Exploring Vulnerabilities and Difficulties in Platform Emergence
Jacob Forsström
Department of Informatics Master thesis, 30 hp Master’s Program in IT Management
SPM 2021.03
Abstract
The focus of this paper is platform theory, sharing economy, and user-centered design (UCD).
Platform theory helps us understand the extensive research in its discourse and provides a stable ground to explore the fragile stage of platform emergence. The sharing economy is a central phenomenon to the studied project which is very important for our global use of future scarce resources. UCD is a central phenomenon where the importance of early involvement of users in the development process of a UCD project. By studying a platform project under development, I present an analytical framework where I identify vulnerabilities and difficulties in platform emergence. The emergence of platforms is an important yet difficult, and vulnerable process, and only a few studies have been conducted exploring this phase. The research question addressed in this thesis is: What are the sources to vulnerabilities and difficulties in the process of platform emergence? Methods of conducting this study are the use of semi- structured interviews of the people involved in the platform project for further flexibility of the questions. The case study project is focused on building a platform that enables users to build their own platforms. The purpose of that project is to enable users to create sharing platforms easier and cheaper. In addition, vulnerabilities and difficulties in platform emergence are explored. The goals of this study are to: 1) understand how a project is performing in this fragile stage of platform emergence, and 2) how to reach the goal where a platform with the underlying themes of platform theory, sharing economy, and user-centered design can be achieved.
Keywords: Platform, Platform Emergence, Platform Establishment, Platform Theory, Sharing Economy, User-Centered Design (UCD), Vulnerabilities, Difficulties
Acknowledgement
Firstly, I would like to sincerely thank my supervisor Lars Öbrand, associate professor at the Department of Informatics, Umeå University, for helping and supporting me with the writing of this thesis. Without his remarkable persistence and patience, the writing would have been gruesome and would have been difficult to finish this thesis. Secondly, I would also extend my sincerely thanks to the collaborative project and all the participants for participating in my study. My thanks for allowing me to investigate the projects processes, interview them, and see their platform. To be given the opportunity to investigate the processes and mapping it, learning new ways of exploring the field of Information Systems. Thirdly, I would like to thank my family for supporting me extra through this year, helping in providing the stability and space to conduct this thesis. Having my back and being patient with me and my work.
Sincerely thanks to all of you, everyone who contributed to this thesis in any way!
1. Introduction
Platforms have become the center of value creation in society, where a typical business model prior to platforms consisted of a linear business model (Parker et al. 2016), where the change of business model has created the conditions for the growth of platforms that exists today. For most stakeholders, a platform is a power symbol. In the past decades, the use of platforms has exploded, with Facebook at the forefront, a new path to doing a business evolved. With about 75% of social media usage in the world, Facebook is one of the largest platforms where they not only dominate the social media market (Statconter 2020) but also the social media game.
Another example of a social media platform is Instagram which, when Facebook bought them in 2012 had 30 million users, increased to a total of about 600 million users by 2017 (Wagner.
Vox 2017). The expansion is massive and shows the potential of platforms. Uber is another example of a successful platform which, in the fourth quartile 2019, have 111 million active users worldwide (Statista 2020). Uber is the business that disrupted the transportation sector because of its market share and digital capabilities has grown large and powerful. Amazon is another platform business that is dominating the online retail industry. In 2020, Amazon had 150 million users paying for their Amazon prime services (Mohsin. Oberlo, 2020). These examples of business expansions show that platforms have become the center of value creation, independent of the business focus. The use of platforms is the future of how to conduct a business successfully in all categories (e.g. retail, transportation, pictures sharing, and social media).
Currently, there is an ongoing collaborative project between a University and a National project in relation to sharing platforms. The core of the collaborative project is based on building a platform with sharing economy and user-centered design. The project is focused on building a platform that enables users to build platforms of their own. The purpose of the project is to enable users to create sharing platforms more easily and cheaper. This makes it more accessible to anyone with a sharing economy idea interested in creating a platform. In addition, this study will help understand the fragile stage of platform emergence where the goal is to have a platform with the underlying themes of platform theory, sharing economy, and user-centered design (UCD).
The emergence of platforms is an important yet difficult, and vulnerable process, and only a few studies have been conducted exploring this phase. The research question addressed in this thesis is: What are the sources to vulnerabilities and difficulties in the process of platform emergence? The main themes for this study are: platform theory, sharing economy, and UCD.
The first theme of platform theory, prior to digital platforms, is when organizations managed their business linearly (Parker et al. 2016). Platforms became a hot topic when they started to become digital and many businesses embraced this trend to further the organization's business.
Through platforms, organizations are enabled to reach more consumers and stakeholders in their business network. In the last decades, extensive research on digital platforms (de Reuver
et al. 2018; Parker et al. 2016; Tiwana 2013), platform strategy (Tiwana et al. 2010; Van Alstyne et al. 2016; Galliers and Leidner 2014), and architecture (Tiwana et al. 2010, Yoo et al. 2010; Baldwin and Woodard 2009) has been carried out. This research provides a stable ground for this thesis topic of platform evolution and more specifically, platform emergence.
The second theme is the sharing economy, and it was established with the rise of the internet.
People have always been sharing but, when sharing became digital, it became a global phenomenon (Belk 2014; Knote and Blohm 2016). Uber and Airbnb, two examples of some of the largest sharing economy platforms in the world, are based on the sharing economy (Lutz and Newland 2018). Both companies went through the fragile phase of platform emergence and came out on top which disrupted the transportation and accommodation markets (Parker et al. 2016; de Reuver et al. 2018; Ofe 2020).
The final theme necessary for this thesis is UCD. It is the method of involvement and uses users’ experiences and insight for the developers when developing a new system, platform, or interactive item (Teixeira et al. 2012). It builds on including the users in the development of the platform emergence phase. This involvement is to get their insight early in the emergence which will allow for a lasting impact on the design and development of the platform. One important aspect is for the development team to address feedback and standards for this process (Teixeira et al. 2012). The developers need to know the demographic need of the user, and whether they are developing for a specific spectrum of users or a generic user (Bowler et al.
2011), and to listen to the users rather than using their prior experience (Edwards et al. 2003).
