Disruptive Innovation in Digital Platforms and the Rising Power of Competitors, Consumers and Producers

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The classical digital innovation theory was developed through the examination of the manufac-turing sectors and was later extended to include services. Its propositions are: 1) new technolo-gy surprises incumbents, 2) incumbents are slow to take decisions to change their production lines, acquire fundamentally new technologies and change their industrial processes; and 3) new technology is adopted by entrants while incumbents struggle to cope, eventually failing to adopt it and consequently being pushed out of their markets. In Elbanna (2017), I argue that this theo-ry has not considered the role of consumers beyond their gradual adoption of low-cost innova-tion with simpler functionality. It also portrays incumbents as stranded and stifled by their pro-duction lines, their existing technological and labour capability, and their need to attend to exist-ing customers; a view that is consistent with manufacturing but not necessary digital platforms and app-based platforms. Indeed, these assumptions do not hold well in the case of digital plat-forms. Digital platforms attend to two or more sides of the market; mainly end-consumers and producers. Digital platforms act as an intermediary between these sides where all consumers are producers are customers for the digital platform. A digital platform cannot operate without sufficient customers that attract producers and sufficient producers that attract customers. I ar-gue that the nature of this dialectical relationship and the intermediary position of digital plat-forms makes digital platforms vulnerable to both consumes and producers and hence digital platforms need to attend to all sides of their market to ensure their sustainability.
Original languageEnglish
Pages (from-to)1-3
Number of pages3
JournalIFIP SELECT for IT Professionals
Issue number1
Publication statusPublished - Feb 2019


  • digital disruption
  • digital platforms
  • platform economy

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