Capabilities for Digital Platform Ecosystem

Even though they are still relatively young, digital platforms have been on the rise in recent years. From healthcare to mobility, many industries have been keen on leveraging cloud computing technologies to benefit from platform ecosystems in collaboration with third-party developers. Google’s Android and Apple’s iOS are just two of the most prominent examples.

Despite all the success stories, it certainly is not easy to successfully establish digital platform ecosystems—an issue many companies face nowadays.

How is it possible to establish successful digital platform ecosystems? According to the researchers Maximilian Schreieck (The Wharton School), Manuel Wiesche (TU Dortmund University), and Helmut Krcmar (Technical University of Munich), there is a solution. In their paper “Capabilities for value co-creation and value capture in emergent platform ecosystems: A longitudinal case study of SAP’s cloud platform” (available open access here: https://journals.sagepub.com/doi/full/10.1177/02683962211023780) they highlight the need for companies to “develop new organizational capabilities to co-create and capture value in platform ecosystems”. As a result of their multi-year, in-depth case study of the multinational software vendor SAP’s new platform ecosystem, Maximilian Schreieck and co-authors identify organizational capabilities that owners need on the way to success in platform ecosystems.

Business models are changing as information is becoming the new gold and IT dominance is propagating across industries. Physical assets are replaced by intangible assets and the knowledge-based view of the firm has superseded the resource-based view of the firm. Literature states that looking from this knowledge-based viewpoint, specific organizational capabilities—the abilities of a company to achieve a desired outcome—can lead to a competitive advantage. But what are the right organizational capabilities when it comes to establishing digital platform ecosystems? According to the study, both technology-related capabilities (cloud-based platformization, open IT landscape management) and relationship-driven capabilities (ecosystem orchestration, platform evangelism, platform co-selling) are required.

Furthermore, companies have to use these capabilities to enable balance value co-creation (the collaboration between the platform owner and third-party developers), and value capture (the process of gaining a certain percentage of the value created) in emergent digital platform ecosystems.

On the one hand, excessive value co-creation requires platform owners to give up control, which then impedes platform owners to capture value.
On the other hand, excessive value capture would reduce engagement of third-party developers within the ecosystem and damage value co-creation. Lastly, a lack of value capture may result in the platform ecosystem to grow while yielding little to no profits.

In conclusion, developing the right organizational capabilities which enable and balance value co-creation and value capture within platform ecosystems is crucial on the road to success in the platform economy.