To investigate the vulnerabilities and difficulties in relation to the process of platform emergence a threefold approach was followed: 1) A case study was conducted that included adopting a qualitative approach, interviews with key actors with the aim of identifying perceived difficulties, and analyzing vulnerabilities in this stage of the process: 2) An analytical framework was used to perform the analysis of the interviews to identify vulnerabilities and difficulties, the analytical framework was developed from concepts and relevant literature, and finally: 3) A number of vulnerabilities and difficulties were identified, and recommendations for managing these were developed.
2. Related Research
2.1 Digital Platform Research
Over the last decades, research on digital platforms has grown substantially within the field of Information Systems. As a result, there is today an extensive knowledge base around issues related to digital platforms. Within this discourse, there is an extensive research on digital platforms (de Reuver et al. 2018; Parker et al. 2016; Tiwana 2013), platform strategy (Tiwana et al. 2010; Van Alstyne et al. 2016; Galliers and Leidner 2014), and architecture (Tiwana et al. 2010; Yoo et al. 2010; Baldwin and Woodard 2009). Ofe (2020) explores orchestration of emerging digital ecosystems as well as challenges of emerging digital platform ecosystems.
Based on an extensive search of Information Systems, closely connected fields, and articles relevant to platforms and ecosystems, which resulted in 683 articles, he conducted a very thorough literature review of 78 articles. He identifies three major challenges; “attracting and generating network effect; control and coordination; and creating and capturing value” (Ofe 2020, p. 26).
From my literature review on platform emergence, the topics revealed that are of great importance in platform emergence are: network effect, scaling, control and coordination, and value creation and value co-creation (see Table 1). Below is a more thorough review of the topics.
Table 1. Key Concepts in Platform Research
Area Description Source
Network Effect
Network effects are when users on different sides of the platform provide value to other users through usage of the platform.
Generating a critical mass is important to gain traction not to fail.
Evans 2009
Evans and Schmalensee 2010
Parker et al. 2016 Van Alstyne and Parker 2017
Scaling Scaling in the context of digital platforms means to grow the platform's IT solutions to enable an expansion of the user base and services on that platform
Eisenmann et al. 2008 Furstenau and Auschra 2016 Huang et al. 2017
Venkatraman 2017 Mancha et al. 2019 Control and
Coordination
When emerging platforms taking off the managers of the platform needs to control and coordinate how the platform is being used. To control and coordinate, developers of the platform use APIs. Organizational identity is important to understand. when coordinating an emerging platform
Bresnahan and Greenstein 1999
West and Dedrick 2000 Gioia et al. 2000
Baldwin and Woodard 2009 Tripsas 2009
West and Wood 2014 Whitley et al. 2014
Lindgren et al. 2015 Value
Creation
In emerging platforms appropriation of value is important. An emerging platform needs to develop goals for the future to map the vision that is set.
Gawer and Cusumano 2008 Tan et al. 2015
Teece 2017 Dattée et al. 2018 Saarikko et al. 2019 Value Co-
Creation
Value co-creation comes from users using multiple services and integrated applications where value co-creation derives from value in use. Value that the users of the platform gain from accessing the service
Lusch and Nambisan 2015 Grönroos 2011
Vargo et al. 2008
2.1.1 Network Effect
Network effects are when users on different sides of the platform provide value to other users through usage of the platform. There is a great importance of network effects throughout the lifespan of a platform (Parker et al. 2016; Van Alstyne and Parker 2017). In the early stages of the platform, establishment of network effects are of extra importance (Ofe 2020; Evans 2009;
Evans and Schmalensee 2010). A two-sided platform network effect is the type that most people are recognized with. Uber is an example of a two-sided network effect, where riders attract drivers and vice versa (Parker et al. 2016; Ofe 2020). A multi-sided platform, or markets network effect, is a platform where more than two users are connected. It becomes an ecosystem where multiple users are connected, and all users draw value from the many users on that platform (Ofe 2020; Evans and Schmalensee 2010; Parker et al. 2016). Network effect has two sides, positive vs negative; positive is the type that has been described in this paragraph, a large number of users on a platform providing value to each other; negative is when there is a large number of users, but they are managed poorly resulting in a skewing of users on any side making it a negative effect on the platform (Parker et al. 2016). In the phase of an emerging platform, generating a critical mass is important to gain the traction not to fail. To gain the critical mass of a platform, a two-sided platform needs to provide value to the users in the beginning for network effect to be successful (Evans 2009; Evans and Schmalensee 2010; Van Alstyne and Parker 2017; Parker et al. 2016). In a platform with two different users, there is always the “chicken and egg” problem of what users come first. Who should the platform prioritize to provide value to? It is a balancing act to know who to prioritize and in what order until critical mass has been established (Evans 2009; Evans and Schmalensee 2010; Parker et al. 2016; Ofe 2020).
2.1.2 Scaling
Scaling in the context of digital platforms means to grow the platform's IT solutions in order to enable an expansion of the user base and services on that platform (Furstenau and Auschra 2016). One attribute relevant to the scaling process in digital platforms is openness and openness of the code layer, where the openness of the code layer refers to who should have participation right to the platform, and what are they allowed to do on the platform (Eisenmann et al. 2008; Furstenau and Auschra 2016). There is also rapid scaling that can be described as fast scaling between two points of the user base. This process is generative in the beginning to gain early success of the user’s adoption, but it later becomes a carefully planned scaling to sustain growth over time (Huang et al. 2017; Henfridsson and Bygstad 2013; Garud et al. 2010).
Mancha et al. (2019) provide practitioners and researchers with a framework that can identify seven mistakes when launching and scaling digital platforms. The framework consists of strategic actions relevant to launching and scaling of “Design the experience, Protect the experience, Build the ecosystem and Monetize” (Mancha et al. 2019, p. 2). Using this framework and following, the guidelines is important to try to avoid failing when scaling.
(Mancha et al. 2019).
In Venkatraman’s (2017) book about the digital matrix, he describes the nexus of scale, scope, and speed. In the industrial age, each of these worked in its own atmosphere, but in the digital age when working together, this digital matrix (the nexus of scale, scope, and speed), may put a company on the map as a market leader in its sector. Tesla Motors, an electric car manufacturing industry, is one example where the company applies, a magical combination of the nexus of scale, scope, and speed. If done right, organizations with the use of conductivity, sensors, and software, learn from the digital landscape and use this data produced to analyze and help make data-driven decisions (Venkatraman 2017; Huang et al. 2017).
