Platform ecosystems are playing an increasingly central role in companies' digitalisation strategies. They bring producers and consumers together via the internet and enable new types of business models. In order for new ecosystems to emerge and grow, the platforms must have specific characteristics and capabilities that distinguish them significantly from conventional platforms.
With a 40 per cent share of the Nasdaq 100, the Big Five Apple, Alphabet, Microsoft, Facebook and Amazon form the epicentre of the platform economy, around which platforms such as Uber, Airbnb and Netflix revolve. The platform index, a share index of the top 15 platforms, has doubled in the last three years - far outstripping the growth of the Dax30, Dow Jones Industrial and Nasdaq 100 share indices. Platforms such as Spotify, Zalando and Scout24 are the big names in Europe, in a comparatively small market. Even with SAP, European companies only account for 3 per cent of the global platform economy - measured by market capitalisation.
Compared to the USA, where 67 per cent of the global stock market value of the platform economy is located, there is a huge amount of catching up to do, but also enormous growth potential. Driven by the hope of being able to leverage the growth potential in Europe as well, the development of platform ecosystems is at the top of the agenda of many large German companies' digitalisation strategies. For example, Star Alliance is working with Accenture to develop a platform for digital services in order to offer an improved travel experience across the entire network of participating airlines. New platform alliances are emerging throughout the market, across all markets and business relationships.
However, building platform ecosystems is not easy. After all, the platforms need special features and capabilities to allow new ecosystems to emerge and grow dynamically. This makes them very different from the familiar conventional platforms, which in the past were more responsible for increasing efficiency and optimising companies, but did not scale across company boundaries. What features and capabilities do the new platforms need and how can they be implemented in companies?
The platform ecosystems are centred around the ecosystem itself. Every ecosystem creates value for all stakeholders involved. The ecosystem can only grow dynamically and sustainably if the value that the ecosystem creates is actually available to all stakeholders. Otherwise, the ecosystem will either not develop at all, stagnate or disintegrate again.
The actors in the ecosystem take on different roles, such as producers and consumers. The allocation of roles is not static. The actors can swap their roles at will or even take on both roles at the same time. In the latter case, they become prosumers, a portmanteau of producer and consumer.
The platform in turn provides the ecosystem's habitat. The better the habitat and therefore the platform responds to the needs and wishes of consumers and producers, the stronger and more sustainable the ecosystem can grow.
The owner is the owner of the platform and generally also provides it. The owner determines the rules within the ecosystem via the platform with the aim of growing the ecosystem. The platform contributes value-adding services to the ecosystem, which vary in relevance depending on the role of the actor.
In the case of Mytaxi, the value created by the ecosystem is the provision of taxi journeys. Taxi drivers offer taxi journeys, passengers request taxi journeys. Mytaxi in turn mediates and brings all players together. The IT system that mediates between guests and drivers and can be used via a smartphone app, for example, in turn forms the platform and thus the ecosystem's habitat.
With the Mytaxi platform, Daimler AG is entering a new market for itself. Until now, Daimler AG has developed, manufactured and sold cars and was less interested in individual customer journeys. Many companies, not just Daimler AG, are hoping that platform ecosystems will enable them to establish new products in new markets and thus win new customers. Companies are no longer just interested in refining existing products for their customers and growing in markets that have long been familiar. New markets are to be created from the combination of existing markets, creating new value.
In these new markets, new rules apply to value creation. It is not the company that provides the value via the platform, but the value of a platform ecosystem is created in the ecosystem itself, through the networks and actions of the players. In the case of Mytaxi, it is not Daimler AG that provides the taxi drivers, but every taxi driver in Europe with a valid taxi licence can enter the ecosystem as a producer, thereby increasing the value of the platform.
An intensified form of the new business models is disruptive. In this case, the new ecosystem is so successful that it completely replaces existing ecosystems. Mytaxi, for example, could completely replace the conventional taxi business in the future. This can already be observed in the USA with Uber. The conventional taxi business has declined rapidly there.
