Thursday, October 31, 2019

Platform Business Models and Strategy - a few knowledge sources

Several authors and business strategists continue to provide insights, interpreting the emerging web-based business models. This note is not a complete treatise on the various themes taken up by the authors whose remarkable contributions continue to enhance the growing literature around digital platforms. The purpose is to introduce a few authors and their work to enhance the student and novice practitioner's knowledge in the area of digital platforms and ecosystems.

Alexandar Oswalder's "Business Model Generation", A handbook for visionaries, game-changers, and challengers stands out to convey the essentials in a simple visual format with a supporting online community. For starting on the journey of news on new business models, this happened to be a good book at the time of publication. Most of the models discussed are no longer a mystery even for the novice now. Yet, it falls in the must-read category not only for its appeal visually but also for the essential content nailed down early on. The building blocks for business model generation are still the standard, notes on patterns observed at the time continue to take on incumbents as challengers. For design, while the book offers a method to start, there are more options to consider – books and authors who focus on design thinking and methodologies.

Business Model Navigator by Oliver Gassman et al, is a must-read for both academics and practitioners. The focus is on the underlying themes and patterns of business models behind successful companies who stand against all odds. The authors emphasize how Business model innovation is the key to avoid drastic failures and ensure survival. Each of the patterns described comes with historical origins of the pattern establishing the time- tested nature, how it came to limelight in recent years, when and how to apply it followed by questions to ponder. This is a very systematic way of presenting business model knowledge with examples. It is a go-to toolkit to refer to for beginners and matured thinkers to navigate and prepare for tough calls. The other parts form the glue to the knowledge about business models -on how to drive and implement very useful to the business professional. The book is rich with templates, checklists, for initiation (analyzing your ecosystem), ideation (adapting patterns), and integration (shaping the business model).

Amrit Tiwana's Platform Ecosystems Aligning Architecture, Governance, and Strategy is a textbook- style with comprehensive treatment to the three areas. The principles and concepts are covered with such precision, the reader will keep referring back to the book for any vocabulary related to Platforms. The book is rich with several meaningful diagrams and figures for anyone attempting to go in-depth for practice and theory. Prof Tiwana addresses the traps that incumbents – both individuals and businesses can fall into with prior enterprise systems and their life Optionscycles.

The Business of Platforms is the latest book by Annabelle Gawer, Michael Cusumano, and David Yoffie. They command expertise among the academics and practitioners with their papers and earlier books where they treat the subject of platforms with the richness of product platforms of the Tech industry – from the mainframe and Microsoft days. The Business of platforms is a journey they took on with both a thorough understanding of the governing principles and concepts along with words of wisdom and caution on the traps and pitfalls of the complex environments of platforms. Their work is always supported by extensive research data and multi-faceted industry consulting experience. Differentiating innovative and transaction platforms, managerial decision challenges to combat with platform leaders,

Sangeet Chaudary's Platform Scale is a bold venture by a young entrepreneur who placed himself in the forefront of platform thinkers and thought leaders in the digital age. I followed Sangeet's blog mostly out of curiosity about how the young author weaves his thoughts to write a blog on a complex subject. Later, as one of the book reviewers, I have observed what it takes for a new author to form a hub of his own, enable direct and indirect network effects by the new audience of his blog in the Internet platform age. I also noticed the partnerships the author took time to grow and nurture to form a platform and an ecosystem of his own. Exposing myself to this venture reminded me of all the characteristics of the web as a network in structure as well as architecture one has to understand for conducting one's own business. Chaudary's book is an amalgam of current trends, rich with examples, simple to read and grasp the complex environment. Failures and risks come with experience – the author's work lets startups venture into the new green pastures of platforms with their basics in place along with a lot of enthusiasm.

Much of the platform growth lies in its careful orchestration aligning and not losing sight of the core principles and properties of the web as a network. The authors of today have it simple for starters, yet much more to manage to come to limelight. Chaudary is well known in the circles of platforms enthusiasts as well as followers of the platform world literature. His work recently is more focused on the regulatory and governance issues at the level of policymaking for nations in the area of platforms. The world economic forum reports and the United Nations Development programs rely on the ease of building platforms for their producers and consumers of the developing world. Platforms are becoming symbolic in presenting themselves as representatives of cultures and the souls of nations.

