Digital Innovation & Entrepreneurship required readings summary
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Module
Digital Business Models (6013B0504Y)
Institution
Universiteit Van Amsterdam (UvA)
Book
Platform Revolution
In-depth and complete readings summary of all required readings for the course Digital Innovation And Entrepreneurship (6013B0524Y) at the UvA. All required readings have been summarised in detail, including book chapters & articles.
Digital Innovation and Entrepreneurship summary of all articles
Digital Innovation and Entrepreneurship
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DIGITAL INNOVATION & ENTREPRENEURSHIP READINGS
DIGITAL INNOVATION & ENTREPRENEURSHIP READINGS 1
Chapter 1: Today 2
Chapter 7: Openness 3
Nabisan: “Digital entrepreneurship: towards a digital technology perspective of entrepreneurship” 4
Sahut: “The age of digital entrepreneurship” 6
Week 2: 8
Chapter 2: Network Effects - The Power of the Platform 8
Alstyne & Parker: “Digital Transformation Changes How Companies Create Value” 12
Gans & Stern: “Multiple Paths to Value: Test Two, Choose One” 13
Week 3 16
Chapter 3: Architecture: Principles for Designing a Successful Platform 16
Chapter 5: Launch - Chicken or egg? 8 ways to launch a successful platform 20
Chapter 6: Monetization - Capturing the Value Created by Network Effects 24
Kretschmer et al.: “Platform ecosystems as meta-organizations: Implications for platform strategies”
28
Week 5 30
Bourdeau: “Competing on freemium: Digital competition with network effects” 30
Cusumano: “The future of platforms” 33
Liptak: “Supreme Court Blocks Texas Law Regulating Social Media Platforms” 36
Van Alstyne: “The Rising Risk of Platform Regulation” 36
Suarez: “Dethroning an Established Platform” 37
Van Alstyne: “Pipelines, platforms, and the new rules of strategy” 38
Yu: “For Some Platforms, network effects are no match for local know-how” 40
Zhu: “Why some platforms thrive and others don’t” 41
Week 6 42
Chalmers et al.: “Artificial Intelligence and Entrepreneurship: Implications for Venture Creation in
the Fourth Industrial Revolution” 42
Gregory et al.: “The Role of Artificial Intelligence and Data Network Effects for Creating User
Value” 48
Levine & Jain: “How Network Effects Make AI Smarter” 53
Kircher: “OMG! What will happen when A.I. makes Buzzfeed Quizzes?” 54
Smith: “How TikTok Reads Your Mind” 54
Week 7 55
Agrawal et al.: “Chat GPT and How AI Disrupts Industries” 55
Baxter & Schlesinger: “Managing the Risks of Generative AI” 55
Cromwell et al.: “Discovering where ChatGPT can create value for your company” 57
Gibney: “Open-source language AI challenges Big Tech’s models” 59
Mollick: “ChatGPT is a tipping point for AI” 59
Mollic & Euchner: “The transformative potential of generative AI” 60
1
, Mollick & Mollick: “Using AI to implement effective teaching strategies in classrooms: five
strategies, including prompts” 62
Mollick & Mollick: “Assigning AI: 7 approaches for students with prompts” 64
Chapter 1: Today
- Markets change into a new platform business model that uses technology to connect organizations
through the power of the platform
- The platform radically changes the society at large as well as the economy
- The disruptive power of platforms is transformative in many different fields
- ⇒ the platform revolution
- Platform = a business based on enabling value-creating interactions between external producers
and consumers
→ provides an open and participative infrastructure
→ its main purpose is to consummate matches among users and facilitate the exchange of goods
or services in order to enable value creation
Platform structure: = complex value matrix (shift from a traditional linear value chain)
- Pipeline arrangement is transformed into a complex relationship in which producers, consumers
and the platform enter into a variable set of relationships
→ connecting and conducting interactions in which something of value is cocreated
- Value can be created, changed, exchanged or consumed
- Eliminate inefficient gatekeepers and so scale more efficiently
- Unlock new sources of value creation and supply of the market (increasing a new inventory of
services, goods,...)
