Presentation 1: Business models: from pipelines to platforms

Designing digital platforms ecosystems

Explain traditional value chain (pipeline) businesses.

• value creation through a linear process (inside pipelines) → GrowthValue chain is linear

• one firm controls most stages of production and delivery (production, distribution, marketing, transaction and customer relationship)

  • creates the supply

  • controls the flow

• User: consume, not create

• e.g. Coca-Cola, Dell

→ Pipeline = Company makes the value

Explain value chain in platform systems.

• Platform businesses create

  • an infrastructure:

    • enables interactions between different user groups by provideing tools, rules, and systems to make exchange easy and mutually rewarding (für beide Seiten lohnend)

  • enable external participants to create and exchange value (platform creates value outside the pipeline by user/complementors)

  • shifting the role of firm from producer to ecosystem orchestrator

• e.g. Airbnb, Uber

→ Platform = company enablles others to make the value

Why can business models overlap?

• companies can create and capture value in multiple ways simultaneously (gleichzeitig)

• firms often operate both pipeline and platform business models to create value

• e.g. Apple, Amazon

→ Company makes products AND runs a platform

What are the three principles of Pipe Design?

1. Define the value unit

2. Design the process that adds value and delivers this unit to the customer

3. Design the pipe (Value chain) that controls and optimizes this process

What does the value creation of platforms depend on?

• hinges on the “core interaction” of platforms

  • “core interaction” concerns: value units, participants, filter

What three actions are necessary to optimize the platform?

Core interactions concerns:

1. Defining the value unit

2. Design the interaction of participants

3. Built filter to enable mutually rewarding (für beide Seiten lohnend) interaction between participants

What is a value unit? Give six examples of different companys´value units.

= fundamental item, information, or service created by participants and exchanged on the platform

• Airbnb: Unique stays & local travel experiences, services

• Twitter: Tweets

• Youtube: Video content distribution & audience reach

• KickStarter: Projects

• SAP: Services

• App Store: App discovery distribution & monetization

What are participants?

= users who interact within a platform by taking on different roles such as creating, curating and consuming

How can the interaction of participants be designed?

• Platform: Controls the IP and the rules of the platform

  • goal of Platforms: enabling interactions

→ acts as an indermediary between producer and consumer

• Participants: Producer/Complementor + Consumers

• Producer/Complementor: creates or provides content, products, or services

→ creates value unit for the platform (e.g. producing content on YouTube)

• Consumers: consume content of the producers on the platform (e.g. consuming YouTube videos)

→ creates value unit for the platform and the producers

How can Filter be built to enable mutually rewarding interaction between participants?

• complete exchange includes information, goods/services and currency (Währung)

• Purpose of filter:

  • to ensure only the most relevant value units reach each potential audience

  • maximizing impact and engagement

1. Input: all available content (e.g. Video, Article, Audio)

2. Filtering: Finding the right content for the audience

• right content, right audience, right time

3. Output: Delivered content (Value unit)

• Audience A sees the right content, at the right time
  

→ Platform filters the complements of complementors and show user only the most relevant complements at the right time

What three architectural design choices in Platform Ecosystems exist?

1. PULL participants: Network

2. FACILITATE interactions: Tools

3. MATCH participants: DATA

Explain the three architectural design choices that exist in Platform Ecosystems.

1. PULL participants: Network

• Design the network → get both participants onboard → enable their interaction

• e.g. Feedback Loop

2. FACILITATE interactions: Tools

• Platform has no control on value creation → provide participants tools to interact and exchange values → Tools make participation easy, scalable, and safe

• e.g. Decomposition, Modularity, Design Rules

3. MATCH participants: DATA

• Data collection → Algorithmic processing → Ultimate match between producers and consumers

• Network effects

→ Design choices can optimize platform value creation and interactions between participants

→ Platforms should have a architectural design to support a network, tools and data

When is a platform called asset-light?

• when platforms do not own the physical assets they used to create value

Give five examples for Asset Lightness in Platforms.

• Uber: owns no vehicles

• Facebook: creates no content

• Alibaba: has no inventory

• Airbnb: owns no own accommondation

• Spotify: create no music content

Define vertical integration.

= platforms that are normaly asset-light have