The edX course on platforms strategy is based on the book Platform Revolution by the Initiatives on Digital Economy (IDE) researchers at MIT Geoffrey Parker, Marshall Van Alstyne, and Sangeet Chaudary of the Media Labs at MIT. Geoffrey Parker and Marshall Van Alstyne are well-known IDE researchers, teachers, and contributors to the platform world and more. Their presence is felt by anyone venturing into the area of complex digital systems and platforms through their talks, articles, and courses they teach in Boston. They have helped initiate and grow the visibility of the digital platform summits at MIT annually. As an aside, major universities in the USA have executive programs and courses on platform strategies fitting into their respective curricula.

Matchmakers by David Evans makes reading and grasping the insights easier. I would put this book as part of the package for the beginner reader along with the above- mentioned books with an emphasis on market place/ transactional platforms. But the pursuits begin after the course/ or reading these books. They seem to cover quite a lot of the fundamentals, yet one comes away with the urge that-- a lot is missing too. For sure, they are material for introductory courses on Platforms. Also, the perspective is mostly from the consumer side, not much for incumbent platform leadership.

Simone Cicero of Platformdesigntoolkit is an active blogger and platform designer from Europe on platforms. His extensive efforts are focused on the design of platform ecosystems, societal as well as geographical ecosystems. He certainly seems to take the platform world to unlimited boundaries along with much- grounded design tips with his regular workshops and courses around Europe and North America. His work on explaining market networks, innovation, and digital value chains through his extensive blog posts has brought clarity to the digital design thinking and tools for the platform ecosystems world. Cicero's platform design team continues to provide valuable insights and patterns for platform design on their website in addition to their courses and webinars.

Linked by Barabasi makes Network Science research easy to grasp and fun to read. Carefully written by a scientist on the properties of networks highlighting both the seriousness and understanding networks. As a student of computer science, understanding layered architectures and networks has been a part of my academic pursuits. I started reading Linked with the confidence that I knew a bit about networks already. I would think Linked is the best way to reach the semi-educated Business and Computer science students and practitioners as the first book to read about the power of the networks. Without the grasp of hubs and communities, there is not much anyone can venture into the world of platforms.

Michael Wade's Digital Vortex

Velcro hooking is a catch-all used to organize around the architectures of the web. Everything is a link away – appearing to be strong and versatile, yet so fragile. Maneuvering through the links and entanglements of the web is not an easy feat for the frail.
When you decide to get to the digital train of thought, the train would have left the station. The path to digital is neither a line nor is it circular. Getting in and out of the train, at several stations requires buying new tickets and embracing new destinations faster, being aware of the arrival time of the destination. Michael Wade aptly used the term vortex. Vortex reminds us of nature's whirlpools explains Wade where everything is drawn to the center. The digital center of a Digital vortex is where the maximum amount of disruption takes place. While the theme is not about being drained in or engulfed by changes, but to get a grasp of the extent of disruption, navigate along with the chaos, collisions, and combinations that happen to lead to both convergence as well as emergence.

IMD Wade's article on strategies for responding to digital disruption around four themes - harvest, retreat, disrupt, and occupy. This skeletal content is expanded as a chapter in the author's book "Digital Vortex" with case studies, examples and questions for leaders. Emphasis is on the Occupy strategy seeing value vacancies as contested market opportunities. The author's LinkedIn article @https://lnkd.in/gcjUTTB is a good read on this.

Mark Skilton's Building the digital enterprise covers the essentials of thinking digital.
The 25 case studies cross-cutting all industries, the well worked out diagrams and notes give pointers to embark the journey of starting anywhere with a clear compass for digital. In the chapter on techniques for building effective digital business models, useful approaches are provided with the digital workspace model notation that Skilton developed. Skilton discusses the evolution of capabilities and strategies in industry contexts. Exploring mechanisms to derive value with new thinking is the challenge that Skilton takes on with an extensive discussion on industry-wide examples.
A sequel to this book is his work on Building digital ecosystems. I wrote a review of Mark Skilton's Building digital ecosystems architectures here

Here are a few URLs to online courses related to platforms and Digital business ecosystems:

https://www.coursera.org/learn/bcg-uva-darden-digital-transformation

https://www.coursera.org/learn/digital-competition-financial-services

A few related and relevant courses to understand the theories behind digital models in depth.

