Platform Strategy and Digital Ecosystems
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Transcript of Platform Strategy and Digital Ecosystems
Platform Strategy & Ecosystems
Open Business ConferenceMay 6th 2014
Warming Up
Let’s take a look at the 5-year predictable horizon
The world will be faster, more connected, with a billion more participants in the global economy.
A rising middle class in Brazil, India, China, and Indonesia will adopt devices first and computers second, leaping the digital divide.
Gen-Y consumers and employees will be in their 30s, defining the conventions for work and play styles.
4G wireless will be broadly available and 5G will be in limited deployment.
Carrier networks will be optimized for traffic against specific services and media types.
Consumer devices will be dominant, but small devices for data sensing and processing will make up a significant percentage of mobile and Internet traffic.
Most commerce will be initiated via mobile devices and completed on a range of platforms.
Most transactions, when executed, will be multi-party: between the app and the underlying services.
Social media with effective partitions and channels will be the dominant mode of communication.
User attention will continue to fragment, alternately directing and being directed by a range of apps.
Data will be a unit of value and a mechanism of lock-in.
Industries will be platform-shaped, with a dominant player occupying the high-margin platform position and pushing others to supporting roles.
What is a Platform Business Model?
Product to Platform
Product
SubsystemSuppliers
ComponentSuppliers
Raw MaterialsSuppliers
Pro
du
cts
Product to Platform
Product
SubsystemSuppliers
ComponentSuppliers
Raw MaterialsSuppliers
Pro
du
cts
Product to Platform
Product
SubsystemSuppliers
ComponentSuppliers
Raw MaterialsSuppliers
Pro
du
cts
Resellers
Products
Consultants
Platform
Data
Pro
du
cts
+ D
ata
A platform business model is defined as follows:
It is a business model which builds value for multiple sides in a given market by consolidating customers, simplifying market-wide processes, and rewarding each player in the value network between the value network and the customers.
There are many examples of platform business models in action today.
Eisenmann, Parker, Van Alstyne (2006),“Strategies for Two-Sided Markets,” SSRN.com.
There are many examples of digital platform business models in action today.
1. Desktop OS: Unix, Mac, Windows2. PDAs: Palm, Psion, Newton3. Game Consoles: Wii, Xbox, PlayStation4. Network Switches: Cisco, IBM, HP5. Multimedia: Adobe/Flash, MS/Silverlight, Google-Apple/HTML5 6. Payment Systems: PayPal, Google Checkout, Visa, Apple, Mobile Felica 7. Mobile Devices: iPhone, Android, Symbian, Blackberry8. Enterprise Systems: Salesforce, Oracle, i2, IBM, SAP9. Social Networks: Facebook, MySpace, LinkedIn, Monster, Twitter10.Batteries: Sony, Panasonic, Sanyo, A12311.Web Search: Google, Bing+Yahoo!, Baidu12.eBooks: Amazon, iPad, Nook, Sony13.Smart Grids: IBM etc.14.Health Care: Microsoft, WebMD, IBM etc.
Eisenmann, Parker, Van Alstyne (2011), “Platform Envelopment,” Strategic Management Journal.
Platform businesses are built on network effects.
The more network effects, the stronger the platform.
Kindle
Usr Book
PSP
Usr Gam
Zune
Usr Mus
MicrosoftSonyAmazon
Eisenmann, Parker, Van Alstyne (2011), “Platform Envelopment,” Strategic Management Journal.
MP3
User Music
Video
TV
Games
Dvpr
Web
HTML
eBooks
Publi
Calls
User
Apple
Openness is a critical element of all platform businesses.
Eisenmann, Parker, Van Alstyne (2011), “Platform Envelopment,” Strategic Management Journal.
V4V3
Price
q1
p1
Quantity
V1
V2
Platform sponsor gives away platform value.
Partners build apps for installed base, adding new layers of value.
Platform sponsor benefits from increased sales & royalties.
Partners benefit from cost savings and installed base.
Parker, Van Alstyne (2011), “Innovation, Openness & Platform Control,” SSRN.com.
Platform models generate profit through first and third party usage.
Most firms can only concentrate on most
valuable apps
Profits increase when others add to
platform’s “Long Tail”
Parker, Van Alstyne (2011), “Innovation, Openness & Platform Control,” SSRN.com.
Platform models build digital ecosystems through virtuous cycles.
We view Digital Ecosystems to be the digital counterparts of biological
ecosystems, exploiting the self-organising properties of biological
ecosystems, which are considered to be robust, self-organising and scalable
architectures that can automatically solve complex, dynamic problems.
Digital Ecosystems are a novel optimisation technique where the
optimisation works at two levels: a first optimisation, migration of agents
(representing services) which are distributed in a decentralised peer-to-peer
network, operating continuously in time; this process feeds a second
optimisation based on evolutionary computing that operates locally on
single peers and is aimed at finding solutions to satisfy locally relevant
constraints.
“
G. Briscoe, P. DeWildeIEEE Conference on BIONETICS (2006)
A digital ecosystem is a distributed, adaptive, open socio-
technical system with properties of self-organization,
scalability and sustainability inspired from natural
ecosystems.
Digital ecosystem models are informed by knowledge of
natural ecosystems, especially for aspects related to
competition and collaboration among diverse entities.
“
Various authorsWikipedia: Digital Ecosystem
[Ecosystem Competition]
Kishore S. Swaminathan (2009), Chief Scientist, Accenture
This approach of common platforms
and shared incentives
is the path to digital ecosystem success.
One Last Thought
Given current abundance of choices and scarcity of user attention,
compelling experiences
must deliver platform capabilities and content to users.
Without such experiences, an ecosystem fails to thrive.
Weill & Woerner (2013), “Optimizing Your Digital Business Model,”
MIT Sloan Management Review
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