The business models described thus create a completely new type of dynamic ecosystem. They are characterised by the fact that they are still emerging, that value creation takes place within them and that they can grow rapidly. If the ecosystems are still in the process of being created, the players are neither known nor bound by regulations until they join the ecosystem. These characteristics mean that consumers and producers initially have a high degree of autonomy and anonymity. Once they have joined the ecosystem, their autonomy and anonymity decrease because the initial data collected can be used to influence their behaviour via the platform.
In contrast, conventional business models create static ecosystems. These consist of an existing ecosystem whose value creation lies in the companies themselves and which only grow slowly. The players in static ecosystems are known and can be specifically addressed and controlled.
Platforms for dynamic ecosystems have the important task of creating these ecosystems in the first place. To achieve this, the platforms must have specific characteristics and capabilities - openness, attraction and exchange - that are of particular importance.
The following chapters describe these characteristics and capabilities from the perspective of the services. However, they are of a general nature and also apply, for example, to the organisation, processes and culture of a company.
The platform property of openness opens up the ecosystem for the value creation process by all stakeholders. The openness of a platform can be viewed from different perspectives.
One perspective is the openness of the platform as a form of new partnerships and cooperation between companies in order to build the platform together. The platform can also be opened up to developers in order to involve them in the value creation process. A well-known example of this is Apple, which, in addition to an IDE, various SDKs and diverse cloud solutions, even provides its own programming language in order to leave the development of apps to the developers. Without these developers, the platform would not be successful. At the same time, technologies are also important for the openness of the platform. For example, open standards or the use of open source software can open up the platform from a technical perspective. From the perspective of the players in the ecosystem, openness means that they can be either a consumer or a producer - usually with only minor restrictions - but can also swap roles or hold both at the same time.
The platform must now offer services that ensure the openness of the ecosystem. The challenge here is to guarantee the quality of the value on the platform, despite its openness. This is particularly difficult in view of the potentially autonomous and anonymous players in the ecosystem. In the case of Mytaxi, for example, a taxi driver who refuses a certain number of journeys is sanctioned. Consumers can also be sanctioned if their behaviour has an unfavourable impact on the ecosystem. One example of this is eBay. Here, not only buyers rate sellers, but also sellers rate buyers. The owner of the platform strategically determines how open a platform is. The openness of the platform can also change during its life cycle if it becomes apparent that the value of the platform is decreasing and the ecosystem is shrinking.
The example of SAP Cloud Platform also demonstrates the consequences and possibilities offered by the increasing technical openness of a platform. This allows third-party providers to develop and distribute applications on the SAP Cloud Platform that complement the core product, the ERP suite from SAP itself. SAP consciously accepts this competition and makes it part of its platform strategy. The SAP Cloud Platform is based on the open source framework ‘Cloud Foundry’, it is compatible with various cloud infrastructure providers such as Amazon with AWS or Microsoft with Azure and has lowered the entry barriers for third-party developers. Free trial access to the platform enables developers to play through use cases without risk before launching them on the market. This has created a dynamic ecosystem that now includes more than 1,600 third-party developer applications in the SAP App Centre, the SAP Cloud Platform marketplace, in addition to customer-specific applications.
In any dynamic ecosystem, the first consumers and producers must be attracted to the platform in order to make it attractive for other players. The reciprocal influence of consumers on producers and vice versa can then create a network effect. The platform property Attraction is responsible for attracting consumers and producers to the ecosystem.
The startup Mytaxi launched the world's first taxi app in Hamburg in 2009. Today, Mytaxi is represented in 70 cities and 13 countries throughout Europe. The ecosystem has grown to 16,000 taxi drivers and 13 million passengers. This is thanks to the strong appeal of the Mytaxi platform.
A platform must therefore provide services to enable this growth in the ecosystem. Here too, the autonomy and anonymity of the players pose major challenges for platform operators. After all, how can consumers and producers be drawn into the ecosystem if it is unclear where to find them and how to inspire them?