An Introduction to complexity course bridges the discoveries and history of sciences to computing. It is a relevant course to envision the digital capabilities, providing the background to what it is about going digital in any industry. Melanie Mitchell's book titled Complexity, a guided tour is a sincere effort to bring the several core principles behind complex systems in easy to navigate and confront the world of complexity.

https://www.complexityexplorer.org/courses/27-introduction-to-complexity-summer-2015

A many model thinker is both wise and practical to set his compass to confront and solve problems of a gigantic scale with unique and robust tools that meet the purpose. Scott Page's "The Model Thinker" provides the theoretical background introducing the models behind complex systems. When taking up complex challenges, systemic and complexity thinking becomes a necessity. Prof Page gives a solid explanation of why we need many models in his introduction to model thinking. To achieve a basis for realistic decisions in the world of business and policy, to be comprehensive in making statements. As models cover a broad spectrum of disciplines, they are useful to predict and act on complex phenomena.

https://www.coursera.org/learn/model-thinking

Research web sites:

SSRN

ResearchGate

MIT CISR

World wide initiatives, symposiums, and summits are beginning to happen in the platforms and ecosystems world. Stay tuned as the theories and practices evolve.

Thursday, September 26, 2019

A few fundamentals on types of platforms and ecosystems

Ecosystem concept captures the idea of the coming together of firms with shared interests and goals to provide customers with a solution. Business platform ecosystems establish inter-firm relationships with the links for products and the surrounding services or complements. They usually take on the shape of a hub and spoke model of a network. The platform hub (owner, leader, sponsor) is at the center with the array of firms connected via technologies. Few of the members of this model of the ecosystem take on the governance aspects for the members of the ecosystem. Firms in the ecosystem deal with complementarities (essential core and the peripherals for example) in a fashion that seamlessly interoperate. For a short read on the paradigm shifts from a business ecosystem to a digital business system, I suggest reading the research article here.

There are two types of platforms and a few in between. There is scope for innovation on one type of platforms. On the innovative platforms, the base provides the infrastructure to create value thru complementary products by third parties. Google Android, Force.com falls in this category. The Android ecosystem is enabled by developments around the APIs. When engineering and technology building is primary to the culture of the business, the platform definition is explained by centering the infrastructure layer.

The other type of platforms is the transaction type of platforms. Here, there is an exchange of goods and services as in Amazon marketplace, people interactions as on Facebook. Salesforce, Apple, SAP fall in the in-between category where the emphasis is on a combination of product and platform. For a more complete treatise on the platform business models, read the section in chapter one “Platform thinking” in the book Business of Platforms.

Two-sided platforms and multi-sided platforms are yet another way of viewing platforms based on how exchanges happen on the platforms. In a two-sided platform, the exchange happens between two parties – customers and providers. In a multisided platform, providers cater to groups of interdependent consumers. Network effects come into play to grow the platform value.

Characteristics of Ecosystems

Ecosystems definitions highlight the design thinking of purpose behind the formation of hubs and links in a network. When the interactions of partners or complementarities are dominant in the design, the definition takes on as you find in this article here.

Modularity with loosely coupled components and self-organizing/ optimizing capabilities are the dominant characteristics of ecosystems according to the definition of ecosystems here.

Modularity enables the conditions for the complementors of the ecosystem to co-ordinate and emerge with ease creating sub-ecosystems around the hubs. Samsung and Motorola thrive on the Google Android hub. The relationships are unique, governed by standardized roles and rules. The extent of coordination and co-specialization needed among the members of the ecosystems determines how the complementors of the ecosystem are aligned for production and consumption. Open-source software Android, and Nike wearable devices are both ecosystems – the underlying mission is for production in one case, consumption in the other.

These characteristics in the definition of a digital business ecosystem show the open relationships of partners in an ecosystem with changing roles based on the demand. Ideally, the links of relationships are subject to change giving the ecosystem capabilities to organize itself over time releasing from the tensions of authoritative hubs. This is a fundamental shift from the traditional supply-side “pipeline” of resources to meet the customer’s demands.