2.1.3 Control and Coordination
The managers of the platform need to control and coordinate how the platform is being used (West and Wood 2014). A digital platform is built on an architecture that needs to function to both attract users but also control and coordinate the activity on the platform. The platform is built on standards that control the flow and appropriate value to the users (Bresnahan and Greenstein 1999; West and Dedrick 2000). In emerging platforms modularity of the architecture is an important trait (Baldwin and Woodard 2009). To control and coordinate, developers of the platform use application programming interfaces (APIs) to appropriate the flow and coordinate the yield of the transactions and interactions on the platform (West and Dedrick 2000). West and Wood (2014) provide insights into asymmetric dependencies of partners in an ecosystem. These partners and actors can have contradicting values and beliefs on how the platform should be run. Asymmetric dependencies may be damaging to the very structure the platform is built and depending on which are important to the success and establishment of the emerging platform (Ofe 2020).
Organizational identity is a subject that has not been studied at length before (Whitley et al.
2014). This is important to understand when coordinating an emerging platform (Whitley et al.
2014; Lindgren et al. 2015; Ofe 2020). For users to be able to identify with something, the organization provides a layer of culture to the organization (Gioia et al. 2000; Lindgren et al.
2015). Organizational identity can be divided into two different forms; internal and external identity; internal is how the members see the structure of the organization; and external is how the outside world views the organization's identity and values (Tripsas 2009; Lindgren et al.
2015; Ofe 2020).
2.1.4 Value Creation and Value Co-Creation
When establishing a platform or an ecosystem, it is crucial to appropriate what value that platform has for the users and the providers of that platform. One way of appropriating value to a platform is through the concept of coring (Gawer and Cusumano 2008). Coring is a set of techniques for finding what is the core of the platform and how to make this the focal point of the platform (Gawer and Cusumano 2008; Ofe 2020).
Dattée et al. (2018) build on the “chicken and egg” problem in value proportion where they invite the idea of having a vision, the meaning of the platform, and the value possible in gaining from the platform. The promising action from a platform to develop a vision of its future is to reduce the uncertainty of the direction of the platform and have a clear value appropriation (Dattée et al. 2018).
An emerging platform needs to develop goals for the future to map the vision that is set. These goals should include both short and long-term goals to enable creating value through the growth and sustainment of the emerging platform (Saarikko et al. 2019). For these emerging platforms to stay relevant and engage the market to provide value to its users, they have to explore what options and ventures are available to them (Ofe 2020) and explore the prospects in developing Information Systems capabilities (Tan et al. 2015). Information Systems capabilities can be used for enabling platforms to understand the digital landscape to find their platform’s value proposition and stimulate the platform in that space (Tan et al. 2015; Ofe 2020). In this emerging stage of the platform, there has to be a “generative sensing” (Teece 2017, p. 12) of what potential value sources exists to the platform. Using generative sensing to sense the space for alternative ventures and finding an environment to operate in and possibility to venture in to later (Teece 2017; Ofe 2020). Value co-creation comes from users using multiple services and integrated applications where value co-creation derives from value in use (Vargo et al.
2008; Grönroos 2011). The value that the users of the platform gain from accessing the service serves a purpose for the users, and it is values the users (Grönroos 2011; Lusch and Nambisan 2015).
2.2 Analytical Framework
To clarify, in this thesis platform theory is a combination of platform structure, platform roles, digital platforms, platform establishment, and platform ecosystems. Sharing economy is a combination of internet facilitated sharing, collaborative consumptions, trust, and circular economy. User-centered design is a combination of feedback, design methods, type of users, and direct and indirect stakeholders.
2.2.1 Platform Structure
The traditional way for many businesses is having a linear value chain or a pipeline business model. In the value chain, many different parts produce the final product or service to the identified users, with the producers on one end, and the users or consumers on the other end.
But in recent years more businesses have transferred to a platform structure. A platform business can look very different compared to a linear business. The producers, users, and businesses find themselves in new positioning. They all serve each other and create new value on the platform. In some instances, the different types can find themselves with reversed roles in this complex network of platform structure (Parker et al. 2016).
2.2.2 Platform Roles
Parker and Van Alstyne, (2012) propose four different platform roles on a two-sided platform.
The first is the user (demand side), the second one is the user (supply side), the platform provider is the third platform role, and the final role is the platform sponsor. The user, the demand side, accesses the functionality on the platform. The supply side provides the functionality that the demand side is accessing on the platform and finally the platform provider is the contact point of the users. It is the market that hosts the functions the supplier provides and the place where the demand user comes and access the content. The platform sponsor is the owner of the platform; they decide what can happen on the platform and controls the flow of activity on the platform (Parker & Van Alstyne, 2012).
2.2.3 Digital Platforms Characteristics
de Reuver et al. (2018) conceptualize digital platforms, both in the function of non-digital platforms and how digital platforms differ. The non- digital platforms can be seen as the network inside one business (e.g., the internal affairs, the supply chain, and the usage of external expertise to evolve the business). In a multi-sided platform, there are often two distinct users; the producers, and the users. The goal of that platform is to bring these two together for a smooth business exchange. When users are drawn to the platform, with multiple groups of users, the network starts to take effect and is referred to as network effect. Network effect is when users of a platform start to use the platform more frequently, and more value is given to each user (de Reuver et al. 2018).
But how do digital platforms differ to non-digital platforms? According to de Reuver et al.
(2018, p. 125), digital platforms have the digital capabilities of “homogenisation of data, editability, reprogrammability, distributedness and self-referentiality”. With an embedded digital technology structure changes and new functionality can be done seamlessly. In addition,
with digital platforms, standardization makes the platforms reprogrammable and editable, providing the modular structure of a digital platform that can evolve over time. The result is a standardized process where the platform can operate differently according to the influx of users which can extend the functionality of the platform (de Reuver et al. 2018).
2.2.4 Platform Establishment
Understanding platform establishment is important for all businesses that are deciding on building a platform. Ofe and Sandberg (2019, p. 1426) provide three essential phases for a business platform establishment: “Emergence, progression, and it's uptake”. The establishment of a platform can be difficult in the beginning where, the idea of the platform needs to be clear and technological structure is essential. There needs to be an intuitive and clear way of using the platform and, if this is unclear the third step of uptake can be difficult. Therefore, the way to attract users’ needs to be specified. Platform developers need to have a plan on how this is, and what drives the usage of the platform. A newly established platform becomes a hub in a network of its users and organizations connected to it which can evolve to an ecosystem of connections. The platform has some level of control, but when working with many organizations and if one is new to this concept, one needs to establish a standard in how communication and connections are solved. This ever-changing environment needs to have a framework to successfully navigate the landscape (Ofe and Sandberg 2019, p. 1426).
