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Three technical and legal approaches that create value from data and foster user trust.
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Business process reengineering efforts can run into serious difficulties when they fail to recognize the complex interrelationships among technology, practice, and strategy. Brynjolfsson et al. introduce a framework ? the matrix of change... more
Business process reengineering efforts can run into serious difficulties when they fail to recognize the complex interrelationships among technology, practice, and strategy. Brynjolfsson et al. introduce a framework ? the matrix of change ? that allows managers to coordinate change in processes. After determining which business practices are most important, managers can highlight the interactions among the practices on the matrix to see where they will have the most difficulty in making a transition from one practice to another. The matrix uses stakeholders' opinions about proposed changes to emphasize areas of difficulty. It can also guide the pace, sequence, feasibility, and location of change. The authors show how a large medical products company, MacroMed, used the matrix successfully. Senior managers first identified decreased costs and increased flexibility as their goals. They established a team to list specific aspects of the existing production techniques. The team identified complementary and competing practices on a matrix. Next the team built another matrix showing the degree of difficulty in moving from existing to target practices. Finally, the team determined how various employees felt about the proposed changes using a five-point Likert scale. By combining all three matrices, the company could answer its questions about the feasibility of proposed changes, when, where, and how quickly changes should occur, and employees' reactions. MacroMed discovered conflicts in machine set-up procedures and reorganized process change-overs. It cut waste, reduced the number of line and staff employees, stopped its decline in market share, and improved flexibility and response time. The matrix of change offers managers a chance to revisit a process to gauge progress and anticipate unexpected barriers due to current environmental factors. It also helps companies reshape and shift their workers' mental models to develop more coherent systems. Its true value, say the authors, is in optimizing steps not in isolation but as parts of an integrated system.
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By bringing together elements of a radical new approach to the firm based on a biological metaphor of the ecosystem, this unique book extends the limits of existing theories traditionally used to investigate business networks.
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Seeking to balance intellectual property protection with incentives for investment in innovation.
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At one extreme, Twitter rejects all political ads no matter how important the message. At the other extreme, Facebook accepts all political ads no matter how untruthful the message. As lies in political advertising become increasingly... more
At one extreme, Twitter rejects all political ads no matter how important the message. At the other extreme, Facebook accepts all political ads no matter how untruthful the message. As lies in political advertising become increasingly problematic, neither policy works. The former prevents us from hearing newcomers while the latter pollutes our discourse with misinformation. This short article proposes a "market for truth" that would allow social media platforms to take political ads, guarantee the ads are lie free, and at the same time absolve such platforms of responsibility for deciding what's true. Using mechanism design, it causes advertisers to either internalize their negative externalities or to signal that they are untrustworthy. This short précis is a segment of a longer treatise on the problem of fake news.
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Platform ecosystems (e.g., Apple iOS, Sony PlayStation, Amazon) are receiving increasing attention from scholars in various subfields including strategy, innovation, information systems, and entrepreneurship. Nevertheless, each of these... more
Platform ecosystems (e.g., Apple iOS, Sony PlayStation, Amazon) are receiving increasing attention from scholars in various subfields including strategy, innovation, information systems, and entrepreneurship. Nevertheless, each of these fields has their own set of definitions, research questions, and research agendas which can cause incongruence and silo-thinking. This panel symposium attempts to initiate a cross- disciplinary conversation and improve our understanding of platform ecosystems. Our goals are 1) to understand common features of platform ecosystems, 2) to learn about state of the art research on platform ecosystems from various subfields, and 3) identify opportunities for cross-disciplinary research that pushes the envelope of platforms research. We accomplish these goals by bringing together four high-profile platform scholars from the strategic management, innovation, information systems, and entrepreneurship fields. We further work with a senior scholar who is well-positioned to cut across...
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Social networks are the ‘connections’ that individuals utilise through various modes of communication to conduct their work. These communications come in the form of email, instant messaging, phone calls, wikis, blogs, face-to-face... more
Social networks are the ‘connections’ that individuals utilise through various modes of communication to conduct their work. These communications come in the form of email, instant messaging, phone calls, wikis, blogs, face-to-face interactions, etc. These connections make up the central nervous system of information intensive organisations. The information that workers use to analyse, explore, understand and make decisions about their environment often fl ows through these connections. Understanding these connections can therefore provide important insights into how the information structure of a fi rm affects it performance. Knowledge management is defi ned as the ‘systematic application of actions to ensure that an organisation obtains greatest benefi t from the information that is available to it’ (Marwick 2001). Knowledge here is seen as the experience of the people within an organisation (tacit knowledge) combined with information from documents within the organisation, as wel...