Dimensions to Ecosystems:

Several dimensions to ecosystems come into play for ensuring engagement and interactions, building relationships with the partners of the ecosystems.

The degree of openness is valuable to determine the strategy for the platform/ ecosystem owner and stakeholders. With many moving parts, openness comes in many flavors. The levels affected can vary from determining choices at the architecture, marketing, standards compliance, IP management, and governance for managing boundary resources. The practices impact the roles and relationships of the various participants of the ecosystems.

For a grasp on how the various dimensions such as the degree of openness, engaging and collaborating with participants, tie strengths and relationships among the participants, read here.

For understanding the glaring differences of the traditional and ecosystem/ platform models and interpretations for management practices, read here.

Capturing Value:

It should be clear where the main or blended value is rooted in the business model. Cost, Experience, Platform values are often thought when it comes to considering value. Each of these value types is dependent on the type of business model adopted. Successful businesses adopt a variety of value deriving models combining with their business models.

Low cost/ No cost provisions are a norm when the business model enables producing one or many with no cost differences. Often, the customer owns a huge chunk of the product with very low or cost-free.

Customer experience has often been associated with retail – chasing the customer all through the journey. An entire customer relationship management system is often associated with ensuring customer empowerment, recommendation systems, and personalization of products and services.

Platform value-driven business models are quite varied. Communities are often the channel for distribution, communication or executing for a specific cause. Think Twitter, Facebook, Reddit here. Connecting and enabling group/ peer to peer dynamics is the strength of Digital market places. Transactional value is exchanged for buyers, sellers for a specific purpose in a market place. Airbnb, Etsy are good examples of digital market places. Ecosystems enable inter-connected firms to co-specialize, co-market, or co-create by leveraging resources. Think Google Android and Apple iOS for ecosystem value. Data orchestrators operate with real-time data to obtain analytics and recognize patterns for decision making. Think companies like GE, Cisco here.

Strategies for thriving with new value creation, discarding the old.

Ben Thompson’s Aggregation theory throws light on how disruptive business models take the internet advantage while designing for value. Fundamental shifts in capturing value have happened in the internet age. This is due to the ability to modularize components of the system of suppliers and buyers resources to provide consumers the best experience. Distribution of digital goods has found a free medium through the internet. There is direct access to the large numbers of consumers for personalized experience and value delivery. The value is delivered free via the internet by aggregating the modularized resources to the consumers.

For competitive advantage, think how your business models can seize value, fill the existing gaps in value delivery and keep it for a slightly longer time. Sounds harsh while diving deep on digital disruptors when considering competitive strategy. DBT's Prof Michael Wade defines value vampires and value vacancies. Value vampires squeeze and drain the value out of the incumbents. Filling value vacancies to exploit the digital opportunities sound kinder than the vampires. Beware incumbents on the aggressive pursuits of the disruptors who wipe away traces of the incumbents to the past! For more on this, read the post here.

Conclusions:

There are plenty of resources to define and interpret what goes into platforms and ecosystems design thinking. Organizing the thoughts and workings of your business units and stakeholders is a major part of the understanding behind ecosystems/ platforms. No one’s views can be neglected, not a single point of view can be insisted. The journey is experimental and focused on the short and long term strategy for winning and meeting the customer expectations of your business.

Thursday, September 19, 2019

Platforms & Ecosystems Metrics - An Overview

Platform ecosystems metrics are discussed by researchers and authors broadly from two angles

- - evolution of platform ecosystem

- - economics of platforms

Their contributions are based on their interests, backgrounds, and advisory experiences

When it comes to mainstream practitioner perspective, there is much to grasp, tradeoff, along with an eye on the effects of interdependencies. Design and Engineering of platforms processes are not yet standardized. This means, to churn out platform development efforts as easily as other business systems entrusting the in house IT departments to fit in their agendas of the enterprise architects do not seem to be popular in the immediate future. Perhaps, it will never be because of the nature of platform development.

Platform Ecosystems' author Amrit Tiwana and Platform Revolution authors Parker et al, have contributed extensively from these two angles.

