Google, Facebook, Amazon, Apple and many more. The success of platform owner companies has created the hype around the concept. It is often forgotten that the platform owners are not doing the business alone.
The new platform economy is based on interaction of many involved actors. Platforms will give companies new opportunities by changing how they interact with each other, oftentimes also disrupting the traditional business rules. Therefore, configuration of platform ecosystem is one of the key tasks in a platform economy.
How to support identification and understanding of a win-win-win model that is beneficial for all platform ecosystem actors? Based on the broad literature review (Sorri et al. 2016), we have built a platform canvas with eight key elements describing the critical characteristics (see Figure below).
To create the integral interactions, a platform needs to attract, involve and interconnect value creators on both the supply and demand sides. The core three elements – value and participants including both users and producers – describe the most important activity of the platform: the core interaction. Each and every interaction in a platform starts from co-creating value, and the platform has to manage the exchange of value by using the filters. In digital platforms the filtering is typically based on algorithms. Those software-based tools enable the proper and relevant fit of the exchange between producers and users.
After understanding the core interaction and the value the participants need or want to exchange, it is relatively easy to define the key enablers of platforms’ network effects. To put it short, direct network effects explain how a platform attracts others to participate whereas indirect network effects arise from attracting others to contribute to in value creation. Then, technical and co-operative resources are closely linked to network effects as they set the rules of participating and sharing within the platform. At the same time, overall governance practices define in more detail how the collaboration within the ecosystem is orchestrated. Open interfaces and integrated filtering of data can enable network effects and create new interaction, which may not be directly controlled by the platform owner.
Finally, the last and crucial element is the value capture, i.e. monetizing as it a critical question from the viewpoint of business model. At the moment, most of the platforms have rather traditional earning logics such as subscription or transaction based models. The transparency in benefit sharing is critical, although the earnings within the platform economy are not or neither will always being shared equally. Each actor should take account of this in their business model.
The canvas is intended to be used in guiding the platform ecosystem participants – platform owners, complementors, infrastructure and service providers – through eight key elements, ensuring reviews of all critical perspectives. The platform canvas helps to challenge the platform by opening their thinking towards multi-dimensional value co-creation between ecosystem members. We have tested with seven industrial case companies, and based on their feedback, it was viewed useful for business managers’ in their platform based business model innovation.