For the next year Michael Blaschke, is visiting me at the LSE. He is a final year PhD student from University of St Gallen (HSG) and the SAP Innovation Center St.Gallen. His research mainly focuses on digital platforms and value co-creation.
The following paper-summary written by Michael gives an idea of his research.
The platform economy represents the most profound global macroeconomic change since the industrial revolution. Digital platforms afford organizations to synergistically co-create value in digital third-party ecosystems. Considering these ecosystems’ specificities, digital platforms require a delicate balance of two conflicting ends: control and generativity. While pure control makes adaptation difficult, pure generativity suffers the costs of experimentation without gaining associated benefits. In turn, embracing the complementary benefits of simultaneous control and generativity is challenging given its inherent contradictions. Beyond summarizing the control-generativity paradox of digital platforms, this blog post makes four alternative modes of balancing control and generativity available to platform managers. The publication can be found here.
The Control-Generativity Paradox
What? Digital platforms—digital core technologies upon which third parties add peripheral derivatives—afford organizations to co-create value in networked business ecosystems.
So What? While platform owners aim for stabilization to exploit their third-party ecosystem (control), third parties aim for autonomy to explore unanticipated avenues of innovation (generativity).
Now What? Platform owners draw upon at least four modes of balancing control and generativity in digital platforms—contextual, structural, temporal, and domainal balance.
Managerial and scholarly interest in digital platforms is mounting. Some of the most valued companies—including Alibaba, Amazon, and Alphabet—embrace the platform logic with surprisingly short histories. At the same time, many long-lived companies are considering how they can adopt the platform logic to improve performance. Prominent digital platform exemplars are social media platforms (e.g., Facebook and LinkedIn), mobile operating system platforms (e.g., Android and iOS), payment platforms (e.g., PayPal and Apple Pay), and peer-to-peer platforms (e.g., Uber and Airbnb).
Digital platforms are characterized by synergistic value co-creation in digital third-party ecosystems. These ecosystem make digital platforms subject to a delicate tension between (1) maintaining control and, at the same time, (2) stimulating—not directly managing—generativity through dynamically recombining third-party resources (Blaschke and Brosius 2018). While control captures mechanisms that encourage desirable outputs or behaviors by third parties (Tiwana et al. 2010), generativity describes a technology’s overall capacity to produce unprompted change driven by large, varied and uncoordinated audiences (Zittrain 2006).
Notably, control and generativity are not incompatible or mutually exclusive goals. Successful digital platforms meet both ends as pure control makes adaptation difficult and pure generativity suffers the costs of experimentation without gaining associated benefits. As balancing has in fact become the innate mindset of digital platform management, we ask: How do digital platforms balance simultaneous control and generativity?
Balancing Control and Generativity
Based on our research, we extracted a set of four modes of balancing control and generativity in digital platforms, namely contextual, organizational, temporal, and domanial balance. This set of modes is drawn based on the premise that digital platforms seek both (1) for stabilization to exploit the given ecosystem of third-party actors (through control) and (2) for dynamism to explore new avenues of resource integration in adapting to third-party actors’ external stimuli (through generativity). Next, we summarize these modes of balancing control and generativity in digital platforms.
Contextual balance denotes a situation-dependent combination of concurrent control and generativity. It is a form of contextual buffering, whereby the platform owner maintains control and generativity activities (1) situation-dependent for each platform partner individually and (2) simultaneously at any given organizational level. For instance, Microsoft (Windows) employs contextually configures control and generativity within the contexts of either exchanging, adding, or synergistically integrating third-party resources.
Structural balance refers to different types of partners that are subject to either control or generativity. It is a form of spatial buffering, whereby the platform owner maintains control and generativity (1) simultaneously on the platform ecosystem level, but (2) are situated within distinct organizational units for distinct partner types (e.g., new and existing partners), respectively. For instance, SAP (SAP Cloud Platform) runs one unit to negotiate and onboard new partners (control), while a different unit explores novel software with already existing partners (generativity).
Temporal balance denotes sequential shifts over time from control to generativity, and vice versa. It is a form of temporal buffering, whereby control and generativity (1) coexist for the same given platform partner but (2) at different points in time, so that the platform owner switches sequentially between control and generativity for each platform partner. To illustrate, Alibaba Group (Alibaba.com) predominantly maintained generativity to become a two-sided platform (1994-2004), relied on control to mitigate the threat of platform envelopment (2005-2006), and fostered generativity again to pursue a digital ecosystem strategy (2007-present).
Domainal balance denotes control in one domain with simultaneous generativity in another domain. It is a form of domanial buffering, whereby any given platform partner is subject to both control and generativity (1) organizational domains while (2) the platform owner balances these domain-dependent control and generativity activities globally across domains. For instance, Microsoft (LinkedIn) differentiates a platform’s core, interfaces, and complements as key architectural domains, each of which require different control-generativity configurations.
- Thriving platforms simultaneously seek (1) for stabilization to exploit the given digital ecosystem (through control) and (2) for dynamism to explore innovation in adapting to third parties’ external stimuli (through generativity).
- Thriving platforms balance control and generativity through a platform-specific adoption and adaption of the four proposed balancing modes.
- Effective platform mangers identify novel modes and mechanisms to achieve the targeted control-generativity balance.
About the paper
Blaschke, M., and Brosius, M. 2018. “Digital Platforms: Balancing Control and Generativity,” in: 39th International Conference on Information Systems (ICIS2018). San Francisco, US.
Tiwana, A., Konsynski, B., and Bush, A. A. 2010. “Platform Evolution: Coevolution of Platform Architecture, Governance, and Environmental Dynamics,” Information Systems Research (21:4), pp. 675-687.
Zittrain, J. L. 2006. “The Generative Internet,” Harvard Law Review (119:7), pp. 1974-2040.