The last characteristic of business ecosystems is innovation or evolution. In competitive ecosystems innovation thrives. Actors are able to innovate through experimentation. Research and development is an example of innovative techniques. Any method or action that brings about a positive change in the status quo is a positive innovation.
If self-governance is high, future growth is sustainable, and competition is established. In this scenario there will be a need and desire to innovate.
In a perfectly competitive industry there is zero economic profit. This means there are no barriers to entry along with a slew of other conditions, and actors move into the ecosystem because there were profits thereby moving the price for products or services to a "point of equilibrium." When an industry is perfectly competition and hits "the point of equilibrium," there are no profits. All inputs are paid for. All members of the system are paid. There is no extra surplus or profit.
Therein lies the desire to innovate!
In the real world, companies have different operating costs, varied skill levels, and do not operate identical to one another. When an actor assesses their strengths and weaknesses, as they related to the business ecosystem, they are able to strategically allocate their resources to attain the highest level of competition available to them.
For example, if Company B realises it is being outperformed by Company A because Company A has better skilled workers, Company B can hire better skilled workers or implement robotic automation to boost its output to that of Company A. In this case, innovation led to the success of Company B.
Since the real world is never perfectly homogenous, there are many ways to achieve a competitive advantage, especially if innovation is possible. But don't forget, innovation is only possible under conditions of sustainability and self-governance.
Favourable conditions of these three characteristics are witnessed for start-up and mobility ecosystems. Both of these technology industries are sustainable due to the nature of technology, they are relatively new and have not undergone excessive regulation, and allow for a great deal of evolution or innovation.
How our examples of technology companies fair against the three business ecosystems characteristics can be viewed in the table below.