PILOT - Platform Strategies for Incumbent Organizations

Initiated:  Spring 2020

Expected completion:  Fall 2021

Kick off webinar:  Tuesday, April 14, 12-1pm EDT; Register

Value Proposition

A multi-sided digital platform creates value by facilitating transactions and enabling innovation. A digital platform enables direct interactions between two or more groups that are affiliated with it (Hagiu and Wright, 2015). It is the presence of network effects, particularly indirect network effects (i.e., more users on one side of the platform attracts users on the other side(s)), that define the digital platform.

The digital platform business model is capable of substantial revenue growth and increasingly mediating more and more socio-economic activity. While only about 12% of incumbent organizations have a digital platform strategy (Bughin and van Zeebroeck, 2017), “fewer than 5% of traditional companies have a coherent platform strategy that is integrated with their corporate strategy” (Torrance and Staeritz, 2019), and fewer than 2% have an active digital platform (Bughin and van Zeebroeck, 2017).

We seek to research how IRI members perceive the threat of digital platforms to their business models and how they are responding to it by engaging in business model innovation.

References

Bughin, J., & van Zeebroeck, N. (2017, August). New evidence for the power of digital platforms. Retrieved: September 4, 2019, from McKinsey Quarterly website: https://www.mckinsey.com/business-functions/digital-mckinsey/our-insight...

Hagiu, A., & Wright, J. (2015). Multi-sided platforms. International Journal of Industrial Organization, 43, 162-174.

Torrance, S., & Staeritz, F. (2019, January 15). Is your business model fit for the Fourth Industrial Revolution? Retrieved September 2, 2019, from World Economic Forum website: https://www.weforum.org/agenda/2019/01/is-your-business-model-fit-for-th...

Approach

First, we will conduct a literature review on how incumbent organizations are facing the threat of digital platforms, competitive strategies, and organizational configurations to engage successfully in digital platform business model innovation. We would like to partner with IRI member companies who are committed to or currently engaged in digital business model innovation to participate in the study. We anticipate needing 6-10 companies in order to get a full picture of this phenomenon. We plan to use a combination of focus group discussions, surveys, and/or semi-structured interviews, depending on the number of IRI member organizations interested in participating in the project and their availability to engage in an in-depth case study. Our plan is to bring the participating companies together in three meetings with the following purposes:

  • Meeting 1 – Focus group to discuss digital platforms and how IRI members perceive digital platforms threatening their business models
  • Meeting 2 - Mid-project meeting to present the results of the literature review and the initial focus group, analyze their digital platform threat, and interview R&D leaders regarding their current business model innovation strategy
  • Meeting 3 (at the Annual IRI Conference, 2021) – Present the results of the study to IRI members: current business model innovation strategy and strategic considerations for facing and launching digital platforms

Timeline

Spring 2020 Literature review, prepare for and conduct focus group discussions
Summer 2020

Develop instrument and codebook; Create project plan for interacting with those IRI partners interested in the project

Fall 2020 Second round of interviews / meetings in person with organizations at the Digital Futures Conference (October 2020) or in person (visiting the companies)
Winter - Spring 2021

Complete research article and prepare research briefing (RTM article); If data/access available, start writing business cases

IRI Annual Conference 2021 Report out
Fall 2021 RTM article submission

Anticipated Deliverables

Participating IRI organizations would benefit from:

1) Exploring digital platforms and assessing the threat they pose to their business model

2) Learning strategic considerations to innovate their business model by launching a digital platform or adopting platform-like features

Participating IRI organizations and the IRI member organizations in general would benefit from:

1) A research briefing presented in person at the 2021 Annual Conference

2) Publication of a paper in RTM

3) Access to pre-print of the academic article (once published)

4) Alternatively, if any of the research participants is willing to provide in–depth access to the organization, we would consider writing and publishing one or more case studies. The pre-print of the case would be made available to company studied in the case, research participants, and the IRI community.

Project Leads

Ruben Mancha- Assistant Professor of Information Technology, Technology, Operations, and Information Management Division, Babson College

Steven Gordon- Professor of Information Technology, Technology, Operations, and Information Management Division, Babson College