Beyond the chicken-and-egg dilemma—uncovering the hidden challenges of the digital platform business model

Some of the most valuable companies in the world owe their success to digital platforms. But why do several companies fail when attempting to follow in their footsteps? Khaled Abed Alghani’s doctoral dissertation in strategic management at the University of Vaasa sheds light on the missing pieces of the platform puzzle.

Building a successful digital platform is kind of like launching a new shopping mall. Constructing the space isn’t enough—you need both shops and customers to show up at the same time. This is referred to as the chicken-and-egg dilemma, and in previous academic literature, it has been widely considered the primary obstacle to platform success. However, Khaled Abed Alghani is thinking outside the nest, arguing that focusing solely on the chicken-and-egg dilemma oversimplifies the reality of platform management.

“I have identified five key processes in managing industry platforms: creation, integration, orchestration, navigation, and evolution. While the chicken-and-egg dilemma belongs to the integration phase, the earlier creation phase presents its own hurdles that platform owners must address before even attempting to build a user base. Similarly, the orchestration, navigation, and evolution processes each present their unique strategic challenges,” Alghani states.

A growing opportunity for B2B markets

Platform-based business models are well-established in consumer markets, as demonstrated by the likes of Uber and Airbnb. However, many firms in manufacturing and other B2B industries have been hesitant to adopt platform strategies. One reason is the complexity of governing relationships between businesses, which differs significantly from interactions between businesses and consumers.

As part of the research process, a director of a Finnish company was interviewed about their attempt to transition to an industry platform model. Over the course of five years, the company invested significant amounts of time and money to assess whether a platform model was viable, only to ultimately decide it was not worth pursuing.

“Their experience reveals a gap in academic research, as there is a lack of clear guidance on how to navigate the complexities of platform-based business models. The aim of my research is to uncover the strategic challenges of platform management and help practitioners make informed decisions,” Alghani says.

Abed Alghani’s dissertation combines bibliometric analysis, systematic literature reviews, and a qualitative case study. It maps the landscape of the existing industry platform literature, identifies the various processes that constitute industry platform management and the associated challenges in each, and presents approaches to overcome these challenges, with a primary focus on the early phases of industry platform management.