Tiwana’s emphasis is on the shift in thinking necessary for those familiar with the software engineering methodologies for the business software systems. He clarifies the differences behind evolution metrics and implementation performance. For the business software architects, the term evolution can be seen as functionality/ feature expanding of platforms. Not only this, how well the system is fit for the future for long term survival and winning. While discussing evolutionary metrics, the corrective approaches and review backward is not the emphasis which is central to the themes of software systems maintenance.

Parker et al highlight the important metrics are those that quantify the success of the platform in “fostering sustainable repetition of desirable interactions” with a goal to generate positive network effects and creation of enormous value for everyone involved, including users, sponsors, and managers of the platform. The discussions on metrics from this angle does not mean that system implementation metrics from the engineering standpoint, the business process efficiencies, and system-level enhancements are not important – they are assumed. Everything discussed by the authors is on TOP of existing understanding of systems development thinking. More caution must be exercised due to the complexity as well as the mistakes made by chasing the wrong metrics can result in undesirable outcomes at a rapid rate.

The emerging role of ecosystem architect who caters to the needs of platform development beyond the system architects – whether business or technical. The system architect and the business architect bridged the gaps and laid the foundation for the various business software systems we see in operation today.

The article Emerging Role of Ecosystems architect by James Hedges and Andrei Furda stands out in my readings on the role of the ecosystems architect in designing platform ecosystems. The article contributes to an extensive literature survey on ecosystems discussions – approaching the ecosystems from a customer and technology perspective. The authors of this article emphasize on what constitutes interaction success throughout the various stages of the platform. They laid out a table of metrics for platform/ ecosystem combining Tiwana’s metrics for evolution (resilience, scalability, and composibility in short term, structure, platform synergy and plasticity in the medium term, and envelopment, durability, and mutation in the long term. Parker et al metrics focus on interaction success and reflect the reality of the business from the user’s perspective. They track evolutionary stages of the platform. These include “liquidity, matching quality and trust during the start-up phase, size of portions of the user base, lifetime value of producers/ consumers and sales conversion rate during the growth phase that can drive innovation and identify strategic threats from competitors during the maturity phase. Having a handle on the interdependencies of metrics requires in-depth understanding and tracking in the changing contexts and environments.

I now turn to Network metrics. A sample of the interrelated areas for metrics can be seen in this blog article – “16 ways to measure network effects” broadly categorized as – acquisition, competitors, engagement, marketplace, and economics related metrics. Diving deeper – the metrics turn out to be 16 of them. In your respective business contexts – there may be many more.

Conclusion:

It is clear that treading the waters of platform/ ecosystems metrics is about tracking complex metrics characterized by evolution, dynamics, and uncertainty. Watchful strategy, governance, and adherence to the discipline of tracking what is working and what is not is the way forward for metrics.

The promise of technologies, Big data, Analytics, and AI algorithms is to provide with tools that can far surpass human intuition and inference. This promise is both an asset and a challenge to what lies ahead for platform thinking and decision making on metrics that matter.

References:

http://platformed.info/platform-metrics/

Three among the many short term/ startup phase, interaction focused, user perspective metrics to be considered by an ecosystem architect - Liquidity, Quality of Matching, and Building Trust. Sangeet Choudary's @https://lnkd.in/gH_b2EX

https://thenextweb.com/entrepreneur/2013/05/04/how-to-win-with-marketplaces-the-three-success-factors/

https://www.researchgate.net/publication/324942808_The_Emerging_Role_of_the_Ecosystems_Architect

platformmetricsare dynamic and evolutionary by nature. Software and market places come closest to the journey with platforms. Still, if one goes by focusing only on traditional enterprise software engineering metrics - the software ecosystems/ platform engineering metrics are quite different. Similar issues if the focus is only on market place perspectives. Here is a read on metrics for network effects - to grasp the range and coverage on just one area - network effects, categorizing them broadly "acquisition, competitors, engagement, the marketplace, and economics-related" metrics. @https://lnkd.in/gkb83Rz

https://a16z.com/2018/12/13/16-metrics-network-effects/

https://medium.com/apis-and-digital-transformation/using-metrics-to-measure-api-driven-ecosystem-value-c0d334bad69b

https://innovationmanagement.se/2016/09/29/metrics-open-innovation-ecosystems/

https://www.researchgate.net/publication/267271540_KPIs_for_Software_Ecosystems_A_Systematic_Mapping_Study

https://www.slashdata.co/blog/a-game-of-ecosystems-measuring-ecosystem-performance

https://www.hellosign.com/blog/evaluate-digital-platforms

https://drive.google.com/file/d/0B36EfI3U2bSMbkdsSmFMbVY3WDg/view

https://www.pointillist.com/blog/uses-of-artificial-intelligence-to-boost-customer-experience-measurement/

Additional Readings:

https://www.researchgate.net/publication/310791758_New_Digital_Metrics_in_Marketing_A_Comparative_Study_on_Social_Media_Use

https://www.researchgate.net/publication/319485746_Are_You_Using_the_Right_Mobile_Advertising_Metrics_How_Relevant_Mobile_Measures_Change_the_Cross-Platform_Advertising_Equation

https://www.gartner.com/smarterwithgartner/how-to-measure-digital-transformation-progress/

https://knowledge.insead.edu/blog/insead-blog/digital-businesses-the-metrics-that-really-matter-6731

Saturday, August 24, 2019

Designing boundary resources for platform ecosystems - An overview

From the ancient times of emperors and empires, protecting geographic borders to secure them inside, and opening paths to connect with the outside have been the fundamental methods to both establish and continue to enjoy monopoly and expansion of power. There were alliances and disputes which were witnessed by the public. There were punishments and rewards which became lessons of history to the future. These were perhaps not the only motives. There were social, cultural, political, and economic reasons behind the several strategies implementing these primary goals. With power and a holistic vision, they strived to build empires that lasted the tests of time.

In the current trends of digital platform ownership and ecosystem building, platform leaders face similar situations to guard their ownership as well as play hard to meet their expansion goals along with winning the competition. Observing the modern platform monopolies, friendly dictatorship approaches seems to work for platform owners. In the world of digital platforms, transparency is a characteristic of platform ownership, even if not declared as open. There is also an ease of maneuvering through the challenges practicing and playing time tested theoretical approaches originating from game theories as well as applying multi-modal thinking. It becomes necessary for the leaders as well as participants to handle boundary resources with a command on the dynamics of the platform ecosystem in both the areas of platform competition moves and innovation initiatives. Whether the platform is in startup stages incubating from an incumbent business or starting on its own also matters.

For incumbent businesses, recognizing that platform thinking differs from creating more of the same or optimize for better results thinking is the first step. Next comes connecting the life cycle stages of platform building to both strategic and innovation initiatives for inside and outside the platform with a grasp of the consequences and effects on actors associated with the platform. Having a command on the core concepts and guiding principles behind the platform ecosystems evolution is a must to prepare for the complexities that arise every step of the life cycle stages of platforms.

For this write-up, I make use of the work of several researchers in the above-mentioned areas. Significant are Annaballe Gawer's work on what drives shifts in platform boundaries, A Research Framework and Synthesis of Game-Theoretic Studies in the area of platform competition by Angel Salazar, Amrit Tiwana's work on the core concepts and guiding principles for Platforms and Ecosystems.

Platform envelopment, multihoming, and forking are most commonly connected to the boundary resources management in the commonly seen writings on Platforms. Platform envelopment is associated with co-operation among platform leaders and their complementors entering into target space with bundling strategies to leverage resources for a common user base. Envelopment promotes expanding from within for economies of scope as well as power over competitors. Forking, on the other hand, is an exploitative strategy. The host platform is exploited from its core competencies to spin off a new competing platform risking the user base as well as the significant resources and assets. Forking is enabled by openness in digital platforms. Google's Android operating system is an example of an open digital platform and has been subject to forking by competing platforms like Amazon ( as in the case of Android operating system forked by Amazon's Fire OS). Multi-homing is a side effect of compatibility as well as forking. This strategy is found common among app developers who can gain from building their apps on multi-platform scenarios. Reaching a consensus, balancing the app developers independence with the integration methods adopted by the platform is a matter of design for platform evolution to avoid the "see saw" problem. Modularity of the components of the platform determine how far the "Humpty Dumpty" design principle is violated - with the whole platform system falling apart if a component is missing or lost a part of its functionality.

