Pertemuan ke-5

Digital
Platform &
Ecosystem
Definition
➔ Digital platforms are the meeting point between two sides (called consumers and
producers) of a market. On the one hand, consumers get to the digital platform to satisfy
a need and/or get some utility, much in the same way as it happens when people go the
grocery store to buy food. On the other hand, producers get to the platform to offer
goods, services and/or utilities that they produce or own in excess, trying to get some
degree of benefit from the allocation of these goods and/or services to those consumers.

➔ When accessing the platform, consumers and producers do have a very different set of
interests that they pursue and hence are offered with a very different set of functionalities
that they can use. Nonetheless, a good digital platform gives an almost instant
opportunity to be a consumer or a producer of a defined good or service and allows users
of the platform to switch between the two in a frictionless way. This simple concept is key
in understanding the power of platforms in multiplying their user-base exponentially.
Just as an example, let us think of how easy it is for a host to become a guest on Airbnb
(and vice-versa): users can switch from one to another in a couple of clicks. This
frictionless mechanism allows Airbnb to double its potential: once the platform has
acquired a guest, it has acquired - most likely - a host too.
- The biggest change for industries though has probably involved
operations and logistics as platform-based companies no longer need
to own their assets: Uber does not own any car, Airbnb owns no rooms
and Facebook owns no media assets. Still, Uber is rivaling competitors
in the taxi industry, Airbnb represents a major threat to the lodging
companies and Facebook collects an incredible amount of media
contents generated by its users thanks to which it is able to gain bigger
and bigger portions of the ads market’s revenues (formerly an exclusive
territory of traditional media companies).

- Platform-based companies only own core resources and can profit from
a long tail of active ecosystem partners. In this new world, the desire for
positive network effects of an ecosystem requires enterprises to look at
external resources in a new way.
 Characteristics of
Digital Platform
01 02
Consumers Producers
Consumers are that side that gets to the platform to Producers, contrary to consumers, get to the platform to
acquire goods, services, or a certain utility. When offer a certain product, service, or utility they produce or
getting to the platform, consumers may know the own in excess. This is a first main difference from
goal of their interactions on the platform with producers belonging to the off-line world: while in a linear
various degrees of certainty. Let us take for example business model a utility is always connected to a product
consumers getting on Airbnb. Some of them look or service, in a digital platform environment utilities (in
for a specific kind of accommodation at a specific their economic sense) have value on their own. Let us
place, while some others just look for an experience clarify this concept with an example taken from real-life,
and/or a new place to see. The role of the platform is linear business world. “All in all, producers in the digital
to intercept all the possible needs of the consumers platform world have much more to offer to consumers,
and allow those consumers to express wishes or to and this explains why digital platforms are outperforming
post their needs when they cannot find what they traditional businesses in fields like retail for example:
are looking for. availability of feedback and Q&A on most digital platforms
with regards to product, services and utilities provided
deliver a kind of value to the consumers”
 Characteristics of
Digital Platform
03 04
Value Unit Transactions
The value unit exchanged on the platform is the Transactions take place on digital platforms when
product, service, or utility that consumers demand - consumers and producers exchange the different value
and producers offer – on the platform. The value unit units. With regard to this, one of the big merits of digital
is perhaps the single most important component for platforms is that they have changed the traditional way
a platform and the overall producer’s and trade is done (goods for goods or goods for money). We
consumer’s experience must be built around the might dare to say that digital platforms have broken the
concept of facilitating the exchange of the value monopoly of money in intermediating transactions. As an
unit as much as possible. Whether we are dealing example it will be enough to say that consumers and
with transportation services (Uber), accommodation producers can use a digital platform to exchange goods
(Airbnb) or need for goods (Amazon), the degree of for goods (my sofa in exchange for your armchair), goods
convenience and personalization that the platform for services (take my sofa for free if you take it yourself
is able to generate around the value unit can from my living room), services for utilities (use my
determine the success or failure of a digital broadcasting service for your videos) and so on.
platform.
 Characteristics of
Digital Platform
05 06
Launch Curation
When dealing with the idea of launching a platform, the first Curation is that mechanism through which the platform
reaction from experts is always to think of the chicken and owners (or managers) keep contents on the platform neat
egg problem. For those who are new to this topic, this and relevant to the users: as an example, it is through
translates in the challenge of getting producers (Uber drivers curation that YouTube and Facebook prevent producers
for example) sign up to the platform when there are no
from posting racist or misogynist contents on their
consumers (Uber passengers) and vice-versa. The common
platforms. Curation helps Airbnb in keeping its
question with this regard is where to start from, i.e. which
side is necessary to have on the platform in the first place. As accommodation posts at a certain quality level and it is
much as we cannot imagine a washing machines good curation that ensures that a certain quality standard
manufacturer selling washing machines that it does not is guaranteed for products listed on Amazon. In a certain
manufactures, it is difficult to imagine how Airbnb could way, curation does establish a certain level of trust among
attract consumers if there are no room listings and how Uber the users of a digital platform, trust that is sometimes
could attract passengers if it has no drivers onboard. For undermined by the anonymity of - and physical distance
many of today’s big players in the digital platforms’ between - producers and consumers.
environment, this translated into offering services and
products that their owners could produce themselves in the
first place.
 Characteristics of
Digital Platform
07 08
Architecture Monetization
Decisions made by platforms’ owners with regards to the Revenues in the digital platforms’ world can come from
architecture of the platform reflect the degree of openness, different sources and one single platform might generate
and hence control, that those owners wish to have on the revenues in more than one way. One common way to
platform itself. Key for the platforms’ owners and managers make money for a digital platform is to take a transaction
to keep control on the core functions of the platform and on
cut, in terms of fixed or percentage fees, when goods or
those adds-on that have the potential to become platforms
services are successfully exchanged on the platform.
on their own. The role of a good architecture is to make it in
such a way that this control can be established, and that the Platforms like Airbnb, Uber, Deliveroo, UberEATS, Justeat
platform does not generate and fuel its own competitors. and many others work in this way. Another common way
of cashing a platform out is to leverage its user base to get
advertisement fees from companies that want to promote
their products and services on the platform. Once the
platform has reached the so-called critical mass in terms
of number of users, it can then start charging fees to its
users for accessing the platform (like dating portals) or for
enhanced services (premium services like Amazon Prime
or Spotify premium).
 Characteristics of
Digital Platform
09
Governance
Once a digital platform has been conceptualized and its
monetization strategies have been made clear and
disruption-proof, it is time to think take care of the platform’s
governance. As it happens in the offline world, there are two
main actors playing a major role when it comes to
governance: the owner and the manager. The platform’s
owner is the legal entity (person or company) who invests
equity in the platform. The platform’s managers are those
who manage the platform on behalf of the owners and are
responsible for its business’ success. This duality poses for
digital platforms the same threats that pipeline companies
face regarding governance.
Business Moves to Platform
❏ The digital revolution that we have been experiencing for the past ten to twenty years has
brought us new network-based value chains and “coopetitive” business models. In this wave of
change traditional (linear) value chains and competitive business models (otherwise known as
product-based business models) have been replaced by platform-based business models. There
is also no doubt, based on the current market landscape worldwide, that platform-based
businesses are winning out.
❏ How do we then explain then the increasing dominance of platform business models? Let us
begin with an example based on Apple and the handset market.