Understanding the connections and how the users interact can be difficult to comprehend, but these connections can be necessary in order to elevate the value to the next line of adopters (Ofe and Sandberg 2019).
2.2.5 Platform Ecosystem
Tiwana et al. (2010, p. 675) define an ecosystem as "the collection of the platform and the modules specific to it". Ecosystems are important to understand since they are the essential building blocks in networks where the ecosystems connect platforms and networks together, and later evolve into one large network. Different attributes shape the ecosystems and how they evolve over time. Ecosystems function as markets for developers to build modular structure of APIs, making it possible to develop these over time. (Tiwana et al. 2010).
2.2.6 Sharing Economy
The concept of sharing economy was first introduced by Weitzman in 1986 (Weitzman 1986) and has since gained traction. For example, Airbnb, one of the bigger platforms, adopted the thinking of sharing economy (Lutz and Newland 2018). Knote and Blohm (2016, p. 2)
“describes the socio-economic phenomenon of temporary, not ownership but access-based utilization of consumer goods or services”. Before internet sharing, sharing was evident in our everyday life. When the internet was established, sharing became digital and is now an important topic. Belk (2014), Knote and Blohm (2016) Lutz and Newland (2018) identified internet facilitated sharing and collaborative consumptions as important elements of sharing economy.
2.2.6.1 Internet Facilitated Sharing
Internet-facilitated sharing began with the forming of the internet and it all started with the music and video business. Napster was enabled through the internet to distribute music freely in another way than had ever been done before. It seemed like the best idea ever; using the internet to facilitate sharing of music. To the record business this was not acceptable because of their lost sales which resulted in lawsuits that forced Napster to cancel their operations (Belk 2014). Napster foreclosed and new sharing sites of music and movies appeared (e.g. Pirate Bay). Through internet facilitated sharing, some legal businesses appeared to facilitate the sharing of music digitally. Spotify is an example of a successful business that has embraced this legal way of sharing music. Sharing of material goods is another example of internet facilitated sharing. Sharehood was established in Australia by a person who wanted to use his neighbor’s washing machines. It prompted him to start this online sharing site to enable people in his community to list property that others could use for free. Sharehood is now established in other countries proving the internet-enabled sharing also can be successful in communities (Belk 2014).
2.2.6.2 Collaborative Consumptions
Collaborative consumption is when people have merchandise that they are able to provide to the community for compensation of some sort. Belk (2014) describes that collaborative consumption is a specified field in between sharing and a marketplace where sharing with compensation is the main focus. Belk (2014, p. 1957) states: “Collaborative consumption is people coordinating the acquisition and distribution of a resource for a fee or other compensation.” Collaborative consumption has the aspects of sharing for a fee and it is situated in a continuum between straight sharing and a business or marketplace. The notion of collaborative consumption is that the actors in such collaboration have a feel of non-ownership but, through a fee, the satisfaction of ownership for a limited time can be experienced (Belk 2014).
Hamari et al. (2016) expand on collaborative consumption, first introduced by Belk (2014), and categorize it into four sections of sharing economy: online collaboration, social commerce, the notion of sharing online, and consumer ideology. Online collaboration is when groups of people or individuals with similar goals work together for a common goal by sharing their knowledge.
One example is Wikipedia, where the community comes together and provides knowledge and shares it to the online community (Hamari et al. 2016). Social commerce is a subsection of collaborative consumption where, through the use of social media, the influencers gain the following from a large crowd of individuals. In this peer-to-peer platform, the influencers can push their messages to their followers, and they push it towards a company or product that they recommend or are sponsored by and finally convey this sponsorship to its follower base. These influencers can also be followers of other influencers and thereby take the form of both providers and buyers which provide the multi-sided nature of the sharing economy (Hamari et al. 2016).
2.2.6.3 Trust
Trust is an important factor in all relationships and engagement with others that have a shared end goal. This is also true for the sharing economy. A level of trust needs to be in place for interaction and sharing of goods to happen. Hawlitschek et al. (2016a, p. 3) states “if one actor does something for another actor, trust refers to the expectation and obligation that this exchange is reciprocated in the future.” In an online business the exchange between different partners, and the trust amongst them, is important to withhold the principle of an online transaction. Trust is what makes the transaction between a company and a private person. There has to be a level of trust between the two parties when a transaction takes place on a platform between individuals (Hawlitschek et al. 2016a). In the sharing economy, there are some actors that require substantial trust. According to Hawlitschek et al. (2016b, p. 26) “there are the three major targets that are essential for the sharing economy to function: trust towards peer, platform, and product”. In a peer-to-peer transaction trust is therefore very important. The peer to platform relationships can be experienced in different ways. Airbnb is an example where the engagement begins from an online perspective and it transfers to an in-life perspective when the peer meets the platform, or the host connected to the platform. The trust is important on both parts, for the peer to uphold the rules of the host, and for the host to provide the anticipated level of service established on the platform (Hawlitschek et al. 2016a). In a sharing economy, the peer-to-peer engagement is important in order to be able to develop trust. Owning in this thinking has traversed from owning to sharing. The items charged are often of personal value to its owner and, because of this, peers are willing to share. In return they want the trust from this engagement that the shared items are returned in similar quality as it was before it was shared. Providing the peer-to-peer engagement and, reassuring that it is returned in a whole piece and functionality, is of uttermost importance. A level of trust in these situations is essential for a functioning sharing economy community (Hawlitschek et al. 2016a).
2.2.6.4 Circular Economy
An interesting concept that relates to the sharing economy is the circular economy. The idea of circular economy is that everything in its loop is being reused. Circular economy can be divided into two major cycles: biological and technical. In a biological cycle, the focus is to shift the use of new natural resources to renewing old resources for further use and reusing that energy.
The technical focuses on reusing and repairing the old products for new purposes to keep it in the circular economy (de Sousa Jabbour et al. 2018). Fossil resources are getting more scares making it utterly important to repurposing of the item or recycling for future use (de Sousa Jabbour et al. 2018). Geissdoerfer et al. (2017, p. 6) define the circular economy as a
“regenerative system in which resource input and waste, emission, and energy leakage are minimised by slowing, closing, and narrowing material and energy loops.” This further strengthens the argument of circular economies’ importance in an evolving world where resources are scarce (Geissdoerfer et al. 2017; de Sousa Jabbour et al. 2018).
