From Pipeline to Platform: Managing Risks of Openness in an Emerging Industrial Ecosystem

Abstract

With the rise of Industry 4.0, manufacturing ecosystems are undergoing a fundamental transformation. Machinery manufacturers attempt to transition from pipeline to platform business models, hoping for new profit opportunities and establishing themselves as the new ecosystem leader. While literature suggests using openness to achieve competitive advantage, we observe firms following tight coupling strategies. This paper analyzes how firms can successfully transition their business model by employing openness. To answer this question, we conduct a longitudinal ecosystem study in the agricultural industry. We explore an incumbent machinery company trying to position itself as the ecosystem leader by establishing a platform business model. Our findings show that openness leads to risks due to interdependencies in the ecosystem. As a result, the focal company’s abilities to create network effects and to capture value from these are affected. We argue that the right configuration of control points can help to reduce or eliminate these risks. Subsequently, we show three transition journeys based on a combination of control points enabling a company to go from a pipeline to a platform business model, thereby positioning itself as the ecosystem leader.