The Apple’s iPod business started in the pre-platform economy with a production driven by a standard and
linear value chain based on a product-first thinking. The Apple ecosystem had very limited network effects
and data capture abilities: as such the iPod was not much more than a (really) nice MP3 player. What
allowed Apple to disrupt that market was that at Apple they matched the iPod with iTunes, which allowed
the company to coordinate users and content providers and remove traditional supply chain inefficiencies
(before that customers were transferring music from a CD to a laptop and from the laptop to a handset
device with incredible hassle and waste of time). The joint offering of iTunes and the iPod created a
triangulated supply network that allowed Apple to take a cut from transactions occurring on iTunes while
capturing customers’ data to enable more valuable music matches. Apple was then able to create network
effects with its growing number of customers, partners and providers working together to accrue value for
the platform that coordinated them.
2 Network Effects
Direct Network
Effects
Indirect Network
Occur when the value of a product, service, or Effects
platform increases simply because the number of
users increases, causing the network itself to grow.
On the other hand, occur when a platform
or service depends on two or more user
Social media platforms primarily benefit from direct groups, such as producers and
network effects because the service's value grows
consumers, buyers and sellers, or users
as a direct result of attracting more users.
and developers. As more people from one
group join the platform, the other group
Apple also benefits from direct network effects. The receives a greater value amount. This is
preferential treatment of messages sent from an
iPhone to another Apple device (through iMessage) best illustrated by the e-commerce and
has helped the company expand its moat in the ridesharing examples noted above.
market.
How Digital
Platform
Ecosystem
work?
Open Innovation for
Platform Economy
Open innovation leverages internal and external ideas
and resources in many ways, starting from the concept
that the smartest people usually work outside the
company's border and from the assumption that
external R&D can work with - and sustain the - internal
R&D. Recent success stories like Facebook, as well as less
fortunate adventures like Myspace have shown that
companies need to leverage internal and external ideas
to win the market.

Overall, in an open innovation system, people are free to

experiment and build on top of what already exists,
rather than having to reinvent the wheel every time.
Openness does come with its own benefits and
challenges though as we have stated in the opening of
this paragraph.
 Digital Ecosystem
✦ Many traditional corporations tried to create or participate in digital
ecosystems, only to fall short. These ecosystems consist of interconnected
sets of services through which users fulfill a variety of cross-sectoral needs
in one integrated experience. Today’s dominant ecosystems were launched
by ascendant tech companies, which have used hyperscale platforms to
compete with, disintermediate, and often substitute for the offerings of
traditional competitors by controlling customer interfaces and control
points such as search, advertising, and messaging.
✦ How do ecosystems work? For starters, they create value along two
dimensions. They allow participants to consolidate a range of customers,
often across sectors. Think of this as the horizontal vector. On the vertical
vector, ecosystem participants strengthen or even dominate touch points
along customer journeys (both B2C and B2B).
Digital
Ecosystem
sets the
Future
To participate successfully in ecosystems, traditional companies must often change the way
they think about customers. Instead of limiting themselves to services within their
historical industry borders, they may venture beyond in an effort to serve customers from
one end of the customer journey to the other.

Major technology vendors and suppliers are fueling the growth by keying their strategies to
ecosystem players. They furnish hardware and software for platform building and set up
data exchanges (application programming interfaces) for ecosystem partners.
THANK YOU!
Any questions?