In my former life as an environmental scientist, it was well known that life was more interesting at the edges – in the “between places”. As a B2B CFO®, working with a myriad of companies in many industries and business sectors, I have also noticed this same phenomenon – I am continually amazed by the fascinating ways that people create businesses in new ways and in new places, find an advantage with a unique viewpoint of a common situation, or access customers in new and inviting ways.
Well, you can imagine my surprise to find that I was not alone in my observations. This phenomenon has been formally recognized in the business world in Edge Strategy: A New Mindset for Profitable Growth by coauthors Alan Lewis and Dan McKone of L.E.K.
Life on the edge sounds pretty exciting, doesn’t it? It can also be scary -breaking new ground, not following “the rules” – so remember, at those times, calling a B2B CFO® could be a great idea!
Below is an excerpt from Edge Strategy:
When Opportunity Resides Along the Edges
Everyone is looking for an edge, or advantage, in business. How do we win? How do we get ahead? What is the angle that will drive our company’s success? But an edge is not just a term for advantage itself; it can also be the place where you canfind that advantage.
We define an “edge” as the outer rim that frames what you do and separates it, quite conveniently, from what you don’t. Edges are frontiers beyond which something changes. When you proceed beyond this border in business, the main thing that changes is risk.
Edges are not necessarily clear. To the contrary, many edges are quite fuzzy. When you look to the horizon, are you always sure where the sea ends and the sky begins? In business, strategy edges are like that too. Rare is the exact definition of how a product is positioned, what value a product delivers, or where different customers give a business permission to play. We argue that opportunity resides in this very ambiguity. If its edges are not well defined, a business can redefine them, ever so slightly, in its favor. And by staying within this nebulous but familiar space instead of moving to the less comfortable adjacent expanse or beyond, a business can find brilliant new ways to leverage its existing assets.
Edges have another interesting property; they are the places where the inside and the outside meet. As such, they tend to be where the action is. In nature, in civilization, and, indeed, in business, the peripheries teem with the most fascinating interactions. Where things meet, opportunities abound.
THE EDGE EFFECT
Ecologists call the phenomenon we just described “the edge effect.” In the 1930s, Aldo Leopold, an American environmentalist, coined the term when explaining why quail, grouse, and other game birds were more prevalent in transitional agricultural landscapes than in single (homogenous) habitats like fields and forests. He posited that “the desirability of simultaneous access to more than one habitat” and “the greater richness of edge vegetation” supported a greater diversity and abundance of species.
Since then, scientists have given these borderlands a name – “ecotones.” Eugene Odum, whose classic text, Fundamentals of Ecology, helped to popularize this idea in the 1950s, described an ecotone as “an area or zone of transition between two or more diverse communities.” He was thinking about the border between forest and grassland or between sea and shore. Places of transition between two ecosystems, such as the edge of forests, shorelines, wetlands, cliffs and mountain sides, estuaries, savannah, tundra, and deserts, are where the greatest diversity and opportunity exist for both flora and fauna. At the edges, the populations, resources, nutrients, lights, and food from both ecosystems mix. Some species exist only in ecotones, given the uniquely fertile environment that the combination of the two worlds creates.
It is no surprise that academics draw parallels between the ecotones of nature and the “economic ecotones” of ports of trade and even extend the logic further to the routes that exist between them. Typically, these are also situated at the edges between civilizations. Great trade routes have seeded the major cities of the world and been the conduits for advancement. “Such a river of life as nowhere else exists in the world” is how Rudyard Kipling described the collection of cultural meeting points that make up the Grand Trunk Road.
THREE TYPES OF ECOTONES
We can also apply this concept of ecotones to individual businesses, to powerful effect. In our work, we have observed that this “transitional bonanza,” this “opportunity between things,” is alive and well at the level of individual corporations. As in nature, these phenomena are often familiar; once recognized, they may even seem obvious. However, before they are exploited, they must be spotted. Consider the many edges that frame a business.