Governing Across Boundaries

Continuing on with my series on Business Ecosystem Leadership which delves into the nine dimensions of the capability framework, this one deals with the ability to mitigate the governance realities of one’s own organization with the very different governance requirements in business ecosystems. It’s a critical dimension of our framework, which I like to call the Dual Governance challenge.

As business ecosystems become central to corporate strategy and innovation, many organizations face a growing tension: How can they remain aligned with their internal structures while participating effectively in fast-moving, collaborative environments that operate by very different rules?

For better or worse, traditional corporate governance is designed for control, accountability, and risk mitigation. Determined largely by the pre-existing frameworks of business law, governance works well in this context of defined boundaries and known variables.

By contrast, business ecosystems are networks of diverse, interdependent participants without a pre-existing legal framework. The various stakeholders are usually held together by a complex contractual architecture that varies from player to player. The lack of a shared constitution makes governance in such a context a complex affair, often driven by blind power dynamics.

The natural friction between the dynamic, underregulated nature of ecosystems and the conventional governance frameworks of its members tends to undermine even the most promising collaborative ventures. To mitigate this conflict, organizations must evolve by developing the capability to operate in both. They need to excel in dual governance.

The following thoughts aim to provide some orientation for navigating this conundrum.

Empowering the Edge

Decision-making must move closer to where the action happens—at the edges of the organization

In most organizations, internal governance is a top-down process, with the decision power allocated at the (corporate) center. To accommodate the very different world of ecosystem dynamics, decision-making must move closer to where the action happens—at the edges of the organization, where teams engage with external partners and platforms.

Particularly in large corporations, individuals who are charged with representing the firm in an ecosystem are hamstrung by internal bottlenecks. Even minor commitments require multiple approvals from legal, compliance, and senior leadership. This not only frustrates partners but signals a lack of trust in the people doing the work.

The solution is easy: To align with the needs of an ecosystem, companies must delegate authority to small, cross-functional teams that can act decisively within clear parameters. These ecosystem teams need defined mandates: what they can approve independently, when they must escalate, and how they coordinate internally. Defining these boundaries helps avoid an overreach of delegates while enabling teams to commit with confidence.

Equally important is the internal support structure of those who engage with the outside. Ecosystem teams benefit from “priority approval lanes” — streamlined fast tracks for legal and financial clearance that prevent delays. Organizations that build these express channels send the clear message that external collaboration is a strategic choice.

Internal and External Governance

A dual governance architecture balances internal requirements with external responsiveness

Empowering the edge is only effective if supported by a dual governance architecture that balances internal requirements with external responsiveness. This means to address both worlds with different yet coordinated means.

Internally, companies must establish governance mechanisms that reflect the dynamics of ecosystem engagement. Dedicated cross-functional decision forums—comprising stakeholders from finance, legal, IT, product, HR, and others — are the approproate internal counterparts to external ecosystem bodies.

Externally, effective participation means shaping the ecosystem’s governance—not just giving in to unmitigated power dynamics. Organizations that take on visible roles in rule-setting, co-developing standards, or leading task forces gain strategic influence. By actively contributing to the ecosystem’s structure, they help align its evolution with their own interests.

Roles for Boundary Leadership

To enable this dual governance in practice, organizations must create and legitimize new roles that are dedicated to ecosystem leadership. They are ambitious roles that span boundaries, manage ambiguity, and build trust across institutional divides. For example:

• Ecosystem Managers align external partners with internal priorities, manage relationship dynamics, and ensure continuity in multi-party collaboration.
• Alliance Directors take a strategic view of the company’s ecosystem portfolio, safeguarding alignment with long-term business goals and negotiating key agreements.
• Technical Liaisons ensure that internal systems and products are compatible with ecosystem standards, enabling interoperability and collective innovation.

Executives will only be successful in these roles if they are sufficiently empowered. They need real authority to represent the organization externally, they need the backing of senior leadership, and they need to be assessed by performance metrics that reflect ecosystem success—like co-development milestones or partner satisfaction. Without these conditions, they risk becoming symbolic rather than impactful.

Cultural Implications

Organizations won’t succeed if the prevailing mindset resists the openness and trust that ecosystems require

No structural shift can succeed without a corresponding cultural evolution. Even with redesigned roles and streamlined processes, organizations won’t succeed if the prevailing mindset resists the openness and trust that ecosystems require.

