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Wave2 Alliances

A reference on how organisations work together

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Wave2 Alliances › Background

Platform ecosystems

In a platform ecosystem the parties are not negotiating with each other so much as accepting terms set by whoever owns the surface. That is a different kind of relationship, and much of the standard alliance vocabulary fits it badly.

What a platform changes

A platform is an offering that other organisations build on or sell through, where the owner sets the terms of participation for everyone. Marketplaces, operating systems, app stores, cloud services and large business applications with partner programmes all work this way.

Three things follow. Terms are published rather than negotiated: the participating party takes them or does not participate. The relationship is one-to-many, so the platform owner is managing a population rather than a counterpart. And the owner can change the terms, sometimes substantially, without either side breaching anything.

This is not a criticism. A platform can only offer consistency to its users by holding all participants to the same rules, and negotiating individually with thousands of parties is impossible. But it means the arrangement is closer to a standing offer than to a partnership between equals, and describing it in partnership language causes participants to expect protections they do not have.

Why organisations participate anyway

The exchange is straightforward: the platform supplies distribution, trust and infrastructure that would otherwise take years and considerable capital to assemble. A participant reaches buyers who were already there, using payment, identity and delivery mechanisms it did not have to build, with the platform's standing substituting for its own.

For a small organisation this is often the difference between existing and not existing. The cost is a share of the revenue, a loss of direct relationship with the buyer, and exposure to decisions made elsewhere.

Integration relationships

A distinct and more balanced form of ecosystem partnering is integration: two products that are more useful connected, each party building and maintaining part of the join.

These relationships have their own recurring problems. Maintenance is unequal — one side's release schedule dictates the other's work. Support is ambiguous, because a customer with a broken connection contacts whichever party they think of first. And the connection is usually built by whichever side wants it more, which is a reasonable arrangement until that side's priorities change and the connection quietly rots.

The practices that help are modest: a named technical contact on each side, advance notice of changes that break the join, an agreed rule for who takes the first support call, and an honest annual decision about whether the integration is still worth maintaining.

Asymmetric dependence

The central risk of ecosystem participation is that the platform matters much more to the participant than the participant matters to the platform. A participant may derive most of its revenue from one surface; the surface derives a rounding error from that participant.

Consequences follow from the asymmetry itself rather than from anyone's ill intent. Terms change and the participant absorbs it. Ranking or visibility rules change and demand moves. The platform builds a feature that overlaps what the participant offered, because it saw the demand in its own data.

Organisations that manage this well tend to do a few consistent things: they know what proportion of their business depends on a single surface and treat it as a figure that requires a decision, not just a report; they maintain some direct relationship with their own customers where the platform's rules permit; and they treat the platform as a channel among others rather than as a strategy.

The view from the owner's side

Running an ecosystem is also harder than it appears. The owner must keep the platform attractive to participants while keeping it consistent for users, and those goals conflict routinely. Loosen the rules and quality falls; tighten them and the participants who built the ecosystem's usefulness leave.

Owners also face a genuine dilemma about overlap. Building a capability that participants already provide improves the product for users and damages the trust of the population that made the platform worth using. There is no clean answer, only a choice about which cost to pay and how honestly it is communicated in advance.

How to read these arrangements

The useful discipline is to describe an ecosystem relationship accurately rather than in partnership language. Ask who sets the terms, who can change them, who holds the customer relationship, and what each side would lose if it ended tomorrow. The answers usually reveal a relationship that is valuable and unequal — which is a perfectly reasonable thing to enter, provided nobody has been told it is something else.

Where this leads

The terms used across these pages are collected, with plain definitions, in the glossary.

Sections of this site

Each section is a standalone explanation. Nothing here assumes you have read the pages before it.