Evaluating platform architectures within ecosystems: modeling the relation to indirect value

Written by Philip Boxer
Thursday, 26 April 2012 16:33
Title: Evaluating platform architectures within ecosystems: modeling the relation to indirect value
Author: Philip Boxer
Category: Published
Publication Year: 2012
Where published: School of Engineering & Information Sciences, Middlesex UniversityThis thesis establishes a framework for understanding the role of a supplier within the context of a business ecosystem. Suppliers typically define their business in terms of capturing value by meeting the demands of direct customers. However, the framework recognises the importance of understanding how a supplier captures indirect value by meeting the demands of indirect customers. These indirect customers increasingly use a supplier’s products and services over time in combination with those of other suppliers . This type of indirect demand is difficult for the supplier to anticipate because it is asymmetric to their own definition of demand.Customers pay the costs of aligning products and services to their particular needs by expending time and effort, for example, to link disparate social technologies or to coordinate healthcare services to address their particular condition. The accelerating tempo of variation in individual needs increases the costs of aligning products and services for customers. A supplier’s ability to reduce its indirect customers’ costs of alignment represents an opportunity to capture indirect value.The hypothesis is that modelling the supplier’s relationship to indirect demands improves the supplier’s ability to identify opportunities for capturing indirect value. The framework supports the construction and analysis of such models. It enables the description of the distinct forms of competitive advantage that satisfy a given variety of indirect demands, and of the agility of business platforms supporting that variety of indirect demands.

Models constructed using this framework are ‘triply-articulated’ in that they articulate the relationships among three sub-models: (i) the technical behaviours generating products and services, (ii) the social entities managing their supply, and (iii) the organisation of value defined by indirect customers’ demands. The framework enables the derivation from such a model of a layered analysis of the risks to which the capture of indirect value exposes the supplier, and provides the basis for an economic valuation of the agility of the supporting platform architectures.

The interdisciplinary research underlying the thesis is based on the use of tools and methods developed by the author in support of his consulting practice within large and complex organisations. The hypothesis is tested by an implementation of the modeling approach applied to suppliers within their ecosystems in three cases: (a) UK Unmanned Airborne Systems, (b) NATO Airborne Warning and Control Systems, both within their respective theatres of operation, and (c) Orthotics Services within the UK’s National Health Service. These cases use this implementation of the modeling approach to analyse the value of platforms, their architectural design choices, and the risks suppliers face in their use.

The thesis has implications for the forms of leadership involved in managing such platform-based strategies, and for the economic impact such strategies can have on their larger ecosystem. It informs the design of suppliers’ platforms as system-of-system infrastructures supporting collaborations within larger ecosystems. And the ‘triple-articulation’ of the modelling approach makes new demands on the mathematics of systems modeling.

 

Download the full thesis

Evaluating platform architectures within ecosystems: modeling the supplier’s relation to indirect value

by Philip Boxer, PhD

I have completed a PhD by publication at Middlesex University’s School of Engineering and Information Science under the supervision of Professor Martin Loomes.  Here is its abstract:

This thesis establishes a framework for understanding the role of a supplier within the context of a business ecosystem. Suppliers typically define their business in terms of capturing value by meeting the demands of direct customers. However, the framework recognises the importance of understanding how a supplier captures indirect value by meeting the demands of indirect customers. These indirect customers increasingly use a supplier’s products and services over time in combination with those of other suppliers . This type of indirect demand is difficult for the supplier to anticipate because it is asymmetric to their own definition of demand.

Customers pay the costs of aligning products and services to their particular needs by expending time and effort, for example, to link disparate social technologies or to coordinate healthcare services to address their particular condition. The accelerating tempo of variation in individual needs increases the costs of aligning products and services for customers. A supplier’s ability to reduce its indirect customers’ costs of alignment represents an opportunity to capture indirect value.

The hypothesis is that modelling the supplier’s relationship to indirect demands improves the supplier’s ability to identify opportunities for capturing indirect value. The framework supports the construction and analysis of such models. It enables the description of the distinct forms of competitive advantage that satisfy a given variety of indirect demands, and of the agility of business platforms supporting that variety of indirect demands.