- Data-based tools which create community feedback loops (instead of editors, managers,
supervisors)
- Platforms invent the firm (platform’s value is created by the community of users)
→ social influence and virality
→ consumer relationship management
→ no actual inventory
→ organizing external resources and engaging communities
- Diversity
- Traditional business management practices are changing
- Platform expertise as essential for business leadership
- Consummating matches among users
- Creating value by using resources which they don’t own
- Blurring business boundaries (e-commerce)
2
,Chapter 7: Openness
- Should platforms like Wikipedia be more closed to ensure better quality even if it can reduce the
value-creation potential of the platform?
- Closedness: rules which could discourage participation
- The more open a platform is, the more difficult to control
- Openness can also go into extremes, it is important to examine a case-by-case basis (Wikipedia
vs. Myspace)
- Behind a platform, two entities are responsible for its structure and operations: the firm which
manages the platform & directly interacts/ influences users and the firm that sponsors the
platform and retains legal control over it
→ the second is in control of the openness
- Joint venture model: a single firm manages the platform while a group of firms sponsors it (e.g.
orbitz travel reservations)
- Shared model: a group of firms manages the platform while another group sponsors it (e.g. Linux)
- Licensing model: a group of firms manages the platform while one firm sponsors it (e.g.
Microsoft Windows)
- Proprietary model: a single firm both manages and sponsors the platform (e.g. playstation)
Developer participation
3 types of developers:
1. Core developers: create core platform functions that provide value to platform participants
- Main job is to get the platform into the hands of users and deliver value through tools and
rules that make the core interaction easy
- Responsible for basic platform capabilities
- Internal platform management party
2. Extension developers: add features and value to the platform and enhance its functionality
- Outside parties
- Extract a portion of the value and profit from the benefits they offer
- To what extent can a platform be open to extension developers?
→ those who keep it open create an application programming interface
3. Data aggregators: enhance the matching function of the platform by adding data from multiple
sources
- Resell data about platform users to other companies for advertising purposes
- They can match up platform users with producers whose goods and services they could
find interesting
- Personal behavior is being monitored
What to open and what to own?
- Depends on the amount of value created by a particular extension app
- You don’t want to let an outside firm control a primary source of user value on your app
3
, - If particular functionality is reinvented and gains widespread acceptance by users, the manager of
the platform should acquire it and make it available through API (recognize broad applicability)
- Control user participation (producer openness: the right to freely add content to the platform)
→ objective is high quality content (maintenance of quality)
- Limiting openness through artful curation (screening and feedback)
→ human gatekeepers, moderators, user ratings
Openness over time:
- Employees have to provide content and curation if the platform is fully closed
- A forward-looking platform management team must design ways to evaluate the platform’s
openness level (develop algorithms to automate curation or to decentralize it)
- There has to be a balance (if the platform is too closed the partners may refuse to make platform
specific investments)
→ if the platform is too open, the extension developers might begin to insert themselves too
aggressively between the platform and its users
→ developers can even displace the platform itself and use its uses (SAP & ADP)
- Unique power and value of the platform lies in its ability to facilitate connections among
participants from outside the platform
3 kinds of openness decisions that managers face:
1. Regarding management/ sponsor participation
2. Developer participation
3. User participation
Nabisan: “Digital entrepreneurship: towards a digital technology perspective of entrepreneurship”
- Digital technologies have transformed the nature of entrepreneurial processes and outcomes as
well as ways in which you deal with economic uncertainty in the market
- Digital entrepreneurship: intersection of digital technologies and entrepreneurship
- Digital technologies have made entrepreneurial processes less bounded
→ fluid because the scope and value of products continues to evolve even after the idea has been
enacted
→ digital platforms infuse a degree of generativity (technology’s overall capacity to produce
unprompted change driven by large, varied and uncoordinated audiences)
→ less bounded in terms of temporal structure (business models can be quickly formed or
changed, different phases of development can happen simultaneously)
- Digitalization of products and services
- Breaking down processes between different phases of production → less predefinition in
entrepreneurial agency and where it is situated
→ allowed shared value creation
→ change in entrepreneurs beliefs and actions
→ who gets to participate?
4
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