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PLATFORM REVOLUTION, network, Platform Operators, Platform Users, Helena,…
PLATFORM REVOLUTION
Chapter 1: Platform
1. Definition
new business model
uses technology
to connect
organizations
create + exchange value through interaction
resources
people
2. Pipeline vs. Platform
Pipeline (Linear Model)
Creates value through a
fixed sequence of steps
design → production → sales → delivery to consumers
Platform (Value Network)
Creates & exchange value through
a network of connections
3. Advantages
Remove gatekeepers
grow faster based on
real user feedback
Amazon Kindle
authors publish directly to readers
Use Spare Capacity
:red_cross: owning major physical assets
Uber
:red_cross: own :car:
Use community feedback loops
:arrow_up: service quality
🔍 poor products
Invert the Firm
shift business's focus
managing
internal assets + operations
coordinating
external resources + partners + communities
4. Impact
Transformed
many industries
Travel
Airbnb, TripAdvisor
Transportation
Uber, Grab, Waze
Retail
Alibaba, Amazon
Media
Facebook, YouTube, Wikipedia, Wattpad
Education
Coursera, Skillshare, Udemy
Chapter 2:
Network Effect: The Power of the Platform
Growth & Enablers
Growth-building Tools
Price Effects
users leave when promotions end
Temporary / High churn
e.g.
subsidies, discounts, and giveaways
Brand Effects
Advertising
Costly awareness
Expensive
Network Effects
On-platform Lock-in
≠ Virality
Attracts external users to join the platform
Retention vs. Temporary gains
Scalability Enablers
Accelerating ecosystem expansion
Frictionless Entry
Easy onboarding
Side Switching
Consumers → Producers
Cross-Subsidization
Subsidize A to profit from B
Risk & Inversion
The 4 Network Effect
Same-Side
Peer fun (+)
Price competition (-)
Cross-Side
Market match (+)
Idle downtime / Spam (-)
System interactions
Curation & Data Loop
Managing scale pollution
Noise dilemma
Unfiltered scale drives users away
Smart Matching
Scale creates data → sharper algorithms
Turn Firms Inside Out
Organizational transformation
Valuation premium
Network Orchestrators lead
Boundary shift
Human capital shifts to crowds, R&D to open innovation, strategy to external orchestration
Economic Shift
Dynamic Market Expansion
Virtuous cycle
Density ↑ → Wait times & downtime ↓ → Lower prices → Demand ↑
Market creation
Expands total pie
Supply-Side Scale
Internal Cost Reduction
Demand-Side Scale
External User Value
Chapter 3A:
Architecture I: Designing the Core Interaction
The purpose of interaction
Exchange
Information/goods/services/currency
Core interaction
Elements
The participants
Producer/consumer
The value unit
Benefits
The filter
Select customer
Functions
Pull
Attract customers
Facilitate
Make value exchanges easy
Match
Connect the right users to maximize interaction value
Chapter 3B:
Architecture II: Building a Platform That Grows and Evolves
Layer New Interactions on Top of the Core
LinkedIn: connecting → groups & discussions → recruiters & advertisers → publishers
Uber & Lyft: shared rides (UberPool, Lyft Line)
Change the value unit
Bring in a new type of user
Exchange new kinds of value
Curate a new category (“thought leaders”)
End-to-End Principle
Problem: bloatware
Simple, stable core; special features at the edges
Microsoft Vista: old code in the core → failed (XP >12% vs. Vista <2%, 2015)
Mac OS X: clean core + “Classic Environment”
Modularity
Independent parts + standard interfaces (APIs)
Lets outsiders build on the platform
Amazon vs. Walmart APIs
1990s PC boom: Intel, Nvidia, Kingston, Seagate
Re-Architect
Launch integrated to move fast, then re-architect
Intel: PCI & USB → mice, cameras, printers
Anti-Design Principle
Users use platforms in unplanned ways
Twitter hashtag: suggested by a user
Lesson:
stable core, evolving edges, watch your users
Chapter 4A:
Disruption I: How Platforms Eat Pipelines
Disruption
Pipeline
Clear accountability
Supply chain bottlenecks
Linear transactions
Upstream → Midstream → Downstream
Platform
Two-sided / Multi-sided markets
No need to direct ownership Required
Facilitate transactions
Connect suppliers and consumers
Platform risks
Rating system
User reviews & ratings
Reduce information asymmetry
Support purchase decisions
Platform Construction
Value Units
Transferable & exchangeable value
Products & Services
Through reduce friction to attract users
Information exchange
Rating
Value exchange
Monetary & Non-monetary Rewards
Chapter 4B:
Disruption II: Industry Restructuring and Incumbents Response
De-linking Assets from Value
Australia: water rights separated from land → Waterfind → survived drought
New York energy market: solar rooftops, batteries, buildings’ stored heat
Separate owning an asset from the value it creates
Re-intermediation
New middlemen, not no middlemen
Scale through algorithms & user feedback
Small businesses run Google AdWords
Yelp & TripAdvisor replace travel guides
Market Aggregation
Gather scattered markets into one place
redBus (India’s bus operators)
Alibaba, Etsy, Upwork
Incumbents Fight Back
Ask: what can we hand off to partners?
Ask: how can data & community add value?
Nike: FuelBand + shoes + apps ecosystem
Under Armour: $710M, 3 fitness apps, 130M users, no devices
McCormick: 126-year-old spice company → flavor-profile platform
GE, Siemens, Haier: Internet of Things
The Test:
information or community adds value → you can build a platform
network
where the profits is
Platform Operators
Ethical Issues
Algorithm Manipulation
Internet Bubble
Platform Users
mean to do
Fake Reviews
Rating Manipulation
Helena
Calista
Bella
Peter
Adam
Peter
Because of network effects and digitalization
Why
How
:arrow_down: