Platforms and Ecosystems 101

written by Inge Rickhoff and Oscar Stark

Platforms and ecosystems are often used interchangeably to explain new digital business models. They are however not the same, but rather carry a relationship to each other.

An ecosystem represents a group of coordinated nodes that exchange value relative to each other. In this context, the ecosystem is about driving a network effect that allows the creation of value with an exponential undertone, as opposed to how traditional businesses do in a linear fashion.

On the other hand, a platform business is a business in which an organisation wants to attract and trap value and carry the characteristics of standardisation and scale. The idea is to create a single capability and reuse it as many times as possible.

This allows the organisation to use a defined capacity but grow the user base on the capacity through scaling driving an asymmetric outcome for the platform business. This is possible due to how technology is leveraged. Platform businesses generally carry a few different technology platforms in them through which they play out this principle, each platform playing its own scaling role in complement to the overall business.

To appreciate the nature of the digital platforms in a platform business one needs to understand the three main capabilities that make up a digital business, and which platforms typically are associated with them.

These can be viewed as:

• Experience – set up a common engagement platform through which various interactions can be driven to play out a defined experience towards customers. One needs to keep in mind that the platform needs to drive familiarity for customers and thus a single platform, as opposed to having multiple technology platforms.

• Context – exposing content to the various parties that drive them to want to engage with you is critical to success. Here one should think of different product offerings and relevant information that would be meaningful to consume. Product offerings typically plug modularly into a solution platform, this being exposed through the experience platform of the organisation.

• Platform – This served as the bedrock that carries the organisations ability to govern, manage risk, drive compliance to all required legislative and regulatory matters, ensure trust, orchestrate resources, data, and management of primary business functions (financial, human, facilities, infrastructure, and technology resources).

The link between ecosystems and platform business lies in the role that an organisation plays in orchestrating vibrant ecosystems from which they can support the exchange of value; the exchange of value facilitated through the platform business that the organisation drives.

As one peeks into the nature of platforms and ecosystems, it is evident that they are enabled through technology, yet they are defined by organizations deliberate designs and orchestration thereof. This orchestration serves to mediate the engagements between various participants in the ecosystems as the exchanges of value plays out.