Mobilizing Service Ecosystems for Sustainability – the Case of Polestar

Maya Hoveskog^1,* Magnus Holmén¹, Anya Ernest²,
Magnus Bergquist³

¹School of Business, Innovation and Sustainability, Halmstad University, Sweden

²R&D, Connected Experience Innovation, Polestar, Sweden

³School of Information Technology, Halmstad University, Sweden

*[email protected]

Extended abstract

Recent years have witnessed the repurposing of cars from being purely a means of transportation to as an extra room as well as a digital platform on wheels. In-car digital services open new possibilities for OEMs to increase the retention of customers for internal combustion engines (ICEs) and electric vehicles (EVs) alike (Capgemini Research Institute, 2022). To succeed, OEMs need to find ways to become more service-centered, which is challenging as it demands multi-stakeholder collaboration (Markard et al., 2012) towards a collective outcome (Talmar et al., 2020). This paper reports on a case study of the emergence of Polestar’s InCarApps, which was initiated to capitalize on the repurposing of the role of cars and to increase attraction to EVs by increasing the status and image of the car, renewing what customers view cars to be (e.g., mobile office), and open for the option of new data-oriented service markets. Arguably, an ecosystem approach to service innovation makes it possible (Adner, 2017) However, despite much research being done on ecosystems, we still need a rigorous way to analyze how they emerge and change (Ritala & Gustafsson, 2018). Ngongoni et al. (2022) proposed a method for ecosystem analysis using functions. Bergek et al. (2008a; 2008b) define functions as key innovative activities in the ecosystem (knowledge development, resource mobilization, market formation, influence of the direction of search, legitimation, entrepreneurial experimentation, and development of external economies). The paper explores how a digital service ecosystem is mobilized and orchestrated by a product-oriented firm, which in contrast to most prior cases studied, is not the owner of a digital platform.

The focal company is the Swedish EV manufacturer Polestar, a spinoff of Volvo Cars, which very rapidly for the industry launched a digital app initiative for its infotainment system. We did a semi-structured qualitative interview study (n=12) in 2022 with employees from Polestar, the digital platform owner (Google), and complementors (third-party developers and service providers). See Table 1 for details.

Table 1. Overview of interviewees, their organization and position.  

The analysis followed Bergek’s et al. (2008a) approach for analyzing functions in innovation systems to provide insights into the ecosystem mobilized and orchestrated, which resulted in 61 first-order codes capturing activities where most statements were coded by more than one code (Table 2). Coded activities were related to one or several functions.

Tentative results: case description and function analysis

Polestar pioneered using Android Automotive OS with Google automotive services (Maps, Assistant and Play) to integrate app services into the car directly and came to serve as a testbed for application development in the car industry. Between 2019-2022, Polestar launched 14 applications. The in-car app development was done in collaboration with third-party developers and Google. Below we present illustrations of the key innovation activities driving the development of the ecosystem (Table 2).

Table 2. Illustration of the links between identified activities, functions, and empirical quotes.  

Tentative discussion and conclusions

In the following, we analyze the empirical results based on the identified functions and activities.

Entrepreneurial experimentation is the preparedness to evolve under considerable uncertainty in terms of technologies, applications, and markets that may reduce uncertainty (Bergek et al., 2008a). The InCarApp ecosystem provided an arena for experimentation that allowed for probing into new technologies and applications. Polestar being first on the market, adopting and developing applications for Android Automotive was crucial for attracting third-party developers but also as a test bed for Google to showcase the potential of in-car applications. Technological and user uncertainty was dramatically reduced, but market uncertainty remained high in the sense that a future market or business model remained unproven. An indicator of a successful experimentation function is the number of different types of applications developed and the breadth of complementary technologies applied (Bergek et al., 2008a). As twelve actors from different industries (e.g., app developers) engaged in developing 14 apps in a short time demonstrated the importance of experimentation in the emergence of ecosystems via feedback-driven learning (Walrave et al., 2018; Engwall et al., 2021).

Legitimacy deals with the social acceptance of institutions in relevant fields (Bergek et al., 2008a). Relations with strategically important institutions need to be established to mobilize resources and create a demand (Talmar et al., 2020). The emerging ecosystem connected relevant actors so that complementarity were integrated into a shared goal: Google had an interest in testing its platform to increase the network effects of its platform (Gawer & Cusumano, 2014) and needed an OEM to take the first step; third-party developers got the opportunity to test the automotive platform and be early out with a new type of application and to interact with Google, which can be difficult for a small, niched actor on the market; Polestar established a reputation of strong leadership for in-car app exploration that attracted new actors to partner with them to develop the service ecosystem. Internal and external communication was used to ensure that the work was known in the public space and amongst vehicle owners, which created momentum for the initiative internally and externally (e.g., Nailer & Buttriss, 2020). The actors were motivated by value anticipation rather than strong business cases (Nailer & Buttriss, 2020).

