Managing External Innovation: The Case of Platform Extensions

have at least three motivations to regulate connections among members and control the
flow of ideas in the ecosystem. First, the platform owner wants to minimize issues
associated with R&D cost, product complexity, risk mitigation, coordination problems.
Second, the platform value lies in the ecosystem wrapped around it, therefore, the
platform value increases if it has a high quality complements. Third, platform owners
want to leverage external innovation to achieve a specific goal. These motivations will
reflect on the platform owner approach to regulate the relationships with external parties
(Boudreau and Hagiu, 2009; West 2008).
There are different approaches when it comes to opening up the platform for
development by external parties. A directed or close circle approach implies that the
platform owner opens up specific areas to be developed by selected external parties. The
undirected or community approach implies that the entire platform is made available for
external parties to contribute and the platform owner has nothing to do with selecting
what part of the platform to develop or what functionality to build. The last approach is to
have multiple tiers of internal and external developers (Bosch, 2009).
2.2.3 Platform architecture
The platform architecture describes the structure of the platform components, their
interrelationships, and the principles and guidelines used to extend the platform. The
platform architecture has an important role in leveraging external innovation, reduce the
investment and efforts for R&D, and accelerate the innovation in the platform ecosystem
(Hagel III et al., 2008). Also the platform architecture affects the community
participation as suggested by West and O’Mahony (2008).
14