- Producers are the creators of the platform economy. The numerous apps on Android help in building the ecosystem.
- Consumers are the users of the offerings, users of Android devices in this case.
- Providers provide interfaces for the platform. The mobile device companies like Samsung are the providers of Android.
- Owners are the controllers of the rules of participation and usage. Google owns Android and publishes policies on what content should not be on the Apps of specific categories. They also maintain the rules to prevent customer abuse by providing an infrastructure to control App permissions.
Following are the three strategic shifts which businesses face while moving from Pipeline Ecosystem to the Platform Ecosystem.
#1 Resource Control -> Resource Orchestration
In Pipeline Ecosystem, companies gain an advantage by controlling valuable and inimitable assets. For example, Xerox holds a lot of intellectual properties. In Platform Ecosystem, the resources which are difficult to imitate are the community and the content owned/contributed by them. Hence, the network of consumers and producers by itself is a chief asset.
#2 Internal Optimization -> External Interaction
In Pipeline Ecosystem, the companies create value by optimizing the value chain - organizing their internal labour and resources like sourcing of raw materials, customer support, etc. However, in the platform ecosystem, value is created by facilitating interactions between external producers and consumers. For example, Uber enables the interaction of riders and drivers. Hence, the emphasis shifts from dictating processes to governing the ecosystem.
#3 Focus on Customer Value -> Focus on Ecosystem Value
In the Platform Ecosystem, companies seek to increase the Life Time Value (LTV) of a customer. However, in the platform ecosystem, companies utilize the feedback mechanisms between consumers and producers to maximise the total value of the ecosystem. For example, Zomato subsidizes the customers in case of complaints to gain repeated traffic for the restaurants.
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Resources to learn more about Platform Ecosystem
- The Age of the Platform by Phil Simon (Kindle | Paperback)
- Matchmakers by David S. Evans and Richard Schmalensee (Kindle | Audiobook | Hardcover)
- Platform Scale by Sangeet Paul Choudary (Kindle | Hardcover)