The early work on value chains (Porter 1980, 1985) and subsequent development of value chain and networks has seen its origins in operations research and supply chain management. But we are now entering a new era of technologically enabled environments that has spread to other spheres of human and environmental activity resulting in social, societal as well as economic and global impact.
The growth of large scale digitization has created many digital infrastructures that enable new forms of innovation (Yoo 2012). The consequences and mechanisms that drive actualization of this value in these digital infrastructures has created new drivers and attributes (Henfridsson & Bygstsad, 2013).
Much research has also been conducted in value definition and value creation including identifying capabilities and metrics for co-creation of IT value (Grover & Kohil, 2012) and strategic capital and design options for planning digital business strategies (Woodard et al, 2013.). Other research has been in defining conceptual frameworks that express where value is created in the digital environment (Pagani, 2013) and value architectures that point towards drivers of value lifecycles in digital systems. (Keen & Williams, 2013).
Related to this is the identification of artifacts and descriptions of organizational and market systems that represent the context of what has evolved to define communities, orchestrator ecosystems , business processes and resources ( Pagani 2013, Markus & Loebbecke, 2013). The different definitions of digitization attributes such as modularity and layers (Yoo, 2012) are representative of new artifacts and topologies in digitally enabled systems and how they may be used to drive innovation and value creation for participants.
Markus and Loebbecke 2013, use the term Ecosystem as a unit of analysis in describing groupings of suppliers and distribution chains which are understood as loose sets of organizations engaged in the creation and delivery of a firm’s product or service offerings, a term that Iansit and Levien 2004, refer to as, strategy as an ecology. The development of meaningful strata to represent ecosystems by Markus and Loebbecke , 2013 position the term ecosystem as a bounded definition that is only related and shared with players inside that ecosystem. Digital infrastructures that work across multiple ecosystems are described as Business Communities. A more concise definition of platform are explored with a comparison of business community platform and what is described as Orchestrator platform who own and operate their own ecosystem of players that use the orchestrator’s platform. Business community platform supports interoperable business processes that work across ecosystems in a particular business community. What is generalized is a set of structures and attributes that may define one or many ecosystems and communities that may overlap, reinforce or compete. These key differences between community, ecosystem and business processes can be seen as aspects of the digitization and actualization of the broader system of players and artifacts both physical and virtual made by digital transcription. The idea of overlapping physical and virtual communities and ecosystems and their by overlapping platforms and business process interactions is manifested in the broader topic of digital entanglement , digital copresence and the realization of digital visualization of such models.
Evolution of technologically pervasive ubiquitous systems
The evolution of digital systems as digitized ecosystems has been seen as emerging in the early 2000’s brought on by the development of late 20th century information systems standardization supporting massive internetworking global communications connectivity, virtualization of computing resources web services, data and application encapsulation. (Yoo 2012) This has created together with two and three orders of magnitude shifts in price performance in the first decade of the 21st century resulting in new value drivers and unbounded innovation model (Yoo 2012..)
The concepts of modularity versus layers of a digital infrastructure (Yoo 2012) describe component features of distributed platform architectures that may have similar accord with business community and orchestrator platforms and ecosystems (Markus and Loebbecke 2013). The key development of attributes that define types of digitization is a useful development in describing key characteristics and importantly the nature of the structure of digital infrastructures and the terms relating to how to define value and generative mechanisms (Henfridsson et al 2013).
Concept of value and sustainable competitive advantage has been widely researched (Margherita Paguri 2013). Porter in 1980 defined value as a vertical chain extending from suppliers of resources to firms and the buyers of products and services from those firms. The value chain as a construct in this context is a set of actors, resources and processes that align with core and non-core activities that together represent stages of processing products and services that represent the added-value and total value of the organization (Porter 1985). This was further expanded into what was described as players in the supply chain incorporating suppliers, intermediates and customers that together represent the value chain of the organization and the market that it operates in.
Early descriptions of the act of value creation between players in the acquisition resources such as capital, labor and raw materials and transforming these into products and services that are sold on to customers (Brandenbuger et al 1996). Value created by this vertical chain of players is defined as a number of attributed including willingness to pay, price, cost and opportunity cost (Mol et al, 2005). Value appropriation and creation across multiple players becomes a more complex issue with added value of a player and how value created by all players or selected groups of players (Margherita Paguri 2013).
