Business strategy has come full circle over the centuries. In the 1700s, companies like the East India Company operated as early conglomerates, controlling vast networks of trade, governance, and even military power. By 1803, the East India Company had an army twice the size of Britain’s and managed extensive supply chains, overseeing every touchpoint from production to taxation across its territories (McKinsey, The Ecosystem Economy). This early form of vertical integration set the stage for conglomerates that sought to own entire value chains.
The Rise of Specialization in the Industrial Revolution
With the dawn of the Industrial Revolution in the 1800s, the business landscape shifted towards specialization. Advances in machinery, energy sources, and production methods allowed firms to focus on particular industry verticals, creating economies of scale and depth of expertise. Companies narrowed their operations, excelling in single industries like textiles, steel, and coal.
By 1840, over 70% of British manufacturers focused on one industry, marking a significant move away from the diversified approach of earlier conglomerates (McKinsey, The Ecosystem Economy).This focus on specialization drove unprecedented growth, fueling industrial expansion and shaping modern corporate structures. By concentrating on specific areas, companies optimized their processes and scaled rapidly, achieving dominance within defined markets. Specialization became synonymous with efficiency and expertise, creating industry leaders who excelled in narrow verticals rather than diverse markets
The Modern Return to Diversification: Tesla’s Ecosystem Approach
Today, technology has brought about a new wave of diversification, but in a different form: the ecosystem. Rather than traditional conglomerates, companies like Tesla are building interconnected networks of products and services that create seamless experiences for customers. Tesla isn’t just an automaker; it integrates solar energy, battery storage, electric vehicles, and autonomous software—all in pursuit of a sustainable energy ecosystem. By controlling every aspect of the energy value chain, Tesla offers customers an end-to-end solution, meeting their needs at multiple touchpoints and creating a holistic experience (McKinsey, The Ecosystem Economy).
This ecosystem approach is central to what McKinsey describes as “capturing the entire value chain” of the customer. Tesla, for example, not only sells electric vehicles but also supplies the power (through solar) and storage (via batteries) that keep those vehicles running, all while developing the autonomous software that could redefine transportation. Such ecosystems are designed to meet complex, interconnected customer needs, integrating various industries under one brand.
As we can see in the graph above; Using the Ecosystem Strategy Map, Ecosystemizer can identify Tesla’s positioning in the 10 Life Areas and 3 corresponding Roles. (Ecosystemizer, 2024)
The Future of Business Ecosystems
In the modern “ecosystem economy,” companies are no longer just product providers—they aim to become central hubs in their customers’ lives. According to McKinsey, businesses that successfully adopt ecosystem models can drive greater customer loyalty, increase touchpoints, and capture more revenue streams across multiple sectors. By orchestrating a network of interconnected offerings, these companies achieve what traditional businesses couldn’t: they create seamless, end-to-end experiences that embed them in everyday life.
Tesla’s approach is a prime example of this shift. As McKinsey suggests, the future belongs to companies that can balance specialization with ecosystem thinking, creating interconnected services that lock in customer loyalty across multiple needs. This shift from product-centric to ecosystem-centric business models marks a new era, where companies don’t just compete in one industry but build holistic worlds around their customers.
As we look to the future, the question isn’t just what product your company offers, but how you can create an ecosystem that delivers value at every stage of the customer journey. The rise of ecosystems is transforming business—are you ready to be part of it?
References:
McKinsey, The Ecosystem Economy: How to Build a Connected World that Drives Growth and Innovation, McKinsey & Company.
Kawohl, Julian, Niklas Manikowsky, and Lucy Müller. “Tesla’s Ecosystem Journey—An Analysis Using the Ecosystemizer Framework.” Ecosystemizer, January 29, 2024. https://www.ecosystemizer.com/blog/teslas-ecosystem-journey.