2.2.7 User-Centered Design (UCD)
UCD is a method that can enlighten the developers to create a system that reflects the user’s interests in the system. Teixeira et al. (2012, p. 162) states that “User-centered design (UCD) is one of them concerned with incorporating the perspective of the users into the software development process in order to achieve a desirable and usable system”. During the developing phase of a project the developer needs to design the system with emphasis on the user. The developer needs to have a good comprehension of who the user is.2.2.7.1 Feedback
For a project that wants its product to be of a certain nature, in this case UCD, it is prominent that users are included in the process of development. An active involvement of the intended user base should be from the beginning of the system for a project to excel at its UCD capabilities. UCD has in recent years been adapted to an international standard, ISO 13407, that all developers need to uphold when developing a UCD system (Teixeira et al. 2012, p.
162). This standard state that four activities need to be incorporated when adapting UCD; “(i) understand and specify the context of use; (ii) specify the user and organizational requirements;
(iii) produce design solutions; and, (iv) evaluate design against requirements” (Teixeira et al.
2012, p. 162).
2.2.7.2 Design Methods
There are challenges and issues with any design method. A level of interactive ability with some easy useability is essential when developers develop an interactive system. The goal of the developer needs is to build a system that fulfills the experience expected of such a system.
This level of operability is needed to cover the necessary features and functions for an interactive tool. Envisioning all features of such a tool is risky because it could become a system too complex to use. On the other hand, the system cannot be lacking features that serve the purpose of the system. There is a fine line for UCD’s where a system too complex, or lackluster system, would potentially result in a failure of the system’s operability for the users. This is emphasized by Edwards et al. (2003, p. 298);” the determination of features for an infrastructure system is not particularly user-centered and is largely based on designers’
experience and intuition, having built both prior infrastructure and applications.” The problem that designers are facing when developing systems is that they are too focused on how they have designed a system in the past. The designers might have envisioned how the users would appreciate the systems and its look, but this is not the attributes of a UCD system. The intention is to serve the user’s experience, but in the end, the result is often that it comes down to what is right and compelling to the user that the system is designed for (Edwards et al. 2003).
2.2.7.3 Type of User
The essence of UCD is to create a system for the user at its center, and have that system excel as its intended use. The intent of UCD is to work in the favor of the intended user and not just simply function. In this scenario, the designers must find who their users are. Since designers usually shift their focus from the designer to the perspective of the user, they design a system with the user in its core. The developer needs to ask themself who the user is that they are designing the system for. Different users come from different backgrounds. But who of all users is the designer taking their perspective from? Bowler et al. (2011, p. 725) questions this; “When we design, are we designing for a universal user—an “everyman” of information practice? Or
are we designing for special segments of the population?”. This is very important to reflect upon, who are the designers developing the system for? A universal user that might not reflect the intended users? Have the designer team studied the segment of the population when designing the systems? Bowler et al. (2011, p. 725) states three categories of users: the primary, the secondary, and the tertiary user. The primary users are the intended and recurrent users.
The secondary user is the user that will not be as recurrent as the primary user or they will be using the system through an intermediary user. The user that will be influenced by users of the system is the tertiary user (Bowler et al. 2011).
2.2.7.4 Direct and Indirect Stakeholders
Another way of structuring the issues concerning UCD is to view the users as stakeholders.
This view provides a view of the direct and indirect stakeholders which provides the designer with just two groups of users. The direct stakeholders are the users that will use the system directly, and the indirect stakeholders are the users who are affected by the decisions of how the designers design the system. These are the indirectly affected group of users. In the music business, the indirect stakeholder would be the physical music stores that rely on selling records. Users of Spotify or Apple Music are examples of direct stakeholders that uses different approaches in categorization users design for a UCD system. One way of solving the issues of UCD is to design for a large population with different backgrounds and abilities in the hopes that the functions of the system will fit them. This approach tries to target the universal user.
The issue with that approach is that the universal user group exists of similar minded and thinking users that the UCD system can reflect on. According to Bowler et al. (2011, p. 726) this is far from true: “Some question the validity of the concept of the universal user. Perhaps successful information technology works, not because of a “big picture” approach, but because of the technology’s ability to meet local needs in individual ways”.
2.3 Description of Analytical Framework
To answer the research question in this thesis, interviews of people involved in the studied project were conducted to determine the project’s vulnerabilities and difficulties in platform emergence. The analytical framework applied during this study was developed from the concepts in Sections 2.2 and are summarized in Table 2.
Table 2. Analytical Framework
Area Description Source
Platform Structure
In recent years more businesses have transferred to a platform structure. A platform business can look very different from a linear business. The producers, users, and businesses find themselves in new positioning. They all serve each other and create new value on the platform. In some instances, the different types can find themselves with reversed roles in this complex network of platform structure.
Parker et al.
2016
Platform Roles
Users (Demand Side), User (Supply Side), Platform Provider and Platform Sponsor
Parker and Van Alstyne 2012
Digital Platforms
Digital platforms have the digital capabilities of
“homogenisation of data, editability, reprogrammability, distributedness and self-referentiality”. With this embedded digital technology structure, they can change up and add new functionality seamlessly.
de Reuver et al. 2010
Platform Establishment
Three phases that are essential for a business doing a platform establishment. “Emergence, progression, and it's uptake”. This means that the establishment of a platform can be difficult in the beginning, the idea of the platform needs to be clear and be able to cultivate a technological structure that the platform has an intuitive and clear way of functioning.
Ofe and Sandberg 2019
Platform Ecosystems
Ecosystems define as “the collection of the platform and the modules specific to it"
Tiwana et al.
2010 Sharing
Economy
Sharing Economy “describes the socio-economic phenomenon of temporary, not ownership but access- based utilization of consumer goods or services”. Before internet sharing was evident in our everyday life. When the internet was established, sharing became digital
Belk 2014 Knote and Blohm 2016 Lutz and Newland 2018 User-Centered
Design
User-Centered Design is a method that can enlighten the developers to create a system that reflects the user’s interests in the system. “User-centered design (UCD) is
… concerned with incorporating the perspective of the users into the software development process in order to achieve a desirable and usable system”
Teixeira et al.
