6 Platforms and Ecosystems: Enabling the Digital Economy
Executive summary
Digital platforms are expanding across economies,
reshaping the business models of a wide range of
industries, from finance and healthcare to media and retail,
while creating fundamentally new divisions of public and
private responsibility. The companies driving this trend are
diverse and disparate. Some are start‑ups, others are giants
of the digital economy. Others, still, are traditional firms that
are adapting to a more digital world by adopting an active
platform and ecosystem strategy.
This briefing paper forms part of the World Economic Forum
System Initiative on Shaping the Future of Digital Economy
and Society, initiated against a backdrop of complexities
brought about by digital platforms and ecosystems.
Significant changes have come from diverse angles at the
macro and micro levels, affecting commercial and financial
models, employment, and societal or regulatory issues.
The project examines how digital platforms and ecosystems
are created, nurtured, managed and governed, and the
intelligence gathered is as critical to the private sector as it
is to the public sphere.
The first chapter by Boston University’s Marshall Van
Alstyne includes a simple chart showing the striking pace
of growth of platform‑based companies compared to their
established competitors. The stories these companies tell
demonstrate the myriad advantages of digital platforms.
Most striking is the model itself, which rejects traditional
paths to scale (i.e. selling more and more for less and less)
in favour of one that measures success by the number of
users in the community.
This “network effect” inverts the firm, shifting production
from inside the firm to outside. In contrast with 20th‑century
industrial giants, companies with platforms do not merely
create value themselves, they orchestrate value creation by
outside users. In this inverted model, the platform is more
important than the product. The platform value appreciates
through repeated and broader use, and it increases with
positive feedback, eventually dominating the static or
declining value of the product.
Because the users are themselves the producers and the
company serves as facilitator, the inverted model redefines
traditional public‑private interaction models, while calling
for an openness that managers raised on traditional
competitive dynamics find difficult to grapple with.
However, once scale is achieved, the digital ecosystems are
extraordinarily powerful.
In the second chapter, Michael G. Jacobides of the London
Business School examines how the digital platform is
changing the way companies think about how the end
customer and private partners deliver policy objectives.
Robust ecosystems comprise many stakeholders, including
suppliers and producers from the private sector, customers
as innovators, and government and regulatory bodies from
the public sector.
In this interconnected modular digital world, acting alone
is too onerous for most companies. Indeed, working
collaboratively – to complement, adjust and support joint
efforts – is essential to leveraging digital ecosystems. And
tomorrow’s public‑sector goals reflect broader, systemic
needs that require the variety of skills, assets and expertise
that ecosystems offer. Since such variables as geography,
the regulatory environment and competition affect the
ecosystem strategy, the optimal solution often lies in
having multiple ecosystems, each tailored to specific local
operating needs.
This level of complexity has its downside. Digital
ecosystems can mimic organic organisms by growing in
unpredictable directions, depending on where they find
the most nourishment. Containment is necessary through
strong frameworks to ensure that the broader societal
implications receive appropriate consideration.
The third chapter, by New York University’s Arun
Sundararajan, delves deeper into the shifting landscape
of trust and the fundamental redefinition of institutional
and societal governance. Never before has the public
been asked to place so much confidence in corporations;
correspondingly, the reliance of global trust models
on vast streams of unfiltered consumer inputs is also
unprecedented. This evolving dynamic is causing a radical
redefinition of boundaries between the public and the
private, between regulators and the regulated, and between
citizens and their governments.
In this time of transition, reflecting a progression from
top‑down or vertical trust to horizontal or peer‑to‑peer trust,
the governance of digital platforms is determined as much by
the broader user communities (with some help from artificial
intelligence) as it is by overseers. The public‑private landscape
is reshaped radically and, as complexity grows, the policy
framework evolves. The blossoming of new opportunity
reflects greater societal responsibility for private and digital
actors. The chapter highlights six critical choices, from
neutrality, oversight and transparency to fairness, data rights
and due process, each a central determinant of whether
platforms and ecosystems can retain public trust over time.
Finally, the fourth chapter considers the recurring theme
– how digital platforms redefine public and private
relationships and responsibilities – in a co‑authored section
by our business school academics. As digital progress
increasingly melds the public and private spheres, platforms
and ecosystems bring a dynamic set of complementors
from the private sector to engage with the public sector.
The existing and emerging fields in which platforms
can define and demonstrate the efficacy of the new
public‑private liaison are numerous. The most promising
include managing mobility, providing healthcare, renewing
infrastructure, regenerating urban areas and countering