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Platform Revolution(Chapter 1&2), G2 (IPCM3_Andrea, DICE2_Jeff,…
Platform Revolution(Chapter 1&2)
What is
Platform
?
Technology
Organizations
Resources
People
Unique & Focused on a distinctive industry & market.
A business based on enabling value-creating interactions between external producers & consumers.
consummate matches amoung users & facilitate
About Platform
Pipeline
Linear value chain
Platform
value may be created, changed, exchanged, and consumed in a variety of ways and places
Why platform win pipeline
Unlock new sources of value creation and supply.
Using data-based tools to create community feedback loops.
More efficiently by eliminating gatekeepers.
Inverting the firm
From internal activities to external activities.
Network Effects
What is
network effect
?
the impact that the number of users of a platform has on the value created for each user.
Negative
the possibility that the growth in numbers of a poorly-mangaged platform commnuity
can reduce the value produced for each other
Postive
ability of a large, well-managed platform community
produce significant value for each user of the platform
Need to distinguish from
Virality
What :question:
the tendency of an idea or brand to be circulated rapidly and
widely from one Internet user to another
How is it different from network effect :question:
Virality = Growth of new users( :red_cross: Value creation)
Network = Creating value to product which leads to the building of a longlasting
network of users—
lock-in
:lock:
Brand Effect
Spending money to be recognized by customers
Price Effect
Lowering price like discount
Startup's Growth Strategy
Demand Economies of scale
take advantage of technological improvement on the demand side
efficiencies in social network
demend aggregation
app development
other phomomena
the fundamental source of positive net work
Two-Side Network Effects
in Market A of growing that market enables growth in a related Market B
Kinds of Network Effects
Same-side effects
users from on side of the market on other users from the same side of the market
positive :check:
the positive benefits received by users when the number of users of the same kind of increase
negative :green_cross:
more difficult for appropriate providers and customers to find one another
Cross-side effects
users from one side of the market on users from the other side of the market
positive :check:
when users benefits from an increase in the number of participants on the other side of the market
negative :green_cross:
complexity and expense
too many advertisment
Effective platforms are able to expand in size quickly and easily
Scaling the network effect
Both sides of the market grow proportionally
Balance
Frictionless entry
The ability of users to quickly and easily join a
platform and begin participating in the value creation that the platform facilitates
E.g. - Threadless T-shirt company
Effective curation
If not, can have
negative effect
:warning:
The growth in numbers that enables more matches between producers and consumers also leads to increasing difficulty, or impossibility, in finding the
best match
Make businesses easier to look inside-out view
Innovation shifts from in-house
R & D to open innovation
Primary venue for activities in which
value is created for participants
shifts from an internal production department
to a collection of external producers and consumers
Management of human resources shifts from employees to crowds :silhouettes: :silhouettes:
Examples
UBER
Platform Changes
Eliminating gatekeepers by using data-based tool
real-time feedback
to determine which driver will succeed and which will failed
Unlock new sources of value creation
didn't own a car, but create a platform that allows everyone to provide riding to consumers
Invert the firm
how the focus shift: broadcast -> segmentation -> social influence
Network Effect
Napkin Sketch
Demand Economies Of Scale
convex growth
the more people join
the Uber, the more value grows
Two Sided Network Effects
riders attract drivers
drivers attract riders
platform spend money to attract participants avoid inbalance between riders and drivers
coupons
Frictionless Entry
register and join Uber easily
Cross-side effect
riders > drivers
waiting time increase
drivers > riders
driver downtime increase
participants abandon the markets
G2
IPCM3_Andrea
DICE2_Jeff
IBS(M1)_Emerald
IPCM4_Emily
More demand
Lower prices
More drivers
More coveragel saturation
Faster pickups
Less drive downtime
riders
drivers
phone users
more phone users
What is
frictionless entry :question:
Ecosystems of users
are the new source of competitive advantage and market dominance.
Why does
it happen :question:
Interactive ecosystem
Step-by-step arrangement for creating & transferring value