Speaking of Ecosystems: What’s Business Got to Do with It?

The cognitive cost of thinking of polluting industries as business ecosystems.

Posted Oct 11, 2019

One of the most interesting and discordant metaphors in the world today is “business ecosystem.”

For over 25 years, the metaphor of the business ecosystem has grown in influence as a rhetorical device within organizational studies of high-tech industries. Its power to frame the narrative of technological innovation pervades cognitive schemes employed by business strategists, academic consultants, and marketers to predict the future of high-tech enterprises. To speak of a company like Apple without speaking of its ecosystem has become unintelligible in elite high-tech circles. That is not good news for real biological ecosystems, the original source of the metaphor.

James F. Moore introduced the new metaphorical use of “ecosystem” in an article published in the Harvard Business Review in 1993 to articulate his dissatisfaction with reigning ideas in managerial studies about how corporations evolve when their industrial environments change. “Evolution” and “ecosystems” offered Moore a way to think figuratively about a firm’s history and future: “In a business ecosystem, companies coevolve capabilities around a new innovation: they work cooperatively and competitively to support new products, satisfy customer needs, and eventually incorporate the next round of innovations.”

Moore’s idea was inspired by his observations of “high-technology businesses” in computing (IBM, Apple, Intel, Microsoft…), retail (Walmart), and pharmaceutical/biotechnology (Genentech, Merck, Eli Lilly, and Bristol-Myers). If managers failed to recognize how they “coevolve” within stable and emergent ecosystems—which include consumers, supply chains, logistics, etc.—they would be unable to identify strategies to ensure the survival of the firm.

Toward the end of his essay, Moore admitted that the metaphor had limitations because of, well, people: “Yet it’s precisely in the role of conscious direction that a strictly biological metaphor is no longer useful. Business communities, unlike biological communities of co-evolving organisms, are social systems. And social systems are made up of real people who make decisions….”  So, take the metaphor as an analytical device until you have to make decisions. But then what?

The people problem is much bigger than Moore allows. Corporations send lobbyists to Washington to shore up their advantages; politicians make regulations and policies that can change odds for winners and losers in the economy; publicly funded investment allows innovative researchers to take risks that corporations won’t; and so on. These social forces lie outside supposedly self-organizing business ecosystems and their metaphorical evolution.

A more urgent dilemma for the ecosystem metaphor awaits in the real world of biological ecosystems, the source from which Moore’s metaphor casually draws. For the metaphor to sustain its force as a cognitive frame, it must be biased against any negative options impinging on its internal logic. This explains why real ecosystems are never mentioned in the literature on business ecosystems. Such a preemptive bias against addressing environmental externalities (air pollution, toxic waste, hazardous working conditions, etc.) is key to the metaphor’s cognitive power.

So when it comes to environmental accounting of their behavior in biological ecosystems, many high-tech businesses suffer from what psychologists call cognitive dissonance, or at least fumble for ways to explain themselves.

Take IBM, which serves as one of Moore’s exemplary cases of ecosystem behavior. The story of IBM’s business ecosystem does not include IBM’s discovery in 1979 that trichloroethylene (TCE), a degreasing solvent it used for 50 years, had leaked and amassed in groundwater under its 140-acre plant at Endicott, New York.  Fumes emitted by this toxic discharge affected over 400 homes in the area, while below ground the TCE migrated from Endicott to the Susquehanna River. TCE does not occur naturally; it increases the risk of cancer, affects the nervous system and reproductive health; and it poses further risks when combined with other elements. The cleanup in Endicott continues to this day, costing IBM somewhere between $10 and $20 million, while across all its operations it has spent $270 million in environmental cleanups. According to local reports, “Company officials have never publicly explained IBM’s role in the disaster.”

Related examples suggest that cash-strapped localities welcome high-tech firms at the expense of their local ecosystems. Microsoft and Intel, another couple of Moore’s leaders in business ecosystems, have set up businesses near Phoenix that promise to consume vast amounts of water from the region’s aquifer. The problem for residents is that these deals come with little transparency, raising concerns that local biological ecosystems will be severely affected by firms that play, in Moore’s metaphorical ecosystem, the role of “central ecological contributor.”

In past posts, we have discussed many eco-disasters associated with Kodak, Apple’s supply chain, Amazon’s packaging, and the tsunami of e-waste generated by the high-tech sector. In the last few years, some of these firms have made efforts to green their public images, and have even made advances in reducing key indices of their negative environmental byproducts (carbon emissions, plastic components, toxic mining practices), garnering praise from environmental groups like Greenpeace. But none of these companies have abandoned the business ecosystem metaphor as a managerial or marketing principle.

One of the latest iterations of the metaphor has been circulating in a “discussion paper” from the United Nations Environment Programme, entitled “The Case for a Digital Ecosystem for the Environment: Bringing together data, algorithms, and insights for sustainable development.” The paper argues for new alliances across government, high-tech businesses, and environmental sciences in order to grow a “digital ecosystem,” defined as “a complex distributed network or interconnected socio-technological system….In this sense a digital ecosystem [is] much like natural ecosystems.” It is an ambitious project to use data analytics to generate “actionable evidence” that is intelligible to “policy makers, investors, consumers, and citizens.”

This turn of events offers further proof that the ecosystem metaphor is not only the lingua franca among high-tech elites, but also the dominant frame that ecologists are expected to use if they want a place at the table with the moguls of Silicon Valley. Still, as proponents of the “digital ecosystem” acknowledge, the urgency of the climate crisis we face also means they must explain the abundant (and dissonant) contradictions that come when high-tech businesses get into the global fight for a healthy planet.

In this context, it seems futile to start talking about erasing the metaphorical ecosystem. But giving it up might help diminish doubts about high-tech trustworthiness in the fight to save the planet. It might save the sector and its cheerleaders from the cognitive dissonance that muddies the meaning and importance of our biosphere and all the complex ecosystems now threatened by the climate crisis.