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MANAGING OUR HUB ECONOMY BY MARCO IANSITI AND KARIM R. LAKHANI ((To…
MANAGING OUR HUB ECONOMY
BY MARCO IANSITI AND
KARIM R. LAKHANI
business is getting monopolized by the companies that promoted democracy
external companies need to offer their products through the companies that monopolize the market
they use their popularity to transform or enter in another industry modifying it from product to network driven
The Challenge:
"This trend threatens to exacerbate already dangerous levels of income inequality, undermine the economy, and destabilize society."
(Page 86)
The Answer:
"While there are ways for companies that depend on hubs to defend their positions, the hubs themselves will have to do more to share economic value and sustain stakeholders."
(Page 86)
To remain competitive,
companies will need to use their assets and capabilities differently
transform their core businesses
develop new revenue opportunities
identify areas that can be defended from encroaching hub firms and others rushing in from previously disconnected economic sectors.
"Thoughtful hub strategies will create effective ways to share economic value, manage collective risks, and sustain the networks and communities we all ultimately depend on."
(Page 86)
Economic hubs are rooted in 3 principles
1.- The first is Moore’s law, which states that computer processing power will double approximately every two years.
2.- Modern digital technology enables the sharing
of information at near-zero marginal cost, and digital networks are spreading rapidly
3.- the notion that digital-network formation naturally leads to the emergence of positive feedback loops that create increasingly important, highly connected hubs
digital domino effect.
One example of the digital domino effect is that
" The car features that buyers will care most about—software and networks—will be largely outside the automakers’ control, and their price premiums will go down."
(Page 87)
Other sectors will succumb to the Hub Firms
In traditional product and service businesses, the value creation curve typically flattens out as the number of consumers increases
Digital technologies, however, exhibit in creasing returns to scale
Hub firms often compete against one another.
If multi homing is common, the market is less likely to tip to a single player, preserving competition and diffusing value capture
Cooperation will become more important for the rivals that orbit hubs
Strategic joint action by companies that are not hubs may be the best competitive antidote to the rising power of hub firms
All quotes and comments were based on the article published by Harvard Business Review. Plagiary is not intended by any means.
The mind map is presented only as a summary of the article, and some ideas are stated in a quoted way