Acquisition of Complementors as a Strategy for Evolving Digital Platform Ecosystems
Nicola Staub, Kazem Haki, Stephan Aier, Robert Winter, Adolfo Magan
This study examines how digital platform owners can accelerate growth by acquiring 'complementors'—third-party firms that create add-on products and services. Using Salesforce as a prime case study, the research analyzes its successful acquisition strategy to offer practical recommendations for other platform companies on integrating new capabilities and maintaining a coherent ecosystem.
Problem
In the fast-paced, 'winner-take-all' world of digital platforms, relying solely on internal innovation is often too slow to maintain a competitive edge. Platform owners face the challenge of rapidly evolving their technology and functionality to meet customer demands. This study addresses how to strategically use acquisitions to incorporate external innovations without creating confusion for customers or disrupting the existing ecosystem.
Outcome
- Make acquisitions across all strategic directions of the platform's evolution: extending core technology, expanding functional scope, and widening industry-specific specialization. - Use acquisitions as a mechanism to either boost existing proprietary products or to initiate the development of entirely new ones. - Prevent acquisitions from confusing customers by presenting all offerings in a single, comprehensive overview (like Salesforce's 'Customer 360') and actively communicating changes and benefits. - Adopt a flexible, case-by-case approach to integrating acquired companies, tailoring the technical, branding, and licensing strategies to each specific situation.
Host: Welcome to A.I.S. Insights, the podcast where we connect Living Knowledge with business strategy. I’m your host, Anna Ivy Summers. Host: Today, we’re diving into a fascinating study titled "Acquisition of Complementors as a Strategy for Evolving Digital Platform Ecosystems." Host: With me is our expert analyst, Alex Ian Sutherland. Alex, welcome. Expert: Great to be here, Anna. Host: So, in simple terms, this study is about how digital platforms, like Salesforce, can grow faster and smarter by buying other companies that build products for their ecosystem. Is that right? Expert: Exactly. It's about using acquisitions as a strategic tool for evolution, not just expansion. Host: Let’s start with the big problem. Why is this such a critical issue for platform companies today? Expert: Well, we're in a 'winner-take-all' digital world. If you're running a platform, you're in a race. Relying only on your own team to build new features is often too slow. Your competitors are moving fast, and customer demands change in a heartbeat. Host: So, you risk falling behind. Expert: Precisely. The challenge is, how do you quickly bring in new technologies and services by acquiring other companies, without creating a messy, confusing product portfolio for your customers? Host: A very real challenge. How did the researchers go about studying this? Expert: They conducted an in-depth case study on one of the most successful companies at this: Salesforce. They didn't just look at public data; they conducted 19 detailed interviews with senior people at Salesforce, as well as with their partners and major clients. Host: So they got the full picture from every angle. Expert: That's right. It allowed them to understand not just what Salesforce did, but why they did it and how it impacted the entire ecosystem. Host: Let's get to the findings. What was the first key insight from the study? Expert: The first is that successful acquisitions aren't random. Salesforce made them across three distinct strategic directions. First, extending their core technology—like buying MuleSoft to handle data integration. Expert: Second, expanding their functional scope—like acquiring Demandware to launch a full e-commerce solution, which they called Commerce Cloud. And third, widening their industry specialization, which they did by buying Vlocity to get deeper into specific sectors like communications and healthcare. Host: So it's about being very deliberate in how you grow. What was the next major finding? Expert: The study found that acquisitions were used in two main ways: either to boost an existing product or to create a brand-new one. Host: Can you give us an example? Expert: Of course. To boost an existing product, they bought ExactTarget to supercharge their Marketing Cloud. But to create a whole new capability, like that e-commerce platform I mentioned, they bought Demandware and used it as the foundation for their new Commerce Cloud. It's a dual strategy for innovation. Host: Now, you mentioned the risk of confusing customers. How did the study say Salesforce managed that? Expert: This is critical. As they acquired more companies, functionalities started to overlap, and customers were getting confused. To solve this, Salesforce created what they call the 'Customer 360' overview. Host: A single source of truth? Expert: Exactly. It's a unified dashboard that presents all their services, including the newly acquired ones, in one coherent package. It creates the feeling of a one-stop shop, even if the technologies behind the scenes are from different companies. Host: And the final key finding? Expert: That there is no one-size-fits-all approach to integration. Salesforce adopted a very flexible, case-by-case strategy. Host: What does that mean in practice? Expert: It means they looked at each acquired company individually. For some, like Demandware, they absorbed the company completely and the brand disappeared. For others with huge brand recognition, like Tableau and Slack, they kept the original brand. They tailored the technical, branding, and even the licensing models to what made the most sense. Host: This is incredibly practical. So, Alex, let’s boil it down. What is the number one takeaway for a business leader listening right now who is thinking about their own acquisition strategy? Expert: The biggest takeaway is to think of acquisitions as a portfolio. Don't just buy what's hot. Deliberately invest in companies that strengthen your core tech, add broad new features, and give you industry-specific depth. Host: And what about after the deal is signed? Expert: The work is just beginning. You must have a plan to communicate a simple, unified value proposition to your customers. If you don't, you risk confusing them and destroying the value you just bought. Host: And be flexible in how you integrate. Expert: Yes. That flexibility is key. What worked for one acquisition may not work for the next. You need to adapt your integration strategy for branding, technology, and licensing each time. Host: So, a smart acquisition strategy is about more than just buying growth. It’s a deliberate process of evolving your platform, integrating new pieces thoughtfully, and always, always communicating clearly with your customers. Host: Alex, thank you for breaking down this complex topic into such clear, actionable insights. Expert: My pleasure, Anna. Host: And thank you to our listeners for tuning in to A.I.S. Insights, powered by Living Knowledge. Join us next time as we explore the latest research shaping the future of business.
digital platforms, platform ecosystems, acquisitions, complementors, Salesforce, business strategy, ecosystem evolution
