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Platform Revolution Chapter 10, G2 (IPCM3_Andrea, DICE2_Jeff, IBS(M1)…
Platform Revolution Chapter 10
Strategy
Porter's 5 forces model
threat of new entrants to the new market
threat of substitute products or services
bargaining power of customers
erect barriers to the entry
maximizes profits by avoiding reunion competition
encourage reunion competition for others in value chain
bargaining power of suppliers
intensity of competitive rivalry in industry
Technology advances drive shorter cycle time
McGrath
new tools and techniques to attack incumbent firms
massive investment
Author Steve Denning
company's relationships with customers are its only lasting source of value
Winner-take-all markets exist in certain platform markets.
4 main factors
network effects
multihoming and switching costs
supply economies of scale
the lack of niche specialization
In winner-take-all markets, competition is apt to be particularly fierce.
How Platform Compete
Preventing multihoming by limiting by platform access
limiting platform access so as to control and capture a greater share of the value created on the platform
Seek exclusive access to essential assets
discourage multihoming
Multihoming occurs when users engage in similar types of interaction on more than one platform
Fostering innovation, then capturing its value
The open-ended nature of platform creates enormous opportunities for users to create new value.
take control of the major sources of value created by and for users in their ecosystem
seek to own the resources whose value is greatest
seek to weaken the startup by promoting competitors
Leveraging the value of data
Data is the new oil!
Data can be a source of enormous value to platform businesses, and well-run firms are using data to shore up their competitive positions in a wide vaeiety ways.
A/B testing
Redefining mergers and acquisitions
Classic merger and acquisition strategy
pursue targets that either add complementary products or market access or subtract supply chain costs
Whether the target company creates value for a user base that signidicantly overlaps with the one they are currently serving
Advantages
Claiming a portin of the value created by a platform partner is far less risky than buying that partner
Keeping a partnership at arm's length reduces the platform's the platform's technological complexity.
Platform envelopment
Continually scan the horizon, observing the activities of the other platforms
Provide a similar feature directly
offer it indirectly via an ecosystrm partner
Platform effectively absorbs the functions and the user base
The generally triumphant is the larger platform, with its more numerous initial user base and more powerful network effects
Enhanced Platform Design
Trying to improve the quality od the tools they provide to pull in users, facilitate interactions and match producers with comsumers
New Competitions of Platform
Three Dimanssional Chess
Platform Vs Platform
Strategic advantage is based not on the
attractiveness of particular products or services but rather on the power of entire ecosystems.
e.g. Sony (PlayStation), Microsoft (Xbox), and Nintendo (Wii)
Partners Vs Partners
E.g. two game app developers strive to attract the same consumers on the same
console
Platform Vs Partners
can strengthen the
platform, but at the expense of weakening partners
Short-term gain that can lead to painful long-term consequences.
E.g. Amazon operates as a platform for independent merchants while selling same goods on the same platform
Capsule History
Michael Porter's 5 forces model
a firm can erect barriers to entry, it can keep competitors out, and entrants with
substitute products cannot storm the castle
maximizes profits by avoiding ruinous competition for itself but
encouraging it for everyone else in the value chain
:check:used it to guide decisions
which markets to enter and exit,
what mergers or acquisitions to consider
.
MIT’s Birger
Wernerfelt - the resource-based view
Richard D’Aveni and Rita Gunther McGrath -
Technological
advances drive shorter and shorter cycle times
e Internet era has created radically new tools and techniques with which
to attack incumbent firms
highlights the fact that a particularly effective barrier to entry is control of an indispensable and
inimitable resource
Steve Denning
Porter's 5 forces avoid competition
company’s relationships with customers are its only lasting source of
value
G2
IPCM3_Andrea
DICE2_Jeff
IBS(M1)_Emerald
IPCM4_Emily
Peter Drucker
to create customers
means
highlight weakness
added nuance and fresh insights