Digital Workshop – Academy of Management 2020 – STRonger Together
COMPETITIVE ADVANTAGE AND UNEVEN PLAYING FIELDS IN THE WORLD OF AI AND ECOSYSTEMS
July 23rd – 18.30 CET / 17.30 BST / 10.30 EDT / 7.30 PDT
Via zoom
Organizers
Michael G Jacobides, London Business School
mjacobides@london.edu
Annabelle Gawer, University of Surrey
a.gawer@surrey.ac.uk
Participants
Carliss Baldwin, Harvard Business School
cbaldwin@hbs.edu
Martin Reeves, BCG
Reeves.Martin@bcg.com
Martin Creaner, Centernode Limited
martin.creaner@centernode.org
Colleen Cunningham, London Business School
ccunningham@london.edu
Ioannis Lianos, U. College London / Greek Competition Commissioner
i.lianos@ucl.ac.uk
Marshall Van Alstyne, Boston U
mva@bu.edu
Feng Zhu, Harvard Business School
fzhu@hbs.edu
Abstract
We are witnessing a profound and global transformation of sectors, fueled by advanced in AI and digital technologies, as new platform-based firms use their ecosystems to provide a new way to get organized. These transformations often lead to a set of new asymmetries of power. From telco to retail, industry transformation has both challenged existing players and created concerns for dominance, made worse by the scale economies in data capture in Artificial Intelligence (AI). The more data a company has access to, the easier it is for it to improve and outcompete its rivals. As a result, size begets intelligence and efficiency, making an uneven firm even worse. This PDW assembles well-known expert academics and practitioners to propose directions to address this shift toward an increasingly uneven world. It aims to make sense of the amassing set of evidence to help inform the debate and improve the state of understanding so that we better integrate these dynamics. It aims to help inform the current regulatory angst around the rise of these new digital structures, where inequality and uneven playing fields emerge in new and potent ways.
Please pre-register at https://us02web.zoom.us/meeting/register/tZcrce2rqD4tHtBE1tdsYULY38qLLnNO95ll
If you want to submit / present a paper, please send a 2-page summary by July 15 (slide deck/ 7 page paper by July 21st) through PDW_UnevenPlayingFields_AOM2020@surrey.ac.uk
BACKGROUND AND MOTIVATION
As the economy around the world transforms, with sectors increasingly shifting from traditional structures to platform-mediated, ecosystem-based industry architectures (Adner, 2017; Jacobides, Cennamo & Gawer, 2018), we see the rise of a new breed of expansive actors who wield an unusual amount of power across the board (Iansiti & Lakhani, 2017). Many of the worlds’ most valuable firms are platform orchestrators, who benefit from, but also strategically use, their complementors (Cusumano, Gawer & Yoffie, 2019), enabling rather than controlling them (Hagiu & Wright, 2018), but also having significant power, as there is a small number of “bottlenecks” which emerge in these new industry architectures (Baldwin, 2014; Jacobides, Knudsen & Augier, 2006).
The asymmetries in these new structures are significant. For every Uber, there are millions of drivers; for every Apple, there are millions of app developers, for every Spotify, there are hundreds of thousands of artists. As we witness sectors transform, the entry of new platform-based firms, which use their ecosystems to provide a new way to get organized, often leads to a set of new asymmetries of power. From telco to retail, industry transformation has both challenged existing players and created concerns for dominance. Making things worse, Artificial Intelligence (AI), which relies on data to help firms better understand their environment and customer needs, is scale-specific: The more data a company has access to, the easier it is for it to improve and outcompete its rivals (Iansiti & Lakhani, 2020). As a result, size begets intelligence and efficiency, making an uneven firm even worse.
So, as academics, how do we deal with this increasingly uneven world? How can we use the amassing set of evidence to help inform the debate, and improve the state of understanding so that we better integrate these dynamics? Can we possibly even help inform the current regulatory angst around the rise of these new digital structures, where inequality and uneven playing fields emerge in new and potent ways? (see Ivanov & Lianos, 2019, for an overview).