Any professional studying platforms can easily grasp the above concepts. It is also relatively easy to figure the motivations behind certain competitive, co-operative, and non-co-operative moves. Broadly they can be categorized under harnessing their power with strong fence building methods along with seeming openness. Knowing that power or effectiveness or simply preserving their unique identity, may be the goal of consolidating boundary resources, it is easy to figure the individual models and strategic games that contribute towards winning. The challenge is to figure out the appropriate models and strategic games played in steps and stages by platform leaders to place themselves in a consistently winning position. For sure, not everything is fair play for everyone experiencing the effects of the platform directly or indirectly. The pricing, subsidies, bundling are all subject to change and asymmetries. Looking for patterns may be as challenging to find the needle in the haystack if not delved in-depth getting over the myths of independent product evaluations in independent markets in platform contexts.

One of the keys to this challenge is to get a grasp of the core concepts and guiding principles behind platform ecosystem building, evolution, and emergence. This challenge is about trying to grasp the influencing capabilities similar to nature's ecosystem building that happened over centuries of time. But digital platforms can show the ecosystem effects faster than in the real world businesses, responding to feedback mechanisms. This can be viewed as an advantage at least to establish some basic patterns of platform owners moves although not efficiently counteract or predict well in advance.

Strategic games are appealing as the outcomes can be rated and are based on interaction encounters among rational players. Divide and conquer, weakening the opponent and strengthening the ally are strategic games that appear to be rooted in common sense. Designing pricing and freemiums, which side to subsidize, how to figure the way when trying to share ownership and control and many such issues are quite complex. Cooperative and competitive games handling the cross-network externalities requires estimating and considering effects on cross-side participants and consumer issues. How to look for win-win potential, how to back out or compete require strategic thinking at a large scale.

There are deliberately played power challenges and games based on time tested models to counter those effects. Figuring which challenge to counter by applying the appropriate strategy, considering the several key issues that can be dormant requires applying methods that work in the context. The common ground for relying on mathematically and experimentally supported models is that they are measurable and simulated. With time, technologies forming the infrastructures change, the standards by which a platform effectiveness are raised resulting in the red queen effect (trying to race also appears static and standing). There is a tendency to settle for an equlibrium state towards the middle. Many governance mechanisms come into play under the umbrella of Goldilocks rule. As players increase, challenges for platforms increase exponentially. The winners are those who have built the capabilities investing their best in many facets.

References:

Platform Ecosystems, Aligning Architecture, Governance, and Strategy

By Amrit Tiwana

(Chapter 2, Core concepts and Principles,

Chapter 10, Evolving a platform)

Exploiting and Defending Open Digital Platforms with Boundary Resources: Android’s Five Platform Forks

URL: https://pubsonline.informs.org/doi/abs/10.1287/isre.2018.0786

Intra-platform Envelopment: The Coopetitive Dynamics between the Platform Owner and Platform Complementors

URL: https://www.semanticscholar.org/paper/Intra-platform-Envelopment%3A-The-Coopetitive-between/0dc3ad6dd8fa88b99ff696cc41475040415d9620

https://hbswk.hbs.edu/item/platform-envelopment

Friends or Foes? Examining Platform Owners’ Entry into Complementors’ Spaces

URL: https://onlinelibrary.wiley.com/doi/epdf/10.1111/jems.12303

What Drives Shifts in Platform Boundaries: An Organizational Perspective

Annabelle Gawer

https://medium.com/regen-network/cooperative-games-and-the-ecological-data-economy-df993338cdff

Platform Competition: A Research Framework and Synthesis of Game-Theoretic Studies

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2565337

The origins of the modern ecosystem:

https://medium.com/on-the-horizon/the-origins-of-the-modern-ecosystem-69b2eb96d309

Friday, August 16, 2019

Explaining Platforms

Platform means different interpretations in different contexts. Adding the digital context is part of addressing the questions that arise on what platforms mean for businesses. While beginning to figure out what platforms mean in the context of the business, several challenges arise. Practitioners come up with at least a couple of perspectives for drafting platform strategy for business – A business model perspective and technology infrastructure perspective.

