The Future of Competitive Strategy

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Introduction

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

Digital ecosystems amplify the power of data and provide different options for legacy firms to unlock data’s value. Digital customers pro- vide product-user interactive data, crucial for legacy firms to offer new revenue-enhancing, data-driven services. Digital competitors compete with access to similar data. They are different from competitors compet- ing with similar products that legacy firms are familiar with. Reckon- ing how to confront digital competitors is a critical part of an effective digital strategy. And finally, legacy firms need new digital capabilities to unlock the value of data and chart new frontiers with a digital competi- tive strategy. Chapters 1 and 2 elaborate on how firms can build strong data reserves and improve their proficiencies at harnessing data. Chapter 1 starts this discussion by detailing what legacy firms can learn from the digital titans about harnessing the power of data. The chapter reveals the inner workings of the digital titans and how they have developed their prowess at unlocking the power of data through their digital plat- forms. The chapter highlights the specific ways legacy firms can apply these insights to their businesses to craft a digital strategy. Chapter 2 describes application program interfaces (APIs), or tools that enable different software programs to communicate with one another. APIs can weave a diverse range of software programs together, share data across a multitude of firms, and establish intricate instruc- tions on how firms transact with data. As a result, they have enabled unprecedented collaboration among firms for value cocreation and are today the force behind the emergence and growth of digital ecosys- tems. This chapter highlights how the digital titans use APIs. It also suggests how their best practices can be applied by legacy firms to build a foundation for their digital ecosystem strategy. Chapters 3, 4, and 5 delve into the workings of digital ecosystems and how companies can best leverage them to unlock the value of data. Chapter 3 elaborates on the central framework of this book, presenting digital ecosystems as a combination of production and consumption ecosystems. It explains through various examples how a legacy firm can construct and engage with production and consumption ecosystems.