Value Creation in Digital Platforms with Sabine Baumann

Show notes

About the Guest

Sabine Baumann is a professor of digital business and the university vice president at the Berlin School of Economics and Law. She serves as the scientific director at the Oldenburg Institute for Information Technology and is the editor-in-chief for the IEEE Technology and Engineering Management Society's leadership brief. As a business scholar who witnessed early digital disruption firsthand in the media industry during the 1990s with the rise of Napster, she has spent decades studying digital transformation, digital business models, and platform ecosystems.

Summary

The episode explores digital platforms and business ecosystems from an economic and governance perspective, emphasizing that successful platforms rely just as much on rules and incentive structures as they do on technology. Baumann discusses the limitations of AI, arguing that while it aids in automation and scaling, it cannot completely solve "Baumol's cost disease" because many ecosystem processes still depend on inherently slow, human-centric activities like negotiation. The conversation contrasts heavily researched B2C platforms with B2B industrial ecosystems, noting that manufacturing environments face unique hurdles to platform adoption, including expensive legacy systems, physical assets, and a lack of digital capabilities. Baumann critiques the "build it, and they will come" mentality, stressing that platforms must build critical mass through network effects and ensure participants can capture, rather than just create, value. Ultimately, she highlights her current work revisiting traditional scholars like Sherwin Rosen and his "superstar economics" to better understand winner-takes-all dynamics in modern digital markets.

Links to books and papers mentioned

• Value Creation in Digital Platforms and Business Ecosystems by Sabine Baumann and Victoria Slightly (Available for pre-order) https://www.routledge.com/Value-Creation-in-Digital-Platforms-and-Business-Ecosystems-Networks-Relationships-and-the-Platform-Markets/Slettli-Baumann/p/book/9781032829234
• Handbook for digital business ecosystems edited by Sabine Baumann (Published 2022) https://www.e-elgar.com/shop/gbp/handbook-on-digital-business-ecosystems-9781839107184.html
• AI: A Cure for Baumol’s Disease? (2024) https://zenodo.org/records/13167298
• The Cost Disease: Why Computers Get Cheaper and Health Care Doesn't (Book, 2012) or the original 1966 study Performing Arts, The Economic Dilemma. https://yalebooks.yale.edu/book/9780300198157/the-cost-disease/