2012
Feedback UCD has in recent years been adapted to an international standard ISO 13407 that all developers need to uphold when developing a UCD system. This standard states four activities that are a must when adapting UCD: “(i) understand and specify the context of use; (ii) specify the user and organizational requirements; (iii) produce design solutions; and, (iv) evaluate design against requirements”
Teixeira et al.
2012
Design Methods
“The determination of features for an infrastructure system is not particularly user-centered and is largely based on designers’ experience and intuition, having built both prior infrastructure and applications.” The problem that designers are facing when developing systems is that they are too focused on how they have designed a system in the past. The designers might have envisioned how the users would appreciate how the
Edwards et al.
2003
systems works and looks, but this is not the attributes of a UCD system. The intention is to serve the user’s experience, but in the end, the result is often that it comes down to what is right and compelling to the user that the system is designed for.
Type of User In this scenario, the designers must find out the users.
Since designers usually shift their focus from the designer to the perspective of the user, they design a system with the user in its core. Different users have different backgrounds that reflect them but who of all users is the designer taking their perspective from?
Bowler et al. (2011) questions “When we design, are we designing for a universal user—an “everyman” of information practice? Or are we designing for special segments of the population?”.
Bowler et al.
2011
Direct and Indirect Stakeholders
This view of the direct and indirect stakeholders which provides the designer with just two groups of users. The direct stakeholders are the users that will use the system directly and the indirect stakeholders are the users who are affected by the decisions of how the designers design the system
Bowler et al.
2011
2.3 Critical Reflection
In this thesis in total, I preform four literature reviews, one in emerging platforms, platform theory, sharing economy and user-centered design. This means that they are not as comprehensive as they would have been if I had done just one literature review. One risk with that would mean that I could have missed some important parts in each of the literature reviews.
This means that each review might be a bit smaller, but I have tried to capture the most important concepts. During my research I found more recent ISO standards than the one I applied (ISO 13407 standard) in my analysis, but as a consequence of that, with the newer ISO 9242 standards of 2010 and 2019 editions, the requirements for how formal a UCD could be may have been broadened. A more comprehensive literature, which would have included the newer ISO standards, would have resulted in a different outcome of the analytical framework used in this study (Table 2). A different analytical framework would have in turn affected the analysis and conclusions drawn from this study. Perhaps making the analysis slightly different, more detailed and nuanced. However, the analyzed and identified vulnerabilities using the applied analytical framework of the empirical data (Table 2), is based on the main features of the literature of the discourses that I applied in this study.
3. Methods
3.1 Research Setting
To answer the research question what the sources to vulnerabilities and difficulties in the process of platform emergence might exist. A collaborative project between a University and a National project in relation to sharing platforms was studied. The project is exploring the concepts of sharing economy and user-centered design when leaning on platform theory in building a platform. The main logic they are testing is that of user-centered design because this is what they believe is the next generation of sharing platforms. The researchers of the project have researched the phenomenon of sharing platforms and sharing economy for an extended time and have recently started to test hypotheses connected to these themes.
What started as a research project has now moved into the software development phase of the project. They refer to this as a tool for building sharing platforms. It should be noted that, from my data analysis, the tool as they describe it, should be referred to as a platform, and therefore, I will refer it to a platform and not a tool. This platform is intended to serve to test the hypothesis of user-centered design for the next generation of platforms. The current generation of platforms (e.g. Uber and Airbnb) are resource-centered platforms which is different from this project’s approach of user-centered design. Uber is in the transportation sector and Airbnb is a part of the accommodation sector. To stay sustainable, Uber and Airbnb need a large section of the public to use their platforms to enact the phenomenon of network effect. Network effect is about the more users utilizes the platform, the more users the more value is gained. For a platform to be established, there is a need for a large population to fuels the platform in order to remain sustainable. Therefore, it is more common that these larger organizations are established in populated areas and generally not in rural areas.
This collaborative project focuses on shifting the narrative from a resource-centered design to user-centered design which allows a focus on the user instead of the resources. The goal is to place the user in the center to permit the platform to circulate the user. This approach permits the user to choose if they want to share their personal belongings with their family, friends, or community.
Development of this platform has traversed many steps. The conceptual model of the project structure includes three different loops: a concept, a technical, and a pilot loop (Figure 1). These loops are interconnected and work closely together. The development of this platform was carried out for the better part of a decade in the concept loop which included many years of studying the platform logic. In the last two years, they started to build the platform (technical loop). When essential parts of the platform were approaching completion, the platform was introduced to potential users which became this project's pilot study (pilot loop). This is an iterative development model which is not a new concept, but a proven effective approach for this project.
Figure 1. Conceptual model of the collaborative project iterative workflow.
During the last two years, the technical loop has emerged where implementation of the hypothesis of the concept loop has been carried out. In the technical loop, the researchers have been working closely with an external developer when building this projects platform. This includes building the shape of this platform, and its function to serve to test their hypothesis.
These ideas and knowledge are then passed to the external developer where the researchers’
ideas have been implemented. As mentioned, this is an iterative process that loops over time.
This has provided the researchers time to rethink initial decisions which results in an improved platform that, later on, can be used to build sharing platforms.
While building the platform, the research team connected with a potential user in the wind power industry that was interested in the idea of building a sharing platform. This initiated the pilot loop where the users could use the platform and start building their own sharing platform.
During the pilot loop, the research team has regular meetings to get feedback on what processes are working and what is not considered effective. This information is then provided to the concept loop, were the feedback is processed. In turn, this feedback is provided to the technical loop, were the developer addresses the pilot loops concerns. At completion, this feeds back into the pilot, were the users continue building their platform.
One loop that has emerged during this study is a “sharing space” which can be referred to as their fourth loop. This loop is not included in the project’s structure. It works with the project but as its own entity to serve as a physical space where users, students, and the public can come in contact with the team. In this space, there is the possibility of illustrating and getting help in developing your sharing platform. Based in the “sharing space” the research assistants can help and discuss with potential users when developing the user’s ideas.
The research question in this thesis focuses on the initial and fragile phase of platform emergence. In order to investigate the difficulties and vulnerabilities in this phase, this thesis closely follows the processes, practices, development, and decisions of a sharing platform project through its journey towards maturity. As such, this thesis adopts a qualitative case study methodology, where the main data generation is carried out through exploratory and thematic interviews with key actors. Detailed data collection, data analysis, and application of analytical framework are presented and discussed below.
3.2 Data Collection
Data collection was conducted by interviewing people involved in the research project studied.