We feel that a PDW that will bring together some leading scholars on the topic, and which will provide the opportunity to link researchers from the Academy of Management to practitioners from the regulatory side, will help make a difference in an important topic. From talk of tech breakup and regulation to new political interventions, we are living in extraordinary times, when researchers in our field may help make a difference, in the spirit of this years’ theme of “broadening our sight”, to encompass new, critical issues. As the unusually impactful research of a law gradual student has recently argued (and has been picked up in the media), the traditional analytical arsenals of regulators are not well equipped to consider how platform sponsors and firms at the heart of ecosystems exert control (Khan, 2018) and span across previously delineated industry sectors. Indeed, the current framework in antitrust—specifically its pegging competition to “consumer welfare,” defined as short-term price effects—is unequipped to capture the architecture of market power in the modern economy (Khan, 2017). Among others, it ignores the way in which actors re-shape the architecture of their sectors and the ability of a few firms with network-effect-boosted-platforms to dominate and cut across sectors (Iansiti & Lakhani, 2014; 2017; Jacobides, 2019). Further, current antitrust frameworks typically ignore the competitive effects of small acquisitions—common in tech—which potentially have large cumulative effects on consolidation and may pre-empt, or “kill” future competition (Cunningham et al 2019; Wollman 2019).
We feel that a discussion of these topics can both help invigorate scholarship, and make an impact, in a world which is receptive to new ideas. Our field may thus be able to make a difference, consolidating recent advances. From the practice side, regulators have been considering the impact of digitization on competition, there has been a growing interest in the way we can address these new forms of organization, evidence from the Furman report in the UK, and the recent EU announcements of the Competition Commissioner and the Chair of the Commission. The US seems to be heading for some change, especially after its election, and the BRICS competition Conference in Moscow in September was receptive to new ideas. With all this as background, what is the best way forward? How can we help create a sensible, informed framework for debate which ensures a level playing field, and allows us to benefit from the process of industry redefinition? Through this workshop, we aim to bridge leading thinkers with policy makers and senior industry participants.
Participants and Contributions
This workshop brings together some of the leading scholars, from diverse perspectives, but also some key practitioners who will be able to ground our conversation. From the academic side, Annabelle Gawer, one of the top platform scholars (Gawer & Cusumano, 2002; 2014; Gawer, 2014), considers the challenges of excessive dominance of platforms, which she explored in her latest book (Cusumano, Gawer & Yoffie, 2019). Marco Iansiti, one of the early contributors to the ecosystem field (Iansiti & Levien, 2004) will look at how the rise of AI changes the playing field, the topic of his latest book (Iansiti & Lakhani, 2020). Michael G Jacobides brings his expertise on both issues of asymmetry of power in industry architectures (Jacobides et al, 2006), and his more recent interest in ecosystems (Jacobides, 2018), and the concerns about dominance (and potential regulation of) platforms and ecosystems (Jacobides, 2019a, b). Marshall Van Alstyne, one of the key platform scholars, will draw on his work on the dynamics of competition in platforms (Parker, Van Alstyne & Choudary, 2016) and share his most recent work on the regulatory conundrum. Feng Zhu, an important platform researcher, will bring his expertise on both the competition in platform markets (Zhu & Iansiti, 2012) and his work on how digital and non-digital interact (Seamans & Zhu, 2013). Straddling research on strategy, organization, competition, and these “new realities”, Carliss Baldwin, who has also considered the role of bottlenecks (Baldwin, 2018), will help put this research in perspective, and Coleen Cunningham will share her recent research on “killer acquisitions”, with firms that change their boundaries to forestall competition (Cunningham et al, 2019) and consider what this implies for us. Moving further away from our fields’ core, Ioannis Lianos, Chair, Global Competition Law and Public Policy in UCL and author of the BRICS report on digital competition (Ivanov & Lianos, 2019) will help link us to the legal and regulatory side. Ioannis will also bring an applied perspective, as the Chairman of the Greek Competition Authority, and as such one of the top regulators, currently also charged to review and renew the Greek competition laws. Finally, Martin Creaner will bring his perspective as a senior, respected telecommunications executive, who led a group that coordinates telecommunication firms (who have been under pressure from big Over-the-top players such as Google and Facebook), will allow us to delve down into the specifics of a live laboratory- telcos, and how they can potentially fight back by shifting to a “federated model” (Creaner, 2019). Shifting us from regulatory response to business implications, Martin Reeves, the President of BCG’s Bruce Henderson Institute and BCG Senior Partner will share his thoughts on the impacts on firms in competing in ecosystems, and in a world where AI plays such an active role, moving beyond his recent published work (Fuller, Reeves & Jacobides, 2019; Reeves et al, 2019) to encompass AI’s impact and implication for firms, their strategy and structure.
