Abstract
Ecosystem-based business models have been discussed and often praised in business and research literature. Many of the highest-valued companies are built around this model driving others to replicate it. Oftentimes it works – firms transforming themselves to ecosystems enjoy valuation multiples significantly higher than conventional peers. In practice it means that a firm adds lines of business beyond its core: a bank may start e-com business, etc. While the interest towards the ecosystem-based business model is clear up to 85% of ecosystems ultimately fail. The primary reason for this failure being suboptimal ecosystem design. Despite this striking failure rates, the composition of businesses that produce a reliable result has not been widely discussed in research literature. In this paper we propose a framework for the ecosystem business composition. We call it Hook-Engage-Monetize, or HEM for short. We test it on 9 case studies of successful and less successful ecosystems from 9 different countries and show that it is promising as a tool for selecting businesses for ecosystems as well as for future quantitative research.