The collection of data was a qualitative study with the semi-structured interview intended to collect data that had open-ended questions which, prepared for further discussion, and questions. The semi-structured interviews were selected as the best way of conducting this study. During the starting phase of the thesis (early 2020), Covid-19 was not yet a global pandemic nor a big threat in Sweden. When the Covid-19 became a global pandemic, the University shut down and limited the data collection to digital interviews and the observations was eliminated. Therefore, the intended secondary source of data collection that included observations, where the goal was to shadow the project during a set time, could not be performed.
In the beginning of this thesis, an initial interview was conducted and was used as a guide for early decisions in this project. From this initial interview, a document was created that helped guide the upcoming digital interviews. The document included what information was needed to conduct the interviews, how to collect the information, and who would be suitable for this type of interview.
The interviews were divided into different sections of the collaborative project process to capture interesting data that could be used to answer the research question.
Due to the varying job titles of the interviewees participating in the project, the questions were altered to fit their job description. For example, project assistants did not participate in the questions related to project lead tasks. The number of participants, job title, and length of the interview are summarized in Table 3.
The participants were recruited through the point of contact (POC) for the collaborative project.
Prior to this thesis, I contacted the POC with the goal to develop a relationship for the coming thesis. After convening a couple of times, we had a physical meeting where I met the POC (who are P1 in this thesis) for an introductory interview. The first interview with P1 occurred at his workplace and the second interview took place using Zoom (Table 3). The interviews with the other participants took place using Zoom meetings. By doing so, the participants could choose freely the location of where they were most comfortable conducting the interview.
Table 3. Summary of Number of Participants, Job Title, and Length of Interview.
Number of Participants
Job Title Length of interview (min)
Gender Estimated Age
P1 Project Leader First interview 60
Male 27-33
Second interview 60
P2 Project Leader 40 Male 45-60
P3 Project Assistant 40 Male 25-30
P4 Project Assistant 30 Male 25-30
P5 Pilot User 60 Male 45-60
3.3 Data Analysis
The data analysis included transcribing the interviews and compiling the most important and relevant sections of each interview. It was during this stage of the data analysis these three themes evolved: platform theory, sharing economy, and user-centered design (UCD). These three themes became the focus during the development of the analytical framework (see Table 2).
Table 4 presents and exemplifies how the analysis has transpired of the empirical data. For example, taking the concept of platform roles from the analytical framework, analyzing the empirical data, and finding a quote from the data placed in the second column. In the third column my interpretation of the empirical data. Colum four shows the codes that were used to code the different sections and quotes in the empirical data. Table 4 is constructed to be transparent on how the analysis has transpired using the analytical framework. Showing how some of the codes has been used in the analysis. This process was done throughout the whole analysis of the empirical data.
Table 4 shows how the coding scheme was developed, and provides examples of the linkages between the data, interpretation, coding, and the resulting categories. The first examples show how the subsequent category “platform roles” is linked to the data through the coding of a transcript data excerpt as “tool”. Likewise, the second example shows the linkages between the code “ambiguity”, the interpretation of a particular set of data, and the overarching category
“platform ecosystem”. The categorization was carried out based on the coding of the entire data set and developed as a way to clarify patterns in related codes.
Table 4. Coding Scheme with Example Concept Example from
Transcripts
Interpretation of Example Codes
Platform Roles
“a tool being developed at the university to build digital sharing platforms.
We have been studying platforms, digital platforms and sharing platforms for quite some time at the university”
When analyzing the example, it became clear that they are saying that they are building a “tool”.
When using the concept for platform roles and looking at research. It is clear that they are a platform provider and are in fact building a platform. According to research, Parker and Van Alstyne 2012.
Tool
Platform Ecosystem
“are more interested in a platform ecosystem”
When interpret the quate “are more interested in a platform ecosystem” It is interesting because when analyzing further the researchers describe that the platform is built using the platform. That it is used to build standalone platforms making the ecosystem strategy difficult to follow. They have ideas but it is not clearly defined what their strategy is. The project needs to figure this out. According to research, the definition of an ecosystem is “a collection of platforms'' (Tiwana et al. 2012, p 675).
Ambiguity
Trust “we want to have a sharing platform, like a personal sharing platform”
When analyzing the example, I interpret it as that the personal platforms are individual to one person with a sharing idea. Trust its build-up from having engagements with other users. If the platforms are individual, the trust-building process goes missing which is an essential part of having a sharing platform.
Tensions, opposing logics
UCD Definition
“test different platform logics. The main bases are user-centered sharing platforms.”
When interpreting this statement that it is an interesting way of developing a sharing platform.
Especially because it is their first time developing something.
When looking at this statement using the lens of research, to be UCD you must follow what Teixeira et al. (2012, p 162) say
“User-centered design (UCD) is
… concerned with incorporating the perspective of the users into the software development process in order to achieve a desirable and usable system”.
Which the project is not following and therefore are not a UCD project. They are involving users in their loops, (see) just not in the correct way to be called a UCD platform.
User-tested not user-centered design
Feedback Process
“I wouldn't say that this process is super formalized”
When analyzing the example, I interpret this statement, I found it troubling that the project does not have a formalized feedback process. When the whole project is relying on feedback. It is very odd that a part with such importance as feedback has not been prioritized. There are ISO Guidelines for this process (Teixeira et al. 2012, p. 162).
Standard Missing, Not present standard
3.4 Critical Reflections
An improvement to the methods applied in this thesis, as described in previous sections of this chapter, would have been to interview more than one pilot user. Unfortunately, at the time of the interview phase, there were not many pilot users except for the one used in this thesis.
Additionally, interviewing more users could have provided the thesis with more empirical data on the pilot loop. Another improvement to this thesis would have been to follow the collaborative project for a longer time. Studying their processes and workflow for example for an additional five months (into autumn 2020) instead of only four months in spring 2020. If the Covid-19 pandemic had not taken place, including observations as another collection method could have helped to gain insightful empirical data. I recognize that, when applying the analytical framework, it was not complete as one would have wished regarding the depths in every literature research if I only had focused on one theme. Something that I am aware of, parts of the analysis is not that well substantiated as one might wish. Which makes the contribution less substantiated as it could have been. The methods applied in this thesis were selected based on my literature review, which I realize was not entirely as comprehensive as it should have been. I have strived for clarity sometimes at the expense of the empirical data. For example, one of the arguments that I made in this thesis is from only one quotation from the empirical data. I am aware of this weakness, but in order to be able to address these vulnerabilities and difficulties if they do exist, was the expense when I wanted to capture as many vulnerabilities as possible from the empirical data that I had collected.