The emergence of digital ecosystems drives a reconfiguration of value creation (Margherita Paguri 2013). She postulates three types of control point constellations that represent topology models of players and their components representing resources arrangements covering closed vertically integrated, loose coupled coalition model, multi-side platforms model and a potential fourth “giant component” topology model emerging in mega scale players that scale and dominate global markets by their scale that disrupts cross industry boundaries. This relates to a view of overlapping ecosystems of an even larger unit of analysis – a unit that includes peer (competitor or potential competitor) orchestrators and their respective ecosystems. This unit of analysis is described as Business Community that are not a collection of actors and may not have converged strategic activity but a range of activities that may converge or diverge. (Markus and Loebbecker 2013). (emergence social-techology behaviors )
This suggests technologically enabled ecosystems have multiple models of value networks and value creation mechanisms. These emerge and evolve over time through different generative mechanisms (Hendfridsson and Bygswtad 2013). Determining the success of the actualized digital infrastructure.
Representation of value architectures
I use the term digital ecosystem to mean a new type of artifact that is an ensemble of previous descriptors that define the digitization of communities, ecosystems, business processes and other artifacts and properties of systems. This hitherto the term environment has been described variously in a number of diverse social, physical science, finance and technology fields as internetworks, systems of systems, Weltanschauung (world view), ecosystem, economies, ecologies, organisms, cognition awareness, meta-system, systemics theory, domain theory and Mikowski space-time theory. Properties of such views and model representations may include deterministic and stochastic probabilistic systems or autopoietic systems that exhibit biological self-generation and generational properties. Focusing this scope down to a series of lens to investigate and define the technological environment needs to consider key concepts of digital systems.
Physical and virtual spaces
Conceptually, digitization has enabled virtual representations of physical resources and created new virtual constructs that may represent new artifacts that exist only in virtual space e.g. metadata tag associations and trends of social networks. This interplay of physical and virtual environments create different physical and virtual spaces and resources that in the latter case are not necessarily constrained by physical geometry or necessarily work at human perception rates of time. Broadly the definition of digital strategy means that communities, ecosystems, business processes and other artifacts can operate in both physical and virtual space and at different time rates.
Concurrency models in multiplicity and multiplexing
This phenomena also relates to a second concept of multiplexing and multiplicity where by actions and outcomes in digital systems may work and scale concurrently as a result of operating in a multi-node networked environment. E.g. concurrency of web site access.
Temporal nature of digitized Interfaces
A third key concept is in interfaces and relationships between physical and virtual networked systems. Social network analysis research has many examples of emergent social behavior and temporal relations and causality derived from data and metadata analytics (Oh, 2013). The emergent properties of formal and informal relationships described as co-presence (Nandhakumar et al, 2013) and interplay of duality in technology as structure and agency and the general emergence of digital entanglement all point towards new kind of value drivers model that supports and describes and socio-technologically enabled network structures.
Incubation and portfolio
There is much research into products and services development and launch into digital markets. A key aspect is how the value attributes and framework is applied to existing organizations or new organizational models. This has implications for the use of this research as a methodology for value actualization in organizations and the wider market and global environment design. Examples of this can include smart city and policy design for social ecosystems, adoption and launch of new products and services and innovation methods including crowd sourcing and related networking mechanisms.
Visualization, semiotics, and semantics
Current digital business strategy research have many diagramming models for concepts but there is little consistency between or common semiotic notations. There are many systems modeling notations and a wide range of open and proprietary data schemas and emerging semantic notations. A key aspect is to work towards approaches to communicate through visualization methods the new conceptualization and reality of interconnected systems and objects. Furthermore, it means the development of semiotic systems that enable a holistic or viewpoint perspective of an ecosystem.
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The term ecosystem have been an evolving concept from an early usage in ecological and biological fields (Willis 1997). Today the term maybe used more widely as an expression of a range of systems including social, technological, commercial, political and societal systems that display a set of characteristics that define resources, relationships, behaviors and systems that are members of and collectively defined as the ecosystem. Digitization has been a term used to transcribe physical resources and systems into digital attributes and representations that might be defined as expressing the ecosystem as a social-technological system they encode. Digital ecosystems have been described as digital counterparts of biological ecosystems exploiting self-organizing properties of biological ecosystems which could include robust, self-organising and scalable architectures that can automatically solve complex, dynamic problems (Briscoe and De Wilde 2006, 2010). This has been seen is diverse field of computing including neural and evolutionary computing that linked computing science theories of service oriented architecture and distributed computing and multi-agent systems into a collective systems thinking approach. This was described as a digital ecosystem operating to support and enable a business ecosystem. The types of features in business and digital ecosystems has be described in many ways in academic literature and span many areas including supply chains, value networks, social networks and behavioral science, topology and digital artifact ontologies and visualization methods and frameworks.