Resource mobilization is the ability to mobilize competence in relevant scientific and technological fields, entrepreneurship, management, and finance, and in complementary products, services, networks, and infrastructure (Bergek et al., 2008a; Talmar et al., 2020). In the studied case it was evident that the influx of complementary knowledge and infrastructures was important for the development of InCarApps, such as Google’s contribution of knowledge about how to use Android Automotive, and the third-party developer’s knowledge about their specific area.

Knowledge development describes how well the knowledge base supports the diffusion of innovation (Bergek et al., 2008a). It became crucial that an increased knowledge base was needed for diffusion and to speed up innovation. The ecosystem gathered experiences of digital innovation for the car industry by combining different types of knowledge bases (technological, production, market, design knowledge), and different sources of knowledge development (R&D, application developers, other types of service design applications), and by imitating different work formats (Doherty & King, 2005; Hekkert et al., 2007). Applying a more agile work approach, supported by technical infrastructure, is important for speeding up development and reducing organizational overhead (cf. Goncalves et al., 2022). In the case studied, a core team took on the roles needed to solve problems in an agile manner, supported by an openly available emulator for testing the new applications.

Market formation is the development of a mature market for new products and services, a process that often goes through three phases (Kemp et al. 1998; Andersson and Jacobsson, 2000): from nursing, via bridging, to a mass market. The studied case evolved as a nursing market, during which a "learning space" opened up (Bergek et al., 2008a). For Google it became a part of expanding its platform by demonstrating the potential to new users and future markets. For contributing organizations, for example, in the media industry, it was a learning space to ensure capturing of new ideas for value creation. For Polestar, the market formation was about positioning the value and attractiveness of the car to generate space for creating future markets. All actors in the ecosystem joined without having a value capture strategy (Nailer & Buttriss, 2020; Engwall et al., 2021).

Influence on the direction of search is, for example, regulations and policies shaping how actors can enter the ecosystem, competing products and markets, new business models etc. (Bergek et al., 2008a; Walrave et al., 2018). Android Automotive's regulations for what could be implemented in a car had a direct influence. To support developers, Polestar created an emulator for developers to test prototypes, which significantly supported third parties' ability to autonomously try out solutions, mitigate technical bottlenecks, and speed up teamwork.

Development of positive externalities is, for example, external economies that have a positive impact on the formation and growth of an ecosystem. New actors might resolve initial uncertainties about the formation of markets and the impact of new technologies (Bergek et al., 2008a), which is in favor of ecosystem growth. Tesla's dominating position as EV class leader and Google's as a large digital platform provider positively impacted Polestar and the involved contributors’ positive assessment of opportunities to appropriate future markets (cf. Cantner et al., 2021). While Google became crucial for the InCarApp project and contributed directly to its development, it is also important to recognize Tesla's role as a positive externality for the InCarApp ecosystem that strengthened both the “direction of search” and “market formation” functions (Bergek et al., 2008a).

This study showed that the functions affected each other in a dynamic way. The ecosystem emerged via entrepreneurial experimentation of the focal firm (Polestar), which legitimized the area for complementors but also for the platform owner (Google). This increased legitimation, demonstrating use value of apps and the platform, provided the first step for market formation, which may open possibilities for monetization. At the same time, entrepreneurial experimentation both created knowledge and mobilized resources, both internally (focal firm) and externally (especially complementors). Importantly, the mobilization of resources affected the direction of the search towards feasibility and usefulness of mobility-oriented services in the sense that complementors diversified from their old solutions by entering the emerging ecosystem.

To conclude this study answered the call for more systematic innovation approaches, such as service ecosystem mobilization and illustrated the key role of individual actors, collaboration, experimentation and platformization (Konietzko et al., 2020; Engwall et al., 2021). While at the time of the research, InCarApps was the only case of its kind as Polestar was the first to capitalize on this opportunity, today, there are more OEMs starting to explore this (e.g., Volkswagen Group brand vehicles, Audi, Mercedes). Our results showed that service ecosystem mobilization and orchestration by a product-oriented incumbent firm was speeded up by already existing structures and the open, experimentation-guided learning approach to service development. It also allowed the participating actors to position themselves for the future, learn and gain legitimacy and access to resources (Engwall et al., 2021). Even if the InCarApp initiative was not primarily driven by sustainability concerns, and the total environmental impact of EVs to generate sustainability can be questioned, the presented case hints at the role service ecosystems could have for the attractiveness of EVs towards the higher scope and speed of EVs user adoption (Bergek et al., 2008b; Köhler et al., 2019; Engwall et al., 2021; Sandén & Azar, 2005).

Keywords 

Service ecosystems, electric vehicles, entrepreneurial experimentation, legitimation, resource mobilization, knowledge development, market formation

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