A digital ecosystem is a distributed, adaptive, open socio-technical system with properties of self-organisation, scalability and sustainability inspired from natural ecosystems. Digital ecosystem models are informed by knowledge of natural ecosystems, especially for aspects related to competition and collaboration among diverse entities.
To date ecosystems have mainly been defined in terms of specific business models, industries and technology domains. For example as McKinsey offer in this detailed special guide, typical scenarios are digital banking and the IoT.
Our goal is to apply the model to a national infrastructure, literally a platform for a country’s entire digital economy, achieving multiple benefits. As described in this Telegraph article:
“You’re not only building digital business,” he says, “but a more connected, more efficient digital society ‒ from smarter cities to agricultural systems that can feed billions, to the need for fewer hospital beds.”
Platform Business Model
To best understand the concept we can consider it’s various commercial implementations. Digital ecosystems are also defined as ‘Platforms’, a concept first implemented in the commercial sector, by the sharing economy digital giants.
Massive new startups like Uber taxis, Airbnb and many more are pioneering the ‘On Demand Economy’, implementing a Cloud-based On Demand Business Framework which overlays a ‘digital mesh’ across a marketplace of vendors, such as taxi drivers or travel accommodation.
The repeatable secret sauce is the Platform Business Model, described in detail through academic literature and popular business books.
For example the MIT book ‘Platform Revolution‘ describes these hyper-scale disruptors like Netflix, Uber, Airbnb, Facebook, Twitter et al, as the book describes:
“Facebook, PayPal, Alibaba, Uber-these seemingly disparate companies have upended entire industries by harnessing a single phenomenon: the platform business model.”
The book builds on prior MIT research, such as this detailed 2007 research report on Platform Networks, this highly recommended presentation Platform Strategy and Open Business Models, and in a simpler format in this presentation, which defines:
“A “Network platform” is defined by the subset of components used in common across a suite of products (Boudreau, 2006) that also exhibit network effects. Value is exchanged among a triangular set of relationships including users, component suppliers (co-developers), and platform firms.”
Harnessing Platforms – The Third Wave
Mike Rosen has a unique take on the Platform Business Model, describing it as the third in a generation of IT architectures.
In his OMG presentation Winning the Digital Transformation Game, Mike describes the overlay of Cloud, Mobile, Social and Big Data across the traditional legacy of hardware, software and telco services, constituting the ‘Third Platform’ and beginning around 2006.
He highlights the general explosion of the technology innovation ecosystem, everything from 3D Printers through Augmented Reality to the Blockchain, are each executing major levels of disruptive change, in parallel to one another.
As they intersect and synthesize so even larger virtual market opportunities are opened up, from digital currencies to entirely new app sets for the public sector to new mass market gaming niches.
This time of hyper-innovation will be best exploited by those organizations led by Chief Digital Officers, the evolution of the CTO role to reflect this increased strategic importance, and those who are practiced in building Platform architecture.
The presentation describes:
- Five organizational pillars of transformation: Leadership, Omnichannel Experience, Information, Operating Model and WorkSource.
- Three primary action drivers: Create expectation-altering customer experiences, use information for competitive advantage and create new revenue streams through connected services.
- Digital Marketplace core: A central IT design of a catalog of integrated, brokered, managed IT Business Services.
- An Enterprise Architecture Maturity Model: That defines an evolution from local agility to enterprise agility.
- A Performance Architecture: A management dashboard for synthesizing all of these initiatives to drive success and growth.
Mike then summarizes by describing how Business Architecture offers the skill set to define the implementation of these pillars, repeating the central theme that it provides a formal way of linking strategy with execution planning.
Digital Banking Platforms
It’s a model also very well advanced and adopted in banking, driven by the Open Banking trend.
FinExtra suggests 6 Strategies for Building a Platform Bank and the NextWeb explores the sector by focusing on a specific niche opportunity of PSD2 payments that it might be targeted towards, highlighting that this change is a natural fit for a platform approach.
It’s a particularly interesting case study exploring the dynamics of the Platform Business Model, a strategy explored by Bain.
— Bain & Company (@BainAlerts) October 10, 2018
Bain identify a number of critical strategic drivers that Bernie’s presentation specifically addresses:
- The few insurers that do these things well earn the loyalty of their customers, but most companies don’t consistently deliver the value that customers, especially millennials, are seeking.
- Customer use of digital channels, especially mobile, is rising rapidly, but incumbents are struggling to create delightful digital experiences and are facing new competition.
- Insurers that excel emphasize flawless execution in their core business, offer an ecosystem of services that go beyond insurance and make customer-centric innovation a top priority.
Government as a Platform
As we tend towards defining it for national infrastructure purposes the most relevant application is ‘GaaP’ – Government as a Platform.
Tim O’Reilly coined the concept in this presentation and documented in this book section, describing how traditional IT for government should become more like Facebook, Twitter and the other Internet pioneers who have been harnessing the evolution of the Cloud to become ‘platforms’, doing so for government would enable a shared infrastructure that enables more rapid digital transformations.