This paper introduces and develops a new model of platform growth, inspired by the standard growth literature. At each moment in continuous time, the platform owner must choose (i) how much source code to open and make available to a... more
This paper introduces and develops a new model of platform growth, inspired by the standard growth literature. At each moment in continuous time, the platform owner must choose (i) how much source code to open and make available to a developer community, (ii) how fast to absorb developer code into the platform, (iii) how much to tax developer output, and (iv) how much to invest in the platform itself. Without any public code, the control problem reduces to the growth model of Solow (1956). Our platform model captures an infinitely recursive R&D ecosystem with innovation spillovers across developers. To optimize growth, the platform owner must internalize this recursive externality. Developers also innovate less the sooner they lose their code, but the platform grows faster with earlier code expropriation. The platform thus willingly privately contributes to the collective public good of open source code, as part of a dynamic profit-maximizing strategy to encourage taxable innovation...
Extant research has popularized the perspective that strong network effects produce “winner-take-all” outcomes. Platforms with large user bases, however, have both succeeded and failed. The central question is: When is a large user base... more
Extant research has popularized the perspective that strong network effects produce “winner-take-all” outcomes. Platforms with large user bases, however, have both succeeded and failed. The central question is: When is a large user base insufficient to dominate a market? In answer, we develop a model of inter-temporal effects and within-period network effects. The within-period effect only yields contemporaneous user attraction, while the inter-temporal effect contributes to user stickiness across periods. Strong within-period effects that do not persist can stall platform value. Using Groupon data, we estimate these two effects on users\u27 participation choices. Our results show that the inter-temporal effect of Groupon\u27s customer base is weak which causes poor user stickiness. Thus, common marketing practices to attract customers offer inferior returns compared to platform designs that increase stickiness. Overall, these findings remind managers not to overemphasize user acquisition when network effects do not persist and instead focus on platform design
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This paper introduces and develops a new model of platform growth, inspired by the standard growth literature. At each moment in continuous time, the platform owner must choose (i) how much source code to open and make available to a... more
This paper introduces and develops a new model of platform growth, inspired by the standard growth literature. At each moment in continuous time, the platform owner must choose (i) how much source code to open and make available to a developer community, (ii) how fast to absorb developer code into the platform, (iii) how much to tax developer output, and (iv) how much to invest in the platform itself. Without any public code, the control problem reduces to the growth model of Solow (1956). Our platform model captures an infinitely recursive R&D ecosystem with innovation spillovers across developers. To optimize growth, the platform owner must internalize this recursive externality. Developers also innovate less the sooner they lose their code, but the platform grows faster with earlier code expropriation. The platform thus willingly privately contributes to the collective public good of open source code, as part of a dynamic profit-maximizing strategy to encourage taxable innovation. We find that with the nonrival character of software, there are initially increasing returns to irreversibly releasing code into the public domain. Consistent with a variety of data, larger platforms should impose higher developer fees and taxes, expropriate less, and save more. We conclude by comparing the platform to a benevolent social planner.
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The US Postal Service suffered a $5B loss in FY 2013 following on a $15.9B loss the year before. One of the challenges has been the diversion of revenues from physical ad mail to online channels such as Google and Facebook. This paper... more
The US Postal Service suffered a $5B loss in FY 2013 following on a $15.9B loss the year before. One of the challenges has been the diversion of revenues from physical ad mail to online channels such as Google and Facebook. This paper articulates the design of an information market that could help physical ads compete with digital ads. The proposed mechanism offers a closed loop information feedback with attractive properties. (i) Recipients can declare what mail they do not want and become protected thereafter. (ii) Advertisers may learn what recipients do want. (iii) Recipients are rewarded for data they volunteer. (iv) The mechanism provides a simple means to convert offline contact to online purchase. (v) A data layer facilitates business partnership with USPS in order to offer new services. (vi) A new type of stamp provides USPS with a new source of revenue.