Models constructed using this framework are ‘triply-articulated’ in that they articulate the relationships among three sub-models: (i) the technical behaviours generating products and services, (ii) the social entities managing their supply, and (iii) the organisation of value defined by indirect customers’ demands. The framework enables the derivation from such a model of a layered analysis of the risks to which the capture of indirect value exposes the supplier, and provides the basis for an economic valuation of the agility of the supporting platform architectures.

The interdisciplinary research underlying the thesis is based on the use of tools and methods developed by the author in support of his consulting practice within large and complex organisations. The hypothesis is tested by an implementation of the modeling approach applied to suppliers within their ecosystems in three cases: (a) UK Unmanned Airborne Systems, (b) NATO Airborne Warning and Control Systems, both within their respective theatres of operation, and (c) Orthotics Services within the UK’s National Health Service. These cases use this implementation of the modeling approach to analyse the value of platforms, their architectural design choices, and the risks suppliers face in their use.

The thesis has implications for the forms of leadership involved in managing such platform-based strategies, and for the economic impact such strategies can have on their larger ecosystem. It informs the design of suppliers’ platforms as system-of-system infrastructures supporting collaborations within larger ecosystems. And the ‘triple-articulation’ of the modelling approach makes new demands on the mathematics of systems modeling.

The following summarises the argument in terms of Value for Defence:

Value for Defence

View more presentations from Philip Boxer

Describing what is going on (wigo)

by Philip Boxer BSc MBA PhD
The case of the Homeless Charity uses a 4-quadrant/4-colour model for describing the ‘being’ of the enterprise.  What does this mean?

The behaviour of the enterprise reveals assumptions that are built into its structures and processes – ‘theories-in-use’.  What we are doing with this model is trying to characterise the nature of these assumptions.1

  • First come assumptions about ‘primary task’.  On the supply-side, these are assumptions about the way the work of the enterprise needs to be organised if it is to be viable. In this example, these are assumptions about the way it is possible to help people who are street homeless to bear their own histories.  On the demand-side, these are assumptions about what particular forms of demand need to be asserted if the needs arising in the overall situation are to be satisfied. In this example, these are the assumptions that the street-homeless person is making about what will enable them to cope with their particular history.
  • Next come assumptions about ‘primary risk‘.  These are assumptions about the relationship dynamics the enterprise needs to sustain between the supply-side and the demand-side if it is to sustain itself over time.  In this example, these are assumptions about what can be done for the street homeless within the funding and time constraints created by the way the enterprise works.
  • Finally come assumptions about the ‘domain of relevance’.  These are the ontic2 assumptions the enterprise is making in the way it engages in what it is doing – assumptions built into what information it tracks, how it uses its resources, how it accounts for what it is doing, and so on.

The 4-quadrants/4-colours are therefore ways of speaking about the effects of these assumptions about task, risk and relevance on the way the enterprise ‘is’. These form the backcloth against which any attempt to ‘intervene’ on the enterprise will be played out.3

Footnote
[1] An ‘espoused theory’ emerges along the speaking-and-listening axis described in The ‘Plus-One’ exercise.  What we are trying to describe with the 4-quadrants/4-colours is the ‘theory-in-use’ implicit in the ‘wigo’ behavior of the organisation that  is being spoken about.  This wigo will itself be being organised by the (more or less) implicit assumptions built into its structures, the relationship between which is represented by the ‘other’ dotted line axis.
[2] The Oxford English Dictonary defined ‘ontic’ as follows: “Of or pertaining to knowledge of the existence or structure of being in a given entity.”  Thus ontical inquiry is concerned with the ontology of particular entities.  Thus any ‘realist’ assertion of ontology is mediated by the ontic assumptions being made by the observer-entity making the assertion i.e. an ontology is built by an entity making ontic assumptions.  The 4-quadrant model gives us a way of thinking about what kind of ontic assumptions the entity is making. (For an example at another scale, see ‘why critical systems need help to evolve‘).  The concept of the strategy ceiling further elaborates on the way these ontic assumptions are held by an entity in the form of stratified relations between the enterprise and demand.
[3] In the case of the Homeless Charity, the learning cycle it is capable of supporting is defined by the author’s relationship to the charity.  This cycle is a way of describing a reflexive consultation within an ecosystem defined by 4 relationships between 5 layers of engagement:

The 4-quadrant/4-colour model describes the bottom two layers of this ‘stack’.