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CDPSG1[PR] Chapter 9&10, G1 (Linn, Tammy, Jeremy, Ian), (Growth…

- - - - The firm produces and delivers value itself.
    - - Firm → Consumer (no reverse interaction)
    - - Expansion through factories, labor, and higher cost inputs.
    - - Cost efficiency
      - Process optimization
      - Increasing production capacity
    - - The two models differ fundamentally in value creation, operational logic, and growth mechanisms.
  - - - Value is created through interactions, exchanges, and content.
    - - Supply side ↔ Demand side ↔ Complementors
    - - Enables matching
      - Reduces friction
      - Enhances interaction quality
    - - Network effects: more users increase value for everyone.
- - - - SMART Metrics Principles (3A’s)
        
        Actionable
        
        Directly informs decisions & improvements
        
        Are people happy enough with the ecosystem to continue participating in it actively?
        
        Accessible
        
        Easy to understand and shared in the team
        
        Auditable
        
        Based on trustworthy, real user behavior data
  - - - Meaningless statistic :arrow_heading_up: even as the volume of interactions is :arrow_heading_down: or flat
        
        e.g., total sign-ups
  - - - Startup Phase
        
        Growth Phase
        
        Maturity Phase
        
        Focus on metrics that drive innovation by identifying new functionalities that can create value for users
        
        Feature Adoption
        
        A high signal-to-noise ratio, and facilitate resource allocation.
        
        Identify strategic threats from competitors to which the platform needs to respond
        
        Focus on metrics that are likely to impact growth and enhanced value creation
        
        Consumers becoming producers increase liquidity
        
        Side-switching Rate
        
        Track % switching sides over time
        
        More users ≠ more success if quality drops
        
        Risk & Quality Control
        
        Fraud rate
        
        Profitability depends on repeat interactions
        
        Lifetime Value (LTV)
        
        A/B tests
        
        Track the strength of characteristics that enable core interactions
        
        Liquidity
        
        A minimum number of producers and consumers and % successful interactions is high.
        
        e.g., The ratio of active users
        
        Depending on the nature of the platform.
        
        No interactions
        
        No network effects
        
        Platform dies early :skull_and_crossbones:
        
        Matching Quality
        
        The accuracy of the search algorithm
        
        High
        
        Lower search cost
        
        1 more item...
        
        The intuitiveness of the navigation tools offered to users
        
        Trust
        
        The degree to which users of a platform feel comfortable with the level of risk
        
        Low
        
        No interaction
        
        1 more item...
- - - - Prevent users from switching between competitor platforms
        
        Ensure developers commit resources exclusively to one platform
        
        Apple blocked Adobe Flash
  - - - Partners to innovate within their ecosystem.
        
        Facebook acquired Instagram
        
        Capturing innovation helps platforms stay ahead of rivals
  - - - Data is considered a strategic asset
        
        Data enables predictive insights and stronger competitive positioning.
        
        LinkedIn’s broad data advantage helped it outcompete Monster
  - - - Partner fails, a new one can be swapped
        
        Facebook avoided buying Zynga despite its popularity
        
        Selective acquisitions allow platforms to capture proven value
  - - - Absorbs functions and user base
        
        Bundling creates a one-stop solution for users
        
        Microsoft Window's streaming audio platform enveloped Real Audio
  - - - Improve the quality of Tools
        
        Airbnb outcompeted Craigslist with better search, matching, and transaction facilitation.
        
        Superior design and user experience can outcompete rivals
- - - - unclear and unfocused
      - The Chinese market is a highly profitable closed market.
        
        Difficult to become an international brand
      - Listed in the US
        
        2014
        
        Alibaba is "invading" the US market.
    - - Platform competition
        
        Explosive Network Effects
        and
        Large-Scale Economy
        
        Alibaba.com
        
        allows companies around the world to source goods, products, component
        
        Tmall
        
        Selling foreign goods to millions of Chinese consumers
        
        compresse the whole middle layer of retail
        
        solved problems
        
        slower import speed
        
        cumbersome procedures
        
        increased costs
        
        Integrator of external partners' resources and networks
  - - - the five forces model of competition
        
        Michael Porter
        
        Dominant strategic thinking for even decades
        
        Model content
        
        Threats from new entrants
        
        threats from substitute products or services
        
        Strategic objective: To control these five forces
        
        customer bargaining power
        
        supplier bargaining power
        
        the intensity of industry competition
        
        Advantage
        
        segment markets
        
        differentiate products
        
        control resources
        
        avoid price wars
        
        defend their profit margins
      - 1984
        
        the resource-based view of the firm
        
        Birger Wernerfelt
        
        content
        
        Controlling an indispensable and inimitable resource
        
        Example
        
        In the 20th century, the diamond industry was a monopoly.
        
        Controlling the global diamond marketing cartel
        
        With nearly a century of profits
        
        21th
        
        Hypercompetition
        
        Richard D’Aveni / Rita Gunther McGrath
        
        content
        
        The Internet has brought about a fundamental change.
        
        "Sustainable advantage" is just an illusion.
        
        Competitive barriers and advantages are now becoming fleeting.
        
        Competition is a perpetual motion.
        
        Flexibility provides the crucial competitive edg
        
        Create customers
        
        Peter Drucker
        
        Permanent source of value
  - - - Companies can manipulate the market
        
        Platforms leverage network effects
      - not a zero-sum game
        
        Platform competition expand overall value
    - - Platform to Platform
        
        Competition between the entire ecosystem
        
        Ex:While the Sony PlayStation Portable is more powerful, the value of the iPhone ecosystem far surpasses that of the PSP.
        
        Not product to product
      - Platform to Partners
        
        Both cooperation and competition
        
        Notice
        
        Damage to partners' trust
        
        Risks of developers or merchants fleeing the platform
        
        Example
        
        Amazon provides a platform for merchants to sell their products, while also launching its own "own brand" to sell the same products.
      - Partner to Partner
        
        Competition within the ecosystem
        
        The platform doesn't need to intervene; partners will naturally compete.
        
        Ex:On the App Store, two fitness apps are vying for the same group of users.
- - - - Industries with massive fixed costs benefit from scale
      - Intel spends billions on chip plants, but once built, producing millions more chips costs very little.
    - - more users, the more valuable the platform becomes
      - Amazon, Netflix, and Nest thrive because each new user increases the ecosystem’s value.
    - - Difficulty or high cost in changing platforms
      - Most people can’t afford both Android and Apple phones
    - - users don't has distinctive needs or tastes
      - Apple survived by serving graphic artists and musicians

Track producer outcomes / consumer purchase frequency