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Kimmo Karhu: Digital superpowers cause explosive growth in the platform economy and open up unlimited space for innovation

According to Kimmo Karhu, the new Assistant Professor at the Department of Industrial Engineering and Management, there has been a lot of research on the platform economy, yet there is still plenty to be studied about its basic mechanisms.
Professor Kimmo Karhu

What do you research and why?

I study the digital platform economy and try to separate out digitalisation from the platform economy itself. They overlap and, as concepts, are easily confused with one another.

There has been a great deal of research into the platform economy, but there is still no proper consensus on its basic mechanisms. The traditional market square is a classic example of the platform economy. An essential feature of the platform economy is that some aspect of the business is independently produced by a third party. This can be software, data, physical goods, or a service such as offering rides in Uber. Anyone can come to the market square to sell their potatoes, and likewise developers are also free to publish their applications on digital platforms. On the platform, producers and consumers meet. This creates a network effect in which an increasing number of producers feeds the growth in the number of consumers, and vice versa.

If the commodity is digital, then digital superpowers come into play. For example, the commodity can be transferred at the speed of light from one location to another. Furthermore, there are no constraints like there are for a physical commodity, and the space for innovation is unlimited. These superpowers easily cause the platform economy’s growth to explode.

I have a coding background, which is why digitalisation is closely involved in my research.

How did you get to be a professor or researcher?

After my master's thesis, I thought ‘OK, that’s enough, I’d like to actually do some work for a change’. However, my interest in research began to grow, and I was thinking that perhaps it could be a good idea to dig deeper into things. Then my acquaintance Professor Matti Hämäläinen persuaded me to become a doctoral student, and once I got a taste of the world of research, there was no going back.

In 2017, I completed my doctoral dissertation on competition and cooperation in mobile ecosystems in the Aalto University Department of Computer Science and Department of Industrial Engineering and Management. My supervisors were Professor Martti Mäntylä and Professor Robin Gustafsson.

A professorship is an excellent position for someone wanting to have an impact. A professor is in a sense like a start-up entrepreneur: they can independently work on their own stuff as they see fit. On the other hand, they can also help students to find their own way forward.

What have been the important points in your career?

The doctoral dissertation is an essential moment for any researcher: it’s something that you just have to get done and dusted.

My most important article so far was the article published in the Information Systems Research journal on platform forking. In platform forking, a platform is copied and forked and its development is continued independently. Lesson to learn is that a platform should not be opened up too much, otherwise a competitor will have the opportunity to attack. For example, under pressure from Apple, Android chose to adopt a more open strategy, including opening up both its operating system and marketplace. This led to development of forked competing versions of Android, such as Amazon's Fire platform.

What is the most essential characteristic of a researcher?

A researcher must be curious, have confidence in one’s own work, and have the courage to take it forward. A common problem in research today is that heavy pressure to publish leads people to just make small adjustments to research done before. It is important, however, to also think outside the box and look for bold new angles on research.

What do you expect from the future?

I am very excited about this opportunity, this role, and this freedom and independence. I want to influence society and industry right from the start of this professorship.

An upcoming article of mine theorizes on the different growth mechanisms for platforms and highlights their negative counterparts. These include congestion, which occurs when the market is too full of producers, and fragmentation, which is seen in, for example, the difficulty application developers face in making applications run properly on all different devices.

I hope to work together with Aalto researchers from the Department of Computer Science and Engineering and the School of Business, among others. One particularly interesting topic is quantum computing, which also intersects with the platform economy and digitalisation. Quantum computers will initially be massive devices that won’t be available in every home. The starting point is therefore a centralised resource that is distributed via a platform. Quantum calculation is also very difficult, as its logic differs from traditional coding. How then could a quantum platform support developers in such a way that the development of algorithms would be as easy as is app development in the Apple ecosystem?

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