September 2010

The editorial theme for this issue of the OSBR is Keystone Companies. A keystone company is the member of a business ecosystem that owns, operates, and evolves the platform. The origin of the keystone concept is a good example of the importance of interdisciplinary lessons, which was the theme of last month's issue.

In an architectural arch, the wedge-shaped piece of stone in the centre is called the keystone. It is regarded as holding all the other stones in place and the arch would collapse if it were removed. Although most arches would collapse upon the removal of any of the other stones, the keystone is usually the final stone put in place during construction and is required to realize the structural integrity of the arch. Accordingly, in addition to its central physical position in the arch, it has been given a symbolic position of disproportionate importance in relation to the other stones.

The strong symbolism of the keystone has lead to the term being applied to other situations and systems where one element exerts disproportionate influence over the other elements and therefore plays a role in maintaining the integrity of the system. In particular, the term has been adopted in the biology literature using the concept of a keystone species in an ecosystem or community. In turn, the concept and its related research have been applied to the management literature where, instead of a keystone species, a particular organization or company plays the role of a keystone in a business ecosystem.

In biology, the defining characteristic of a keystone species is that its influence is disproportionate to what might be expected based simply on its total biomass in the community. A classic example is the North American beaver (Castor canadensis), which exerts a disproportionate effect on its habitat through its dam-building activities. Although the "keystone" label is applied to the species, it actually reflects the role the species currently plays within a specific ecosystem. Thus, the keystone concept is context dependent; the importance of a species in one community may be different from its importance in another.

The keystone species concept has been the subject of intense debate and research activity over the past 40 years. Biologists wish to identify and study the effects of keystone species primarily to guide conservation management. The keystone species concept suggests that management efforts can be focused on protecting an individual keystone species, and these focused efforts also theoretically provide protection for the other species that depend directly on the keystone or indirectly on the community it maintains.

In business management, the keystone species concept proved to be a useful interdisciplinary lesson, but not before another concept was borrowed from biology. The framework of the biological ecosystem concept was first applied to the business management field by James Moore in 1993 when he introduced the term “business ecosystem” in his article “Predators and Prey: A New Ecology of Competition.” Moore used this new term to describe an economic community of organizations that co-evolved their capabilities around a particular innovation and work cooperatively to meet the needs of customers.

Building on Moore's work, others have extended the business ecosystem concept and suggested that the keystone species concept in biological ecosystems can be usefully applied to business ecosystems. In particular, through their book The Keystone Advantage, Marco Iansiti and Roy Levien popularized the concept of strategically minded keystone companies that, “shape and coordinate the ecosystem, largely by the dissemination of platforms that form a foundation for ecosystem innovation and operations.”

In this issue of the OSBR, the authors offer different perspectives on a new approach for small technology companies, industry associations and business development organizations to generate revenue. The new approach builds on the keystone company concept.

Michael Weiss, Associate Professor in Carleton University's Technology Innovation Management program, asks whether the term "keystone" should be used as a noun or adjective. By comparing the use of the term in different fields, he demonstrates that the keystone concept is poorly articulated in the business literature, which may limit our thinking about what a keystone company is and can be.

Tony Bailetti, Associate Professor with Carleton University's Sprott School of Business and Department of Systems and Computer Engineering, introduces a project to create a toolkit that includes everything that is required to support a new approach to grow the revenue of a platform owner.

Michael Ayukawa, founder of Cornerportal, describes the creation of a platform to anchor a global deal-generating business ecosystem. The Open Global Commerce platform will increase the quantity and quality of transnational deals by enabling collaboration and co-creation among participants and stakeholder groups.

Elias Majic, founder of Ottercall, outlines his approach to creating a platform for language learning. Through his analysis of existing language learning solutions, and the development of his company's market entry strategy, Elias demonstrates the advantages and challenges of a multi-sided approach.

Eduardo Moraes, from non~linear creations, emphasizes the importance of trust in a marketplace. His research demonstrates how opinions of trust can be measured and how they affect a customer's uncertainty and belief in solutions presented by suppliers. Eduardo discusses the implications of this research for keystone operators.

Howard Rosenblum, from Carleton University's Technology Innovation Management program, shares his experiences helping an existing business decide whether it should migrate from its traditional, standalone approach to become the owner of a multi-sided platform. The lessons learned can be applied to any small company or organization weighing the pros and cons of migrating to the new approach.

James Makienko, from Carleton University's Technology Innovation Management program, shares his experiences helping a technology company define a set of value propositions for a multi-sided platform to answer the question: "How do you motivate potential participants to pay to join a platform?"


The editorial theme for the upcoming October issue of the OSBR is Sales Strategy and submissions will be accepted up to September 15th. November's theme is Economic Development and submissions are due by October 1st. Please contact me if you are interested in making a submission.

Chris McPhee


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