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William El Kaim – June 2015
2. What is a Business Ecosystem?
• Definition
• Business ecosystems are dynamic and co-evolving communities of diverse actors who
create new value through increasingly productive and sophisticated models of both
collaboration and competition.
• As James Moore said in 1993
• Innovative businesses can’t evolve in a vacuum. They must attract resources of all sorts,
drawing in capital, partners, suppliers, and customers to create cooperative networks.
• Ecosystems enable and encourage the participation of a diverse range of
(large and small) organizations, and often individuals, who together can
create, scale, and serve markets beyond the capabilities of any single
organization.
• Participating actors interact and co-create
2Source: Deloitte Univ. PressCopyright © William El Kaim 2015
3. Platform Definition
• A “platform” is a powerful type of ecosystem,
typically created and owned by a single
business or entity, but deliberately designed
to attract the active participation of large
numbers of other actors.
• Source: Deloitte Univ. Press
• A “platform”, by definition, is at least two-
sided.
• Most Platforms start as product (one-sided), then
adds a second side (developers, merchants,
crowdsourcing, etc.) when the product gets
traction.
• The two sides of the platform should be able to
interact through it (but not outside it in general).
3Copyright © William El Kaim 2015
4. TRUST …
• The Platform’s paradox is that its
hyper centralization and proprietary
nature make it possible to form a
wide network of trusted
decentralized trust relationships
between actors in context, in ways
that the Web never did and never
will do, enabling new multi-party
business models.
• If you remove the Platform you
force every actor to establish
many-to-many trust relationships
with all of the other actors.
4Source: B=MC2
Copyright © William El Kaim 2015
6. Platform vs. Product
• Products have features, platforms have communities.
• Platform innovations are manly emergent, instead of product innovation
which is mainly planned.
• Platforms Ownership and Intellectual property are segmented, while
products in general are controlled by one firm
• Platforms are based on revenue stream, while products are generally based
on lump-sum sales.
• Platform, unlike products, should attract at least two distinct group of
participants, not product.
6Source: Amrit TiwanaCopyright © William El Kaim 2015
7. Nine Guiding Principles in Platform Markets
• Red Queen effect: The increased pressure to adapt faster just to survive is
driven by an increase in the evolutionary pace of rival technology.
• Ckicken-or-egg problem: the dilemma that neither side will find a two-sided
technology solution with potential network effects attractive enough to join
without a large presence in the other side.
• The penguin problem: when potential adopters of a platform with potentially
strong network effects stall in adopting it because they are unsure whether
others will adopt it as well.
• Emergence: Properties of a platform that arise spontaneously as its
participants pursue their own interests based on their own expertise but
adapt to what other ecosystem participants are doing.
• Seesaw Problem: the challenge of managing the delicate balance between
app developers’ autonomy to freely innovate and ensuring that apps
seamlessly interoperate with the platform.
7Source: Amrit TiwanaCopyright © William El Kaim 2015
8. Nine Guiding Principles in Platform Markets
• Humpty Dumpty problem: when separating an app from the platform makes
it difficult to subsequently reintegrate it.
• Mirroring principle: The organizational structure of a platform’s ecosystem
must mirror its architecture.
• Co-evolution: Simultaneously adjusting architecture and governance of a
platform or an app to maintain alignment between them.
• Goldilocks rule: Humans gravitate towards the middle over the two extreme
choices given any three ordered choices.
8Source: Amrit TiwanaCopyright © William El Kaim 2015
9. The New Digital Operating Model
• Establishing a platform in the
center of a robust digital
ecosystem requires then a new
digital operating model, one that
is appropriately permeable to
third parties that can co-create
new value from what a
company and others have to
offer.
• The Shift: From a platform the
company builds upon to a
platform the world builds upon!
9Source: Aaron Dignan Medium blog PostCopyright © William El Kaim 2015