4. Results
4.1 Platform Theory
During the data analysis, it was found that the research platform (tool) has similarities to Facebook. On the platform there are ways of setting up users, groups, and pages. There are also possibilities of adding friends on this platform (tool) has striking similarities of a platform (not a tool) where it is meant to build platforms. Previous research by Parker and Van Alstyne (2012) (see Table 2) defines platform roles where the researchers provide different types of roles in the platform structure. This platform can be categorized as “platform provider” because of its purpose; it provides platforms for others. The platform provider is the one that hosts the architecture, rules, and components of the platform and the provider is the point of contact for the users of that platform.
P1 said that they” are more interested in a platform ecosystem”, but they do not follow the definition of ecosystems from a technical perspective as defined by de Reuver et al. (2018, p.
127) (see Section 2.2.3). The collaborative project does not follow the description of ecosystems in the organizational perspective as defined by Tiwana et al. (2010, p. 675) (see Section 2.2.5).
During the interviews, P1 and P2 say that they are interested in platform strategy. The platform of the project is providing ways to create groups or platforms, but these platforms are not
connected to each other which is the definition of an ecosystem. Therefore, the project is creating an independent platform providing ways to create platforms but not an ecosystem. This choice of strategy does not reflect platform strategies proposed in the literature on platforms.
Facebook is a great example of a platform where you can create groups, but these groups are not independent platforms merely groups on a platform. Instagram, Messenger, WhatsApp, and Oculus are examples of platforms that are connected to Facebooks ecosystem. Another statement by P1 and P3 that confirms that they are not an ecosystem platform was “The platforms that are being built are interconnected from the start.” They are saying this, but are they really connected? Multiple times, they state that they provide users ways to build platforms. But, if they are interconnected and stuck on the platform and not independent platforms, how can they be in an ecosystem? The platform is a place for building platforms, not a place for hosting the newly built platforms and this does not provide an ecosystem platform.
P1 continue to state, “We started with, well if you design sharing platforms, don't only think about them as resource centered, but think of them as Facebook groups they can be user- centered”. But in contrary, their platform is not like Facebook, they only provide a similar structure of facilitating ways of building independent platforms where their groups are not connected to each other. The team plans for an ecosystem with their platform at its center, but they provide ways to build platforms that can function on their own which is not an ecosystem but a platform strategy.
The project is developing the new generation idea of sharing platform. P3 say that “We haven't seen anyone else take this approach to build sharing platforms” and continue to state “Most platforms are very vertical, Airbnb is housing, Uber is cars, Hyglo is renting. Our platform can be all of them”. This is quite a statement to say that the platform of the project can do them all.
Yes, the platform can facilitate many different groups of interest. In fact, it is not the platform doing these groups or platforms, it is the users making platforms. Not the project’s platform, the project is facilitating ways for building platforms. Because it is a platform for “platform making”. P3 continue to argue their approach of a platform structure. “The platform it is much of a horizontal approach instead of a vertical. There are many vertical startups, but our horizontal approach is quite a unique approach to our project, have not heard of this before”.
It is another way of structuring and having a different architectural structure of a platform.
4.2 Sharing Economy
One of the critical obstacles in a sharing platform is how to shape the sharing economy. Some examples of how to solve this problem were presented by Knote and Blohm (2016, p. 1) and these are “Multi-sided markets, Crowdsourcing, Trust and recommendation, and Consumption- based pricing”. Circular economy is another example of the sharing economy on sharing platforms.
In a sharing platform, the idea is to facilitate a space where users of demand and suppliers are on the platform, both of the users. Demand can be supplier and vice versa. The collaborative
can be capitalized that larger sharing platforms are not able. On a sharing platform, there needs to be a matchmaking process in order to find users that you would like to share with. During the interview, the P1 mentions this:
“We found interesting ways to build certain aspects of the matchmaking process. When we built it, we realized that it's almost like everyone has their own platform.”
This statement shifted from a sharing platform that is user-centered, to that every individual should have their own sharing platform. When building a sharing platform, the idea of trust is very important (Hawlitschek et al. 2016a) making this statement difficult. Trust is essential in order to have a secure and stable sharing platform. This is especially important when the shared items on the platform are personal (e.g., car, lawnmower, skateboard, ski gear). There has to be some level of trust built into the platform. For a person sharing their belongings to feel comfortable, a review program is the preferred mechanism Knote and Blohm (2016, p. 6)
“rating and recommendation systems to foster trust-based on reputations and build social networks among users. Rating and review systems are one of the most important features to foster trust-building between the peers and the intermediary in sharing networks.”.
When the project team starts discussing individual platforms for all users, some concerning issues emerges. Some of the concerns found in the analysis of the project’s new agenda are:
How is trust developed between users? How do users with their own platforms interact with other users? In what ways does the switch from platforms with many users in a multi-sided market to an individual platform effect the user?
During the data analysis, the research team has some clear idea and vision to bring their platform froward where the circular economy is at the center stage. P2 recommends:
“Resources that are being produced that they circulate as long as possible. Then think in terms of sharing so that the resources that are being produced are set to work. That is what we are striving for, we think that the sharing logic, the sharing platform logic is strong and that we can use that as a tool for changing the world in that direction.”
It is one thing to have the ideas and research in the subject, but what is interesting is how this is reflected on the platform. These ideas show how they are being materialized. The idea of the circular economy is very important for the relevance of this platform. The concept of how a circular economy should save us is great but in what way it is utilized in the platform is unclear.
The project team has ideas of the sharing economy necessary to move forward. The researchers are knowledgeable in the subject and have done good research. We live in a time when consumption of material items is high, and ones consumed there is the risk that they get wasted.
One of the goals of this project is to change this idea and to introduce the sharing economy in the smaller communities and in rural areas. To reach the users that are not likely a part of larger sharing platforms (e.g. Uber and Airbnb). Hopefully, this will change the way of thinking on our large consumption and live more circularly. Perhaps building trust to share personal property is in the form of consumption-based pricing? This idea from Knote and Blohm (2016, p. 6) “the customer only pays for the actual use of the resource but not directly for its ownership or maintenance. Thus, the sharing economy may create access-based real options for
