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Should Your Company Build an Open or Closed Ecosystem?

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One of the biggest decisions companies need to make is whether they want to build in a closed, proprietary ecosystem or an open one. While this is often thought of as a problem for digital companies, it applies to electric car makers, coffee makers, and more. When deciding, companies should follow four principles: 1) embrace the idea that open vs.

closed is a spectrum, not a binary, 2) balance benefits and costs through centralized governance, 3) pursue strategic differentiation through different levels of openness, and 4) help educate regulators on the tradeoffs.Most companies, at one point or another, need to decide what kind of ecosystem they want to build or operate in. Consider a coffee maker like Keurig.

Earn badges to share on LinkedIn and your resume. Access more than 40 courses trusted by Fortune 500 companies.is professor of Strategy and Entrepreneurship at Copenhagen Business School, where he is Director of the Digital Markets Competition Forum. His main research interests center on competition in digital markets, platform ecosystems, and sector-level digital transformation.is the Piramal Associate Professor of Business Administration at Harvard Business School.

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