News on platforms goes with mega-success stories and impact at the global level. Such stories inspire aspiring business professionals to take on the journey in whatever capacity they think feasible. The impact of the rapid development of technologies that support the platforms dreams increases the tendencies to have ambitious goals around the new approaches to growth, achieve scale, and find new avenues for value creation.

In established businesses, the challenges are two-fold to the professionals involved in making a plan for embarking the platform journey. First, the leaders may not be well prepared to lead people with the initial plethora of questions that arise. For this, the leaders must understand that expertise and research in this area is evolving. There are many experimental approaches which can prove a success/ failure in their specific context. Second, the challenge for the aspiring professional is not to be overwhelmed on the abundant success stories as well as the lack of models to fit their business context.

Look for unifying frameworks while paying attention to the glaring and subtle differences. Get a grasp on the fit for the context. A social platform can be a Facebook as well as YouTube or Twitter – completely different business models. A development platform like Android operating system, Salesforce along with its market place is quite different with its traditional counterparts of open-source Linux or Windows Operating systems. Both Uber and Airbnb are market place platforms bringing new options to consumers affecting their day to day lifestyles, but their community-building approaches are totally different. What is common among these is all these platforms have an “Interaction first” theme around their design. They are connecting producers and consumers in new ways using digital capabilities with little initial investment. They are plug and play business models with highly modular artifacts enabling the quick evolution and scale with less hierarchical intervention.

In Sangeet Choudary’s platform stack , there are three layers to explain platform – the infrastructure, market place, and data. Each of the platforms we hear about has invested in at least one of these layers differentiating themselves with new and often disruptive designs to create value. Some practitioners explain platforms around their journey towards building platforms from their current business models and content distribution mechanisms. This approach is more common with the incumbents who are facing the trends of platform businesses.

The disruption is clear when we hear the need for regulation when the impact is on the health of the societies. Caution with governance mechanisms is required to avoid competitor’s exploitation in the name of competitive advantage. Governance and regulation must be meaningful for the platforms. Platform designs take advantage of the presence of competition. There are several instances of how traditional boundaries are crossed in the virtual, digital world of platforms – often discovering traps and pitfalls leading to better orchestration of the boundary resources as a remedial strategy.

Significant academic and market research contributed to design choices and frameworks around the basic questions on design and strategies for platforms. The fundamentals of design frameworks include topics about architecture, value creation, governance mechanisms, and competition. For starters, read here. The authors bring to the table several easily available resources, mostly research articles to chart out the design issues around an established design framework. A crucial requirement is to get the sponsorship preparing for distributed leadership. Everything on the web is public and open, backed with steps toward building trust and reliability in the digital networks. What works on the ground is traditional. Much needs to be thought ahead on reputation building on the web.

There are a few significant principles around networks that successful platform makers achieve. These principles are the DNA of the platform makers themes in everything they do whether it is carefully evolving the designs or preparing for the emergence of their platforms. For thinking in networks, read Linked carefully. On the author’s website, there are downloadable chapters too. This book helps understand how to envision the seemingly random phenomena around major events that happen due to the nature of the web-based frameworks. The impact of web-based networks is borderless, spread across societies and businesses. Complexity leading to chaos is an inherent property of large networks if not managed and strategized well. For many professionals, careers and contributions seem to take the “red queen effect”. To avoid stagnation and cautiously embark the journey, the new rules of the business games can be understood with an eye on the happenings on networks around.

Platforms and ecosystems are often associated with the digitization initiatives in the company. The Digital is often associated with all the newly evolving technologies in the Internet era and also their convergence – Social, mobile, cloud models built around networks using big data, AI, machine learning, collaborative applications. Disruption and transformation are the big themes around digital. Going Digital includes preparation and building capabilities for the internet age. incumbent businesses must be clear about the impact of the newly evolving technologies and business models on their business value proposition to make the right decisions at every step of the journey.

Finding a place in the more complete ecosystem dynamics is associated with their business models and several early decisions. We will discuss a few fundamentals about ecosystems in the write up on Ecosystems

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