Scaling and Replication

Replication in the context of industrial ventures or in the pre-digital era has existed in a different form. Winter and Szulanski (2001) claim that companies

and standardising to bring down the cost of production has remained at the forefront of many industrial age business models, as shown by Chandler (1962).

Similarly, in the context of across regional boundary scaling, replication existed in the form of adaptation to local needs as the “McDonald’s” approach (Winter and Szulanski 2001, p. 730). Subtle tweaks to the product or service features dictated by the top management were commonly applied to adopt the product to local specificities. As such, replication has been an important aspect of scaling and has been successfully used strategically by organisations prior to the emergence of digital innovation and digital ventures. Other research on replication, duplication, imitation, adaptation, and copying explored this complex phenomenon from either inter-organisation perspective, competitor imitation (Rivkin 2000), in the context of maintaining uniformity (Bradach 1997), or in the franchising (Szulanski and Jensen 2008), or a non-digital organisational context (Kogut and Zander 1993, Ruuska and Brady 2011).

Moreover, most of this research explored the phenomenon using quantitative methods, thus revealing little explanation of the underlying organising logic of replication as a strategy.

Digital age replication differs from that of industrial in two ways. Firstly, digital ventures replicate the logic of their product or service, not the product or the service itself. This is more typical of replication in the industrial age.

Secondly, digital ventures replicate through localisation, rather than adaptation, more inherent to the industrial scaling logic. In the industrial age, global scaling was based on standardisation, whereas localisation was seen as eroding scaling advantages.

My findings show that digital has given replication an ‘upgrade’. In my research, in the case of digital ventures, I traced a different type of replication logic. Replication as a strategy in the digital age takes on a form of a complex generative process. Instead of standardising service or product, and it delivery, digital ventures build on the new organising logic of digital innovation (Yoo et al. 2010). In doing so, they are able to leverage this logic to specialise themselves

to different markets, and scale across regional markets using previously successful strategies that worked in other regional markets.

Digital ventures scale across regional boundaries through GPR. This process allows digital ventures to progress through an iterative cycle with unbeatable speed. The cycle starts with a departure point of great understanding and knowledge of the issue, in the context in which it was instantiated. With this as a basis, planning for change and innovation becomes a less risky, but more of a natural organizational occurrence, as the deliverables and outcomes are more or less known. As predicting these outcomes gets easier, so does becomes the mapping of the strategic moves and scaling trajectories. This allows to map out ahead and proactively by drawing on existing resources, and staying ahead of the competition. Venture consequently close this loop by assessing and measuring the actual outcomes, looking to understand them and use them to enrich existing knowledge and scaling plans that initially set the loop in motion.

GPR is associated with speed and minimisation of failure and loss. In the case of digital ventures that operate on little or no funding, particularly at the early stages of scaling, reuse of resources and replication are important strategies.

GPR also allows to leverage each market carefully and balance their separation from each other. Too much compartmentalisation of regional markets, or too much of a separation between functions creates silos. Digital ventures are good at linking smaller units, start-ups within start-ups, creating faster iterations, and making digital ventures lean. When boundaries are challenged, however, this can create conflicts, in which case the process of GPR helps to create a sharing culture and minimise any potential conflicts.

By paying heed to the notion of replication, my findings contribute to enriching and extending the significance of replication as a strategy (Winter and Szulanski 2001). In extending these theories my findings showed that replication process in the case of digital ventures is generative. In my theorizations I understand the generative nature of scaling through replication to appear at each stage of the process. In its first stage, where an initial generic concept or a pattern emerges, patterns act as platforms from which a decision, strategy, or innovation

can be generated into either local or global setting. Secondly, at the point of pattern enactment and replication in a regional market, the interplays between the three mechanisms-pillars create structures that permit a decision, strategy, or innovation to be consequently enacted and/or replicated into a local context.

Finally, generativity can be traced indirectly (through cross boundary growth), where more markets create more space and scope to experiment with decisions, strategies, or innovations; and directly (through compound growth), by generating more value for the user and subsequently customer base, as well as more patterns, which decisions, strategies, or innovations can further emerge from through positive feedback loops.

In summary, by conceptualising scaling of the user base of digital ventures via replication as GPR, my findings show that replication is used beyond design software (Gamma et al. 1995) and industrial, particularly manufacturing setting (Kogut and Zander 1993). Digital ventures also leverage replication as a strategy, however it is built on the basis of a generative living structure (Alexander 1967, Zittrain 2006), qualitatively different to the cases documented in previous replication research.