Monday, October 23, 2017

Modular architecture: Control vs. Openness

A firm seeks to attract different partners to design and develop new components outside a platform core.
These firm's innovation activities influence each other by being reciprocal and recursive. Thus, the innovation is the demand side based.
Firm needs to have the capability to create new uses of its services and platform. Just think of Amazon who was a bookstore in the beginning, but now sells basically everything.
Today's platform market has become a dynamic mashup of unforeseen dependencies among content, devices, networks, and partners. PayPal exemplifies this change. The payment service uses a sophisticated digital platform seamlessly to integrate with websites from which music, videos, movies, application, magazines and books can be purchased.
On one hand, the platform provider seeks to maximize innovation through open innovation and layer module architecture. But on the other hand, the platform provider seeks to keep some parts of the platform under strict control. So, every layer in the digital platform include designed rules, data control and govern the platform and its components.