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Social networks are the 'connections' that individuals utilise through various modes of communication to conduct their work. These... more
Social networks are the 'connections' that individuals utilise through various modes of communication to conduct their work. These communications come in the form of email, instant messaging, phone calls, wikis, blogs, face-to-face interactions, etc. These connections make up the central nervous system of information intensive organisations. The information that workers use to analyse, explore, understand and make decisions about their environment often flows through these connections. Understanding these connections can ...
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Evaluating the evolving controversial digital currency.
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ABSTRACT A large and growing portion of the economy transpires within software platforms. These environments are bounded high growth economies that embed many novel fea-tures: the platform owner sets rules for participation; R&D... more
ABSTRACT A large and growing portion of the economy transpires within software platforms. These environments are bounded high growth economies that embed many novel fea-tures: the platform owner sets rules for participation; R&D occurs rapidly, with gener-ations of innovations building on one another; there are profit and adoption tradeoffs in open versus closed code. This paper introduces and develops a new model of platform growth, inspired by the standard growth literature. At each moment in continuous time, the platform owner must choose (i) how much source code to open and make available to a developer community, (ii) how fast to absorb developer code into the platform, (iii) how much to tax developer output, and (iv) how much to invest in the platform itself. Without any public code, the control problem reduces to the growth model of Solow (1956). Our platform model captures an infinitely recursive R&D ecosystem with innovation spillovers across developers. To optimize growth, the platform owner must internalize this recursive externality. Developers also innovate less the sooner they lose their code, but the platform grows faster with earlier code expropriation. The platform thus willingly privately contributes to the collective public good of open source code, as part of a dynamic profit-maximizing strategy to encourage taxable innovation. We find that consistent with a variety of data, larger platforms should impose higher developer fees and taxes, expropriate less, and save more. We then compare the platform to a benevolent social planner.
1. D. Roy et al., “The Human Speech Project,” Proceedings of the 28th Annual Conference of Cognitive Science Society, Vancouver, BC, Canada, 26 to 29 July 2009. ... 2. JP Eckmann et al. Proc. Natl. Acad. Sci. USA 101, 14333 (2004). ... 3.... more
1. D. Roy et al., “The Human Speech Project,” Proceedings of the 28th Annual Conference of Cognitive Science Society, Vancouver, BC, Canada, 26 to 29 July 2009. ... 2. JP Eckmann et al. Proc. Natl. Acad. Sci. USA 101, 14333 (2004). ... 3. S. Aral, M. Van Alstyne, “Network Structure & Information Advantage,” Proceedings of the Academy of Management Conference, Philadelphia, PA, 3 to 8 August 2007. ... 4. A. Pentland, Honest Signals: How They Shape Our World(MIT Press, Cambridge , MA , 2008). ... 5. J.-P. Onnela et al., Proc. Natl. Acad. Sci. ...
我们生活在各种网络中. 我们定期检查电子邮件, 在各处拨打移动电话, 刷卡乘坐交通工具, 使用信用卡购买商品. 在公共场所, 可能有监视器来监控我们的行为, 在医院, 我们的医疗记录以数字形式被保存. 我们也很可能写博客给大家看, 通过在线社会网络来维护友谊. 以上的种种事情都留下了我们的数字脚印, 这些踪迹汇聚起来就成为一幅复杂的个人和集体行为图景, 同时这些踪迹也有可能改变我们对人生, 组织和社会的理解.
我们生活在各种网络中. 我们定期检查电子邮件, 在各处拨打移动电话, 刷卡乘坐交通工具, 使用信用卡购买商品. 在公共场所, 可能有监视器来监控我们的行为, 在医院, 我们的医疗记录以数字形式被保存. 我们也很可能写博客给大家看, 通过在线社会网络来维护友谊. 以上的种种事情都留下了我们的数字脚印, 这些踪迹汇聚起来就成为一幅复杂的个人和集体行为图景, 同时这些踪迹也有可能改变我们对人生, 组织和社会的理解.
We live life in the network. When we wake up in the morning, we check our e-mail, make a quick phone call, walk outside (our movements captured by a high definition video camera), get on the bus (swiping our RFID mass transit cards) or... more
We live life in the network. When we wake up in the morning, we check our e-mail, make a quick phone call, walk outside (our movements captured by a high definition video camera), get on the bus (swiping our RFID mass transit cards) or drive (using a transponder to zip through the tolls). We arrive at the airport, making sure to purchase a sandwich with a credit card before boarding the plane, and check our BlackBerries shortly before takeoff. Or we visit the doctor or the car mechanic, generating digital records of what our medical or ...
