Are you ready for it? Ecosystem-Led Growth is a powerful GTM motion, but it works best under certain business conditions. Here’s how to decide if and when to go all in on ELG.
Ecosystem-Led Growth is here, but is this the right moment for your company to adopt it? Let’s take a look at a simple framework for assessing your readiness for ELG.
In working with over 20,000 companies at Crossbeam, we’ve been able to observe businesses at every stage of maturity and nature of business model. As it turns out, there are two key dimensions that dictate a company’s readiness for an ELG strategy: value proposition and company scale.
Value proposition
Generally speaking, a value proposition is the way in which your company delivers value to its customers. As it turns out, the nature of your value proposition is a major input into how well ELG will fit into your business model as a whole.
We’re going to think about your value proposition on a spectrum from “standalone” to “ecosystem.”
What is Ecosystem-Led Growth? Learn more here.
Companies with standalone value propositions are extremely independent and deliver value in and of themselves. Some examples would be:
- Your local dine-in pizza place. Go in, eat pizza, head out. There are very few ways that other businesses could be incorporated into the product experience in order to alter or enhance the value proposition to its customers.
- A software development agency that builds new software products for their customers from scratch. They work directly with their customers and build a full deliverable from a blank page with nothing but their own labor.
- My first company RJMetrics was a company that chose to build features and hire staff over partnering with outsiders. For the most part, that product had a standalone value proposition that didn’t require any more than a spreadsheet upload to start delivering value.
On the other extreme of the spectrum are “ecosystem” companies who would be literally incapable of delivering value if not for other companies that exist in their partner ecosystem. Some examples would be:
- DoorDash, where we find partners galore. From restaurant partners to mobile app store marketplaces to embedded mapping and driver software, it takes a village (rather, an ecosystem) to bring the value proposition of this incredible business to life.
- System Integrators, whose entire value proposition is predicated on the sale, implementation, and maintenance of another company’s products. No partners, no business.
- My second company Stitch Data, which was effectively a middleware vendor whose value proposition involved moving data from one partner platform of ours to another. There was no “single player mode” for Stitch: 100% of our customers were in the customer base of at least two of our partners.
The majority of modern tech companies fall on the “ecosystem” side of the spectrum, but there is a big difference between being fully ecosystem dependent and sitting somewhere closer to the middle.
Take Salesforce, the leading provider of CRM software. While their product may seem somewhat standalone, few of their customers realize a complete value proposition without implementation help from system integrator partners and installing multiple tech partner integrations from Salesforce’s AppExchange marketplace. So which are they? Well, that’s why this is a spectrum. I’d put Salesforce on the “ecosystem” side, but not all the way to the right. Most other SaaS tools are the same.
In some pockets of the tech world, this distinction is made between “best of breed” vendors and “suite” vendors. The “best of breed” prioritize assembling the most valuable individual components to create a joint value proposition, while “suite” vendors index on the simplicity of a standalone solution in how they deliver value through a suite of their own features and services.
Company scale
When companies get big, partner ecosystems become inevitable. Even for companies with strong standalone product value propositions, there comes a point where different categories of partners start to become no-brainers.
Channel partners in particular become commonplace for companies that are pursuing an international expansion strategy or trying to break into new verticals or user personas. Similarly, working with service partners and marketplaces can be a powerful way to scale your go-to-market efforts when hiring directly presents a scalability or expertise issue.
Scale can also attract technology partner ecosystems even when they’ve been avoided by design. Like moths to a flame, when you build a large user base there will always be a potential tech partner ecosystem lying in wait, ready to build analytics, workflows, plugins, and other enhancements that augment the value story for your customers — whether you think they need it or not. If you have decent scale and build an API, they will come.
The ELG readiness matrix
I love a good 2x2 matrix, and I find that they can be a useful way to break down situations like this one where two seemingly independent dimensions come together to answer a hard question.
In this case, “Is ELG right for me?” can be answered by looking at the combination of your scale and the extent to which your value proposition is dependent on your partner ecosystem.
Placing yourself on this spectrum will likely drop you into one of four distinct quadrants:
- Small scale, standalone value proposition: WAIT. ELG is probably not for you. The nature of your value proposition means that trying to build an ecosystem just for the sake of running ELG plays with adding partners may be “forcing it.” The juice may not be worth the squeeze unless you expand your value proposition or achieve meaningful scale.
- Small scale, ecosystem value proposition: INVEST. Companies like these are well suited to invest heavily in ELG, and it may prove to be the most powerful lever they can use to move up the scale dimension of this graph. Their natural connectivity to a partner ecosystem as part of their value proposition means that they are well suited to make ELG plays.
- Enterprise scale, standalone value proposition: EXPLORE. These ones are tricky because they are typically impressive but slower-moving companies who have earned their success by operating in an insular and independent way. However, by not pushing forward with ELG strategies they are almost certainly leaving some amazing growth opportunities on the table. While it may require a crawl, walk, run approach, companies like these should be doing work to explore ELG and what it could mean for them.
- Enterprise scale, ecosystem value proposition: EXPAND. These are the most fun companies to work with because they most likely have embraced and invested in their ecosystem already, even if the ELG playbooks aren’t fully in use within their walls. This means there is opportunity to see outsized returns by taking the inherent value built into their ecosystem and rolling out ELG playbooks at scale. In doing so, they will massively expand both the value created by their ecosystem and likely the ecosystem itself.
If you feel like you’re in an awkward middle zone in the graph, you can also consider the rate at which you are moving along these two dimensions to make a call. Do you have a fledgling ecosystem that shows some promise or are you failing to get one off the ground? Are you satisfied at a small scale or working to achieve hypergrowth? Use your directional velocity within this matrix to see where the puck is going and make the right call on how to proceed.
This post was adapted from an excerpt of Bob Moore’s book Ecosystem-Led Growth: A Blueprint for Sales and Marketing Success Using the Power of Partnerships. Order the book here and subscribe to ELG Insider for expert ELG insights and advice.
