The Future of Competitive Strategy

12

Introduction

©2022 MIT. This excerpt is from The Future of Competitive Strategy by Mohan Subramaniam, published by The MIT Press.

This network of independent entities also expands as more assets get digitally connected. Ford’s consumption ecosystems, for example, expand when more retailers (in addition to Starbucks) or more assets (such as parking lots) are able to digitally complement its sensor data. For a vast majority of firms, consumption ecosystems did not exist before modern advances in data and digital connectivity. An example here is the new consumption ecosystems developing around a light bulb when embedded with sensors. “Smart bulbs” contain sensors to collect data on such conditions as motion, the location of objects, and sound. Data on these conditions open up new opportunities for differ- ent parties to create value. Consumption ecosystems can emerge in a number of domains depending on the data the smart bulb generates and the third parties it attracts. Take motion, for example. By sensing motion in homes that are supposed to be empty, the sensor in a smart bulb can initiate a security services ecosystem of alarms and mobile apps. By sensing and tracking inventory in warehouses, it creates an ecosystem of entities that improves logistics. By sensing gunshots, it generates an ecosystem of camera feeds, 911 operators, and ambulances to improve street safety. Consumption ecosystems provide new avenues for traditional firms to expand into. They provide new ways to unlock the value of data. Consumption Ecosystems and Digital Platforms Unlike production ecosystems, which provide an internal avenue to unlocking value, consumption ecosystems offer an external avenue. To derive value from this avenue, however, a firm must orchestrate data-­ enabled exchanges across complementary entities. In other words, it has to operate as a digital platform. Cimcon, a Boston-based startup that developed the gunshot-sensing smart bulb, runs a platform con- necting objects such as cameras and entities such as police and ambu- lance services and hospitals. 13 Ford’s coffee service is enabled through a platform orchestrating data exchanges among the car driver, Alexa, Starbucks, various app developers, and banks. Although the idea is new for products, 14 the approach follows many established digital platforms