Ecosystem settings require a collaborative attitude instead of egocentricity and blind competitiveness. Success depends on seeing external stakeholders as co-creators and value as something shared rather than captured. This calls for a deliberate shift away from zero-sum thinking towards a logic of mutual gain.

Likewise, a spirit of general openness must replace the default mode of protectionism. Sure – safeguarding delicate data and intellectual property remains essential, but companies must learn to distinguish what truly needs to remain confidential from what can—and should—be shared to enable alignment and innovation. Without transparency and trust, ecosystems grind to a halt.

Perhaps most critically, organizations must embrace a culture of learning and adaptability. Ecosystem engagement often means entering unfamiliar territory—new industries, different business and operating models, alien cultural norms. Rather than defending the status quo, leaders must cultivate curiosity and use exposure to different ways of thinking and working as a welcome learning opportunity.

Creating this culture requires a dedicated capability-building strategy that includes leadership programs with a focus on negotiation, trust-building, and diplomacy, and on leading through influence rather than authority. Also, cultural interventions such as celebrating collaborative wins, sharing stories of successful ecosystem engagement, ecosystem leadership awards, or hosting joint events with ecosystem partners can help embed ecosystem thinking into the organizational core.

Principles for Ecosystem-Ready Governance

We see – the governance conundrum is complex and challenging. Taken seriously, it unleashes massive transformational forces within the member organizations of an ecosystem, especially if they are large and bureaucratic. However, leaders can begin with tangible small moves that lay the foundation for dual governance maturity. Here are eight principles to act upon that summarize some insights from above and point to a practical path forward:

1. Embrace Governance Duality – Establish two-speed governance structures that differentiate between internal operations and external engagement. Support this with delegated authority, agile protocols, and decision-making frameworks that fit ecosystem realities.
2. Empower Boundary Roles – Give those who interface with the ecosystem real authority. “Delegates” must be able to commit on behalf of the organization—without excessive oversight or internal friction.
3. Simplify Processes – Remove red tape that slows down collaboration. Fast-track ecosystem-related decisions with pre-approved templates, streamlined legal reviews, and “express lanes” for approvals that allow for a less cumbersome collaboration with external partners.
4. Design for Agility – Build small, cross-functional teams that include key functions needed for ecosystem engagement and empower them to act as cohesive units. These squads should be able to pivot quickly and adapt to evolving circumstances.
5. Rewire Incentives – Update KPIs and performance metrics to reward ecosystem success. Measure what matters—co-innovation, speed of integration, partner satisfaction—not just internal efficiency or siloed goals.
6. Create Influencers – Equip teams with the soft skills needed for trust-based environments, such as negotiation, facilitation, active listening, and stakeholder alignment. Influence, not authority, is the cornerstone of leadership in ecosystems.
7. Assure Sponsorship from the Top – C-level sponsorship is essential. Senior executives must visibly support and protect ecosystem efforts, step in to resolve internal conflicts, and ensure alignment with broader strategic priorities.
8. Co- Govern the Ecosystem – Actively engage in shaping the rules and structures of the ecosystem. Participation in working groups, standards bodies, and steering committees not only builds trust—it positions your company as a leader in shaping the ecosystem’s future.

Conclusion

Ecosystem participation is no longer a peripheral activity—it is rapidly becoming a core strategic capability for companies seeking to become more customer-centric, innovate, and grow. However, effective engagement in ecosystems requires more than just presence. It demands thoughtful alignment between internal governance structures and the decentralized dynamics of external collaboration.

The move toward dual governance represents a fundamental shift. It challenges conventional models of control, decision-making, and cultural norms within large organizations. Yet the benefits are substantial: increased influence, accelerated innovation, and profitable participation in new forms of value creation. Organizations that embrace governance duality will be best positioned to lead in these complex, interdependent environments.

After all, ecosystem leadership is about shaping systems—not just participating in them.

I’d be curious to learn about your opinion about this capability. What do you think about dual governance? Do you have stories to share that illuminate the challenge? As always, I love to see your comments and engage in conversation. And if you like the topics I am writing about, please subscribe to this newsletter and follow me and the Center for the Future of Organization (CFFO).

This is the 10th installment of a multi-part series on a capability framework for business ecosystem leadership. It is based on our work at the Center for the Future of Organization at the Drucker School of Management at Claremont Graduate University (CFFO). If you would like to get immediate access to the entire framework, you can get it as a physical booklet or Kindle version here.

To actively address the challenges of ecosystem leadership, we have launched a cross-functional dialogue and action platform which currently includes about 40 companies from around the globe. To learn more about this initiative click here.

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