The Pull, Facilitate and Match principles, on the basis of which platform services can be realised, are intended to solve this problem. One example of pull principles is single-feedback loops. These are algorithms that analyse the activities of known consumers on the platform in order to draw conclusions about their interests, preferences and needs. With this knowledge, each consumer can be inspired individually. Even unknown players can be analysed and specifically influenced using appropriate methods.
The example of a European financial institution shows that the openness of a platform alone is not enough to create a dynamic ecosystem. The technical openness of the interfaces and the provision of resources such as documentation and a test environment remain only a basic prerequisite for third-party developers to be able to develop applications for the players at all. However, if only a few customers show interest in granting third-party developers access to their data, there is little incentive for third-party developers to invest resources and labour. The platform operator thus misses out on the opportunity to set itself apart from the competition through a dynamic platform ecosystem with innovative applications. As a first step, it is therefore necessary to gain the interest of customers and achieve initial attractiveness through jointly developed and marketed applications, for example.
The exchange of information, goods or services between consumers and producers is a mandatory prerequisite for the value creation process in the ecosystem. In the case of Mytaxi, the platform shows the passenger a nearby taxi driver. Once the order has been placed, the taxi driver is ready for the arranged taxi journey within a few minutes. The passenger reaches their destination and, after a brief confirmation, receives an automatic debit from their account.
The platform must support these activities by providing services that enable the exchange of information within the ecosystem. Here too, the challenges are the high degree of autonomy and anonymity of the ecosystem players. Consumer behaviour can neither be predicted nor predetermined. Consumers and producers even use end devices of their choice, across different device classes, from smartwatches to smartphones, and with different operating systems, from iOS to Android. At the same time, they expect fast, stable and secure transactions and services that are as widespread and easy to use as possible. The services must be available at all times, guarantee short response times and be highly networked in a heterogeneous environment.
The example of Integreat, an information platform for refugees, shows that the ability to exchange information is also relevant for non-profit platform ecosystems. On Integreat, local authorities, non-profit organisations and volunteers provide important, locally specific information for refugees. Municipalities, organisations and volunteers are in the role of producers, while the refugees - at least initially - are in the role of consumers. This enables local authorities to provide targeted advice, while refugees benefit from reliable information. The platform itself supports the exchange of information through services such as a search function, translation options and local caching of information for offline availability. This created a dynamic ecosystem in which chambers of trade and commerce also became involved over time. They used the access to refugees to offer internships or apprenticeships.
Great potential, great challenge
Platform ecosystems also offer European companies enormous growth potential, as a look at the existing market in the US shows. The platforms there create highly dynamic ecosystems, often start from scratch, have to be open to new consumers and producers in the value creation process and have a strong attraction in order for the ecosystems to really grow. In the best case scenario, in such a way that they make other ecosystems superfluous.
This requires platforms that provide openness, appeal and exchange. The characteristics and capabilities must be determined for each type of platform and may change during its life cycle. In particularly critical domains and use cases, openness must be weighed up against the benefits for the ecosystem. If niche markets are addressed, attraction is only effective to a limited extent because the target group is small anyway and there are few competing ecosystems. Above all, it is important that the features and capabilities of the platform support the business model.
The provision of platforms that fulfil these requirements is associated with major challenges. In particular, companies that have previously built conventional platforms for static ecosystems have little experience in building these platforms. It is therefore important that companies develop a common understanding and a standardised language for the new type of platforms. On this basis, a vision and strategy for the platform can be formulated and implemented step by step. Otherwise, there is a risk that conventional platforms will re-emerge that do not work in the new markets.
Rethinking platforms - for dynamic ecosystems
The potential is huge, but so are the challenges: if you want to successfully build platform ecosystems, you need openness, appeal and clear strategic guidelines. This is the only way to create platforms that survive in dynamic markets - instead of getting stuck in old patterns.