Digital platform organizations are often viewed as the main vehicles of transforming the economy into a digital economy. They use highly advanced digital technologies, are primarily data-driven, and match supply (producers) and demand (consumers) in unconventional ways. Digital platforms contrast the traditional, hierarchical organizational forms (“pipelines” as they are called by Van Alstyne et al, 2017) in the ways they control supply chains, lead, or better, orchestrate a network of platform partners, and develop business models. Essentially, digital platforms do not sell products, content or services themselves. Rather they are selling access to the software, the matching algorithms, and a digital system of reputation and trust between supply and demand.
The US and Chinese big tech-giants such as Google, Facebook, Amazon, Uber, Baidu, Tencent and Alibaba play a dominant role in what is often called the platform economy. Because of their rapid growth and extremely high market capitalization these big-tech platforms have received much attention the professional and scientific literature. However, setting up a successful digital platform can be extremely complex. Many entrepreneurial attempts fail. Some digital platforms are very successful in creating value (e.g. experiencing exponential growth) to multiple users/consumers but are less successful in capturing this value (e.g. making profit (Uber) or generating sufficient revenues to sustain (Wikipedia).
Assignment
The main objective of this assignment is to distinguish between value creation and value capturing in digital platforms.
The assignment asks to analyse a digital platform at choice: I chose Airbnb
In the analysis the following three leading questions should be addressed:
1. What is the value proposition of the platform and to whom?
2. How does the platform create value?
3. How does the platform capture value?