OVERVIEW OF THE PDW AND UPDATED DIGITAL SCHEDULE
The workshop will start with a 5-minute introduction. Then, we will move to an overview of each of the participants contributing their complementary perspective on how the world is becoming more uneven, what this means both for strategy and policy, and how can we, as scholars, contribute to this important debate. This session will have a break to make this a more reasonable digital experience. Then we will deep dive on the reality of trying to change uneven worlds and make them more even, drawing on the telco case, with Martin Creaner presenting the current challenges and the opportunities of the federated model, and with Michael G Jacobides presenting his experimental work on how the mobile telco ecosystem might be unbundled in the future. Finally, Ioannis Lianos will provide some input on where practitioners stand, and Martin Reeves will consider what this all means for practicing managers- and their advisors. This session will last 1 hour. We the move to the digital paper presentation session, where the participants in the PDW will be divided in virtual breakout rooms, and they will provide comments to papers which will have been submitted by participants to the PDW. (If we don’t get enough papers, we will have thematic areas each with one or more senior scholars.)
For those who would want to share their papers- please ensure to send a 2 page summary to PDW_UnevenPlayingFields_AOM2020@surrey.ac.uk , by July 15, and should you wish for more comments you can send us ahead of time a short ppt deck or a 7 page document which the senior scholars will read.
The PDW will end with a final round of conversation, with the participants providing their reflections and suggestions for the way forward, focused on implications for practice, so as to respond to the call in this years’ meeting for “broadening our vison”- hoping for some lively virtual Q&A.
Timetable for the PDW:
Introduction: 5 min
Panelist Presentations: What’s changing on how even or uneven the
world is becoming? Baldwin, Cunningham, Gawer, Jacobides 28 min
BREAK: 4 min
Presentations, cont’d (Lianos, Reeves, Van Alstyne, Zhu): 28 min
Plenary Q & A : 20 min
BREAK: 10 min
A case-study: Regulating mobile ecosystems (Creaner, Lianos, etc) 20 min
Paper feedback session in breakout groups: 50 min
Wrap-up, reflections, final Q&A: 20 min
Come join us virtually!!
REFERENCES
Adner, R. 2017. Ecosystem as Structure. Journal of Management, 43(1):39-58.
Adner, R., Kapoor, R. 2010. Value creation in innovation ecosystems: how the structure of technological interdependence affects firm performance in new technology generation. Strategic Management Journal, 31(3):306-333.
Baldwin, C.Y. 2012. Organization design for business ecosystems, Journal of Organization Design, 1(1).
Baldwin C.Y. 2018. Bottlenecks, modules and dynamic architectural capabilities. In D. J. Teece and S. Heaton (Eds.) The Oxford Handbook of Dynamic Capabilities.
Creaner, M, 2018, Transforming the Telco, CenterNODE: London.
Cunningham, C., Ederer, F., Ma, S. 2019 Killer Acquisitions. Available at https://ssrn.com/abstract=3241707
Cusumano, M., Gawer A., Yoffie, D, 2019, The Business of Platforms, New York: Harper Books
Gawer, A. 2014. Bridging differing perspectives on technological platforms. Toward an integrative framework. Research Policy, 43: 1239-1249.
Gawer, A., Cusumano, M.A. 2002. Platform leadership: How Intel, Microsoft, and Cisco
drive industry innovation. Boston: Harvard Business
Gawer, A., Cusumano, M.A. 2014. Industry Platforms and Ecosystem Innovation, Journal of Product Innovation Management, 31(3): 417-433.
Helfat CE, Raubitschek RS. 2017. Dynamic and integrative capabilities for profiting from innovation in digital platform-based ecosystems. Research Policy, 47(8): 1391-1399.
Hagiu, A., Evans, D., Schmalensee, R. 2006. Invisible Engines: How Software Platforms Drive Innovation and Transform Industries, Boston: MIT Press
Iansiti, M., Levien, R. 2004. The keystone advantage: what the new dynamics of business
ecosystems mean for strategy, innovation, and sustainability. Harvard Business Press
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Iansiti, M., Lakhani, K.R., 2017. “Managing our Hub Economy”, Harvard Business Review, September-October.
Iansiti, M., Lakhani, K.R., 2020. Competing in the Age of AI: Strategy and Leadership when Algorithms and Networks Run the World. Harvard Business Review Press.
Ivanov, A., Lianos, I. 2019. BRICS Report on Digital Competition.
Jacobides, M.G. 2019. Amazon's Ecosystem Grows Bigger And Stronger By The Day. Should We Be Worried? Forbes.com post May 9.
Jacobides, M.G., Cennamo C., Gawer A. 2018. Towards a theory of ecosystems. Strategic Management Journal 39(8): 2255–2276.
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Jacobides, M.G., Sundararajan A., Van Alstyne, M. 2019, Platforms and Ecosystems: Enabling the Digital Economy, World Economic Forum White Paper, March.
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