platforms in manufacturing – emergent themes related to ... · platforms in manufacturing –...

Platforms in manufacturing –Emergent themes related to organizing business with platforms.January 17th, 2017 @ Design Factory

Dr. Ville Eloranta, Postdoctoral ResearcherDept. of Management Studies & DIEM, Aalto University

@villeeloranta www.linkedin.com/villeeloranta

Platform Value Now focuses on understanding the fast emerging platform ecosystems, their value creation dynamics and requirements of the supportive institutional environment

1. “Command and control” has been thedominating organizing paradigm in platforms

2. State-of-the-art research leanstoward decentralization and value sharing.

3. Holistic perspective is needed to leverage the situation

Key messages of this presentation:

@villeeloranta www.linkedin.com/villeeloranta

Key messages of this presentation:

1. “Command and control” has been thedominating organizing paradigm in platforms

2. State-of-the-art research leanstoward decentralization and value sharing.

3. Holistic perspective is needed to leverage the situation

Platform – everyone’s favorite term withso many definitions.• Uber, AirBnB, Amazon, Alibaba à Multi-sided marketplaces• Android, iOS à Industry platforms• Tekla BIM, VAG, Boeing à Supply chain integration platforms

Prevailing perspective to organizing business with platforms

Governance paradigmVertical and horizontal control and integration

Value appropriation modelOwnership of critical components, legitimacy, and architectural

control

1. “Command and control” has been the dominating organizing paradigm in platforms

2. State-of-the-art research leanstoward decentralization and value sharing.

3. Holistic perspective is needed to leverage the situation

Key messages of this presentation:

@villeeloranta www.linkedin.com/villeeloranta

State-of-the-art platform discussion has started to challenge the “command and control” perspective.

Growing customer anger towards”new data-driven ownership models”

”Service Democracy” movement, enabledby combining IoT, AI, and blockchains

Organizational research from the last 15 years finally goes into practise…

… also in manufacturing!

A new school of platform discussion is emerging viewing platforms as complex adaptive structures.

“command& control”

-based platforms

complexadaptiveplatforms

Complex adaptive structure approach to platforms§ Platforms aim for continuous change and adaptability§ Linux, Wikipedia, Supercell, SSAB à Platform organizations

Decentralized governance structure.

Value is by definition shared meritocratically among all platform stakeholders without major power accumulation

But isn’t decentralization bad for money making??

1. “Command and control” has been the dominating organizing paradigm in platforms

2. State-of-the-art research leanstoward decentralization and value sharing.

3. Holistic perspective is needed to leverage the situation

Key messages of this presentation:

@villeeloranta www.linkedin.com/villeeloranta

Leveraging the extremes with a holistic perspective.

Holistic framework of different platforms

a fewfirms

eco-systemscale

Holistic framework of different platforms

“command& control”

-based platforms

complexadaptiveplatforms

§ Core: Protected resource (technology, data, etc.)

§ Centralized§ Builds lock-ins and inertia§ Leverages market pockets

(short-lived)§ Optimized for profits and

power

§ Core: Shared intent§ Decentralized§ Sharing of resources and

capabilities§ Prefers survivability over

short-term profits§ Optimized for adaptability

Holistic framework of different platforms

“command& control”

-based platforms

complexadaptiveplatforms

a fewfirms

eco-systemscale

Holistic framework of different platforms

“command& control”

-based platforms

complexadaptiveplatforms

a fewfirms

eco-systemscale

Holistic framework of different platforms

“command& control”

-based platforms

complexadaptiveplatforms

a fewfirms

eco-systemscale

Holistic framework of different platforms

“command& control”

-based platforms

complexadaptiveplatforms

a fewfirms

eco-systemscale

Holistic framework of different platforms

“command& control”

-based platforms

complexadaptiveplatforms

a fewfirms

eco-systemscale

Holistic framework of different platforms

“command& control”

-based platforms

complexadaptiveplatforms

a fewfirms

eco-systemscale

@villeeloranta www.linkedin.com/villeeloranta

Holistic framework of different platforms

“command& control”

-based platforms

complexadaptiveplatforms

a fewfirms

eco-systemscale

possibility for high profits, but risk of low adaptability

in rapidly changing environment

@villeeloranta www.linkedin.com/villeeloranta

Holistic framework of different platforms

“command& control”

-based platforms

complexadaptiveplatforms

a fewfirms

eco-systemscale

high adaptability, butvery challenging value

appropriation

@villeeloranta www.linkedin.com/villeeloranta

Leveraging the extremes.

