Product to Platform Transitions: Organizational Identity Implications

Organizations are increasingly recognizing that value they once derived from offering standalone products can be significantly enhanced if they transition to platform-based businesses that harness the innovative capabilities of complementors. While the competitive dynamics of platform-based businesses have been studied extensively in the economics and strategy literatures, the organizational implications of shifting from a product to a platform-based business model remain relatively unexplored. We propose that such a shift is not simply an operational change, but may challenge the core of how an organization views itself, calling into question organizational identity. Organizations that have historically defined themselves as creative and innovative may have trouble accepting a platform-based context where outsiders engage in much of the creative activity. Organizational identity can also influence whether and how organizations become platform-based. To succeed, we propose that organizations must question elements of their existing identity and actively modify it to become consistent with their new business approach.