Leaders of companies anchored in traditional value chains can drive growth by transforming their existing customers into digital customers. Digital customers' interactions generate streams of data that can be used to create fresh revenue and expand the scope of product and service businesses. To achieve this, however, leaders must shift strategic priorities and develop new marketing, business, and revenue- and profit-generation models.

Companies that provide traditional products and services can harness IoT sensors and data to create value and generate new revenue through platforms. Before deciding how to proceed, they must assess their ability to collect sensor data, the data's value, and their ability to orchestrate data exchanges among users.

Digital technologies are revolutionizing traditional interdependencies among businesses. As a result, managers have begun to recognize their business environments as digital ecosystems. For firms accustomed to framing their business environments as industries, this represents a significant shift in perspective-one that requires an understanding of fresh strategic initiatives necessary to compete in the digital era. In this article, we highlight what is new and different about digital ecosystems for firm strategy. We offer frameworks that explain how digital ecosystems provide firms with new sources of value and new avenues for growth. Two sets of underlying concepts govern these frameworks: (1) production and consumption ecosystems and (2) digital envelopes and product-in-use information. We introduce and elaborate upon these foundational concepts and highlight new strategic options for firms to compete in digital ecosystems.