Holistic framework of different platforms

“command& control”

-based platforms

complexadaptiveplatforms

a fewfirms

eco-systemscale

hybrid strategies combine platform

organization (survivability) and platform offerings

(short-term profits)!

Holistic framework of different platforms

“command& control”

-based platforms

complexadaptiveplatforms

a fewfirms

eco-systemscale

adaptableorganization

profits fromapp offerings

hybrid strategies combine platform

organization (survivability) and platform offerings

(short-term profits)!

Holistic framework of different platforms

“command& control”

-based platforms

complexadaptiveplatforms

a fewfirms

eco-systemscale

adaptability of theSDK developers

profits fromthe controlled app

marketplace

hybrid strategies combine platform

organization (survivability) and platform offerings

(short-term profits)!

Holistic framework of different platforms

“command& control”

-based platforms

complexadaptiveplatforms

a fewfirms

eco-systemscale

illustrativeexample

on how SSAB’ssteel material could be

integrated toindustrial platforms

adaptability fromopen material intelligence

communityhybrid strategies combine platform

organization (survivability) and platform offerings

(short-term profits)!

Alternatives:

1. Maximize profits2. Strive for survivability3. Leverage the extremes with a hybrid strategy

1. “Command and control” has been the dominating organizing paradigm in platforms

2. State-of-the-art research leanstoward decentralization and value sharing.

3. Holistic perspective is needed to leverage the situation

Key messages of this presentation:

@villeeloranta www.linkedin.com/villeeloranta

More readings…§ Eloranta, V. & Turunen, T. (2016). Platforms in service-driven manufacturing: Leveraging complexity by connecting, sharing, and

integrating. Industrial Marketing Management, 55. 178–186.§ Eloranta, V. & Turunen, T. (2015). Seeking Competitive Advantage with Service Infusion – A Systematic Literature Study. Journal of Service

Management, 26(3). 394–425.§ Eloranta, V., Orkoneva, L., Hakanen, E., & Turunen, T. (2016). Using platforms to pursue strategic opportunities in service-driven

manufacturing. Service Science, 8(3), 344-357.§ Eloranta, V., Turunen, T., Melgin, T., Hakanen, E., Töytäri, P., & Rajala, R. (2016), “Strategic Perspectives of Industrie 4.0 and Industrial

Internet”, in: Grubbström, R. W. and Hinterhuber, H. H. (Eds), Proceedings of 19th International Working Seminar on Production Economics, Innsbruck, Austria, pp. 137-148.

§ Hakanen, E., Eloranta, V., Töytäri, P., Rajala, R., & Turunen, T. (forthcoming). Material intelligence: Cross-organizational collaboration driven by detailed material data. Proceedings of Hawaii International Conference on System Sciences (HICSS).

§ Töytäri, P., Turunen, T., Klein, M., Eloranta, V., Biehl, S., & Rajala, R. (forthcoming). Overcoming Institutional and Capability Barriers to Smart Services. Proceedings of Hawaii International Conference on System Sciences (HICSS).

§ Töytäri, P., Hakanen, E., Eloranta, V., Turunen, T., Rajala, R., & Melgin, T. (2016), “Increasing information intensity in industrial service operations”, in: Grubbström, R. W. and Hinterhuber, H. H. (Eds), Proceedings of 19th International Working Seminar on Production Economics, Innsbruck, Austria, pp. 391-402.

§ Turunen, T., Eloranta, V., & Hakanen, E. (2015), “Leveraging big data in industrial service business – from protection to sharing and recombining””, in: Zhao, X., Zhang, J. and Han, H. (Eds), Proceedings of QUIS 14 – Accelerate the Impact of Service Research, Shanghai, China, pp. 946-955. (Honorable mention award winner)

§ Eloranta, V. (2016). Servitization, strategy and platforms. Aalto University, School of Science. Department of Industrial Engineering and Management. Doctoral Dissertation Series 74/2016. Helsinki.

@villeeloranta www.linkedin.com/villeeloranta

More informationDr. Ville Eloranta, Postdoctoral ResearcherDept. of Management Studies & DIEM, Aalto University

@villeeloranta www.linkedin.com/villeeloranta

ville.eloranta@aalto.fi, +358 40 706 7012