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 boundariesA 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

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

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

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



What Drives Shifts in Platform Boundaries: An Organizational Perspective
Annabelle Gawer


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



The origins of the modern ecosystem:

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