1. Introduction and platform definition Flashcards
Business ecosystem definition
The organizations with which your future is intertwined with and the ones that your organization depends on (outsourcing, competitors, financing, technology, customers etc.)
Roles in an ecosystem can change. A niche player can become a keystone organization and vice versa
Three critical measures of an ecosystem’s health
- Productivity: The network’s ability to transform e.g., technology into lower costs and new products. Can be measured using e.g., return on invested capital
2: Robustness: A business ecosystem should be capable of surviving disruptions such as unforeseen technological change (to handle external shocks)
3: Niche creation: Diversity suggesting an ability to absorb external shocks and the potential for productive innovation
What is a keystone organisation?
It aims to improve the overall health of their ecosystems by providing stable and predictable set of common assets that other organisations use to build their own offerings - exercise a systemwide role despite being a small part of the ecosystem
The two parts of a keystone organisation strategy
- Create value within the ecosystem (creating a platform that offers solutions to other players in the ecosystem. Others create the value. The platform mediate it)
- Share this value with other participants in the ecosystem (and keeping value to itself. The value must increase with the number of ecosystem users)
The two dangerous dominators within an ecosystem
- The physical dominator (aims to integrate vertically or horizontally to own and manage a large proportion of a network directly)
- The value dominator (Often creates only little value for the ecosystem. It extracts as much as it can from the ecosystem leaving little to sustain the system – making it collapse and brings the dominator down with it)
What is a niche player?
It aims to develop specialised capabilities that differentiate it from other companies in the network. It represents the bulk of ecosystem and are responsible for most of the value creation and innovation
They need to continuously advance and evolve their products – otherwise they will become incorporated into the keystone platform
The keystone sometimes swallows a niche player for the overall health of the ecosystem. Hence, differentiation provides a powerful defence
If the behaviour of a keystone begins to stray into domination, the thousands of niche players will move away – collectively having power
Business ecology
The central importance of interdependency. A company’s performance is increasingly dependent on the firm influencing assets outside its direct control
The importance of integration: because a company operating in today’s networked setting can use resources that exists outside of its own organisation, integration now represents a critical form of innovation
What is a platform?
A platform is a business based on enabling value-creating interactions between external producers and consumers. The platform provides an open, participative infrastructure for these interactions and sets governance conditions for them.
The platform’s overarching purpose: to consummate matches among users and facilitate the exchange of goods, services, or social currency, thereby enabling value creation for all participants
Can emerge in any industry in which information is an important ingredient.
What is a pipeline business?
A pipeline is a business that employs a step-by-step arrangement for creating and transferring value, with producers at one end and consumers at the other
A pipeline business can also be described as a linear value-chain
(A platform: Rather than following such a straight line from producers to consumers, value may be created, changed, exchanged, and consumed in a variety of ways and places, all made possible by the connections that the platform facilitates. Focus is on network theory measuring connections)
Platform vs. pipeline: Eliminating gatekeepers
Platforms scale more efficiently by eliminating gatekeepers. Example of Amazon’s kindle vs. traditional bookstores with publishers and distributors. Before had to go through publishers, printers, distribution, booksellers etc.
A gatekeeper: is a person who controls access to something
The elimination of gatekeepers in platforms also allows for consumers greater freedom to select products that suit their needs. They can choose themselves from a greater selection. Now gatekeepers are replaced by community signals. Goes directly from authors to consumers, for example.
Pipeline vs. platform: new sources of value creation and supply
Growth is no longer constrained by the ability to deploy capital and manage physical assets (Airbnb vs. hotel industry)
Whereas the leanest traditional businesses ran on just-in-time inventory, new organisational platforms run on not-even-mine inventory
Pipeline vs. platform: Using data tools to create community feedback loops
As the platforms gather community signals about the quality of content (YouTube) or the reputation of service providers (Airbnb), subsequent market interactions become increasingly efficient
By contrast, traditional pipeline firms rely on mechanisms of control – editors, managers, supervisors – to ensure quality and shape market interactions. These control mechanisms are costly and inefficient to grow to scale
Platforms invert the firm - meaning?
Strategy has moved from controlling unique internal resources and erecting competitive barriers to orchestrating external resources and engaging vibrant communities - as the bulk of a platform’s value is created by its community of users