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explicit permission, provided that full credit including © notice is given to the source.
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One of the deepest platform challenges is understanding how users create network value for each other and which investments provide leverage. Is more value created by advertising to attract users, discounting to subsidize users, or... more
One of the deepest platform challenges is understanding how users create network value for each other and which investments provide leverage. Is more value created by advertising to attract users, discounting to subsidize users, or investing in architecture to connect and retain users? Having grown a user network, which promotes “winner-take-all” dominance, why do platforms with large user bases fail? To address these challenges, we build a theoretical and empirical model to simultaneously measure within and across period network e↵ects for two-sided markets. This yields three main results. First, we extend the customer lifetime value (CLV) literature to network markets, allowing us to measure how di↵erent interventions drive CLV on both sides of two-sided markets. Second, we apply our model to the case of Groupon and empirically estimate the strength of within period and across period attraction. We find significant within period attraction between merchants and consumers that does...
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Over the last years, several reports highlighted the market power of very large online platforms that are gatekeeping intermediaries between businesses and consumers, and the difficulty for classic competition policy tools to deal... more
Over the last years, several reports highlighted the market power of very large online platforms that are gatekeeping intermediaries between businesses and consumers, and the difficulty for classic competition policy tools to deal effectively with anti-competitive practices in these platforms. In response to this, the European Commission recently published a proposal for a Digital Markets Act (DMA) to complement existing competition policy tools by means of ex-ante obligations for platforms. This report presents an independent economic opinion on the DMA, from a high-level Panel of Economic Experts, established by the JRC and based on existing economic research and evidence. The Panel endorses the vision encapsulated in the DMA, including the designation of large gatekeeper platforms and a series of ex-ante obligations they should comply with. The Panel points out the challenge of striking a balance between the benefits from network effects of large platforms and the potential negat...
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We represent a platform’s valuation as its current profit plus its discounted next-period valuation, which is a function of its current user base. Wall Street emphasizes the current profit while the Silicon Valley emphasizes the user... more
We represent a platform’s valuation as its current profit plus its discounted next-period valuation, which is a function of its current user base. Wall Street emphasizes the current profit while the Silicon Valley emphasizes the user base, which represents the future value. We test the impacts of current profit and user base on platform valuation. We show that user base impacts platform valuation, but only slightly improve the explanatory power of the traditional accounting model which only uses financial data. It means that current profit and other financial data have already reflected most of the value of user base. Our findings support the Silicon Valley’s method of valuation, but also remind the investors to pay attention to the importance of today’s profitability of the platform, rather than only emphasize the value of the user base.
A large and growing portion of the economy transpires within software platforms. These environments are bounded high growth economies that embed many novel features: the platform owner sets rules for participation; RD there are profit and... more
A large and growing portion of the economy transpires within software platforms. These environments are bounded high growth economies that embed many novel features: the platform owner sets rules for participation; RD there are profit and adoption tradeoffs in open versus closed code. This paper introduces and develops a new model of platform growth, inspired by the standard growth literature. At each moment in continuous time, the platform owner must choose (i) how much source code to open and make available to a developer community, (ii) how fast to absorb developer code into the platform, (iii) how much to tax developer output, and (iv) how much to invest in the platform itself. Without any public code, the control problem reduces to the growth model of Solow (1956). Our platform model captures an infinitely recursive R&D ecosystem with innovation spillovers across developers. To optimize growth, the platform owner must internalize this recursive externality. Developers also inno...
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We propose that a trade-off between network diversity and communications bandwidth regulates access to novel information. As the structural diversity of a network increases, the bandwidth of its communication channels decrease, creating... more
We propose that a trade-off between network diversity and communications bandwidth regulates access to novel information. As the structural diversity of a network increases, the bandwidth of its communication channels decrease, creating countervailing effects on the receipt of novel information. This trade-off occurs because more diverse networks, presumed to provide more information novelty, typically contain weaker ties. Weaker ties imply fewer opportunities for interaction and less total information flow. Information advantages to brokerage then depend on (a) whether the information overlap among alters is small enough to justify bridging structural holes, (b) whether the size of the topic space known to alters is large enough to consistently provide novelty, and (c) whether the knowledge stock of alters refreshes enough over time to justify updating what was previously known. We test these arguments by combining social network and performance data with direct observation of the ...