Platform Business Model Compass: Guiding Platform Companies Through Business Model Development

Abstract

Digital platforms constitute some of the most successful and valuable companies in the 21st century, becoming ever more prominent and important to understand. Yet, there is a gap in the literature that neglects the interrelations between business models, strategy and digital platforms. The lack thereof translates into an issue for practitioners as there is no framework that covers key elements for platform business model. Therefore, this paper sets out to investigate what business model components are relevant for platforms to discover how companies can define and document their competitive business model. Through a qualitative research design including both primary (semi-structured interviews) and secondary data collection (academic publications, articles, reports), this paper develops a framework based on the BMC. It discovers that the relevant components for platform business model design are: core interactions, network effect management, governance, technological infrastructure and monetization strategy, while metrics add a dimension of evaluating the performance thereof. These elements constitute the Platform Business Model Compass, which takes into account the networked perspective on the platform value chain. Furthermore, it finds that key for platform success is network effects and a healthy ecosystem. Thus, the paper contributes with a platform specific business model framework, that is applicable to various typologies of platforms in different contexts such as gap analysis, ideation, and investor presentations.