The Future of Competitive Strategy

Introduction

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

It analyzes the differences between production and consumption eco- systems. It cautions firms that their strong familiarity with their value chains may bias their perspective and limit them to taking advantage only of production ecosystems–related opportunities. The chapter reveals how recognizing consumption ecosystems as an added facet of digital ecosystems helps legacy firms avoid such traps and open new value-creating avenues. Chapter 4 elaborates on production ecosystems, delineating through a variety of examples how firms can use their production ecosystems to enhance operational efficiencies and offer new data-driven services. It distinguishes between the value created by using production ecosys- tems for operational efficiency gains versus using them for new data-­ driven services. This chapter provides several examples of how legacy firms can go about executing these options. Chapter 5 similarly elaborates on how consumption ecosystems help generate new data-driven services. This chapter also introduces the novel concept of “tethered digital platforms,” whereby legacy firms can extend their current products into platforms. The chapter elaborates on the contingencies that determine when, why, and how products can extend into platforms and the kinds of approaches legacy firms can adopt if a platform is a feasible option for them. A tethered platform strategy is another important element of a firm’s digital ecosystem strategy. Chapter 6 introduces the concept of digital customers, or custom- ers who provide sensor data as they use or interact with a firm’s prod- ucts. The chapter highlights why these customers are different from a firm’s legacy customers and their significance to the firm as it seeks to develop a digital strategy. The chapter also discusses various approaches by which firms can build a base of digital customers and expand the scope of sensor data firms can acquire from them. Chapter 7 introduces the concept of digital competitors, or com- petitors that have similar access to data. The chapter develops an understanding of how firms can anticipate and identify their digital competitors, discusses the nature of competitive dynamics with them, and explains how a firm can assess its relative strengths vis-à-vis these