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23 Cards in this Set
- Front
- Back
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Platform Competition |
–Firms can now manipulate network effects to remake markets, not just respond to them –Platforms turn business inside out,moving managerial influence from inside to outside Mimics three dimensional chess |
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Platforms expand boundaries |
–makes collaboration and co-creation more significant than competition → co-opetion –creates value outside, not protects it inside; opportunity/persuasion vs.ownership/dictation |
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How does it change Porter's 5 forces? |
we should treat buyers and suppliers as value-creating partners, not threats |
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How does it change the resource based view? |
inimitable resource is access to customer-producer network and their interactions, not own physical assets |
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How Should Platforms Compete? |
1. Limit platform access 2. Foster innovation,then capturing its value 3. Leverage the value of data 4. Redefine Mergers and Acquisitions (M&A) 5. Platform envelopment 6. Enhance platform design |
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Elements of winner take all markets |
–Supply economies of scale – Strong network effects – High multi-homing or switching costs – Lack of niche specialization (distinctive needs or tastes can form a separate network, weakening the WTA effect) |
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Platform policy |
•Unique regulatory issues: platform access, fair pricing, compatibility, data privacy and security, national control of info assets, tax, labor rights •Regulation 2.0: use IT and data to implement after-the-fact transparency and accountability (not prescriptive rules, certification, gatekeeping or restrictions on market access) |
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Platform Governance |
•Good governance –creates wealth (outside the firm) –distributes the wealth fairly among stakeholders–resolves conflicts as fairly and efficiently as possible –mimics nation-states(Facebook, Google, Alibaba) |
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How markets fail |
–Information asymmetry → agency, adverse selection – Externality →negative (too much), positive (too little) – Monopoly power → higher price, insufficient supply – Risk →unpredictable hazard (mitigated by insurance) |
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Tools for Governance (laws) |
–Explicit and transparent rules –Deficientor tricky as platform transforms industries –Case laws do not hold platforms accountable –Individual users bear the downside of misbehavior –Platform rules are its “laws” to moderate behavior at both user and ecosystem levels –Fast open feedback for good behavior (Stack Overflow) –Slow opaque feedback for bad behavior (Trolls) |
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Tools for Governance cont. (norms) |
–Informal codes of behavior by culture –Vibrant communities help develop norms, cultures and expectations to create sources ofvalue –Norms include feedback, open engagement, role progressing to greater levels of authority –Behavior design: a recurring cycle of trigger(alert), action (in response), reward(variable unexpected, habit forming), and investment(time, data, money, social capital) |
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Tools for Governance Cont. (architecture) |
•Architecture: –Platform design implemented by program codes –P2Plending platforms use algorithms to displace loan officers in computing a borrower’s likelihood of repaying w/ traditional and unconventional data–eBay:spelling check to help sellers avoid arbitrage –Stock trading platforms uses supercomputers to deter arbitrage – Block chainis anew fully distributed public protocol that makes decentralized governancepossible, with no need for escrows or 3rdparty guarantees → self-enforcing smart contracts (e.g.,Bitcoin) |
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Toolsfor Governance cont. (market) |
–Can govern behaviors through mechanism design and incentives(money or social currency) –Social currency measures the economic value of relationship(favorites, likes, shares, retweets, etc.) –SAP Q&A platform: points earned when a developer answers a question, converted to donation; saves $6-8 million in tech support and reduces response time to 30mins; uses “monetary expansion” for its new offerings by doubling the points tofind gaps/bugs–Risk pooling and insurance can help reduce risk for platform participants |
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Two principles for Self-Governance |
•Internal Transparency •Fair Participation |
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Platform metrics |
–should quantify the success of repeating desirable interactions based on positive network effects and the value created for everyone –the rate of interaction success –the factors that contribute to it |
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start-up phase |
platform design and launch -liquidity -matching quality -trust |
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growth phase |
focus on retention and conversion to paying customers balance between the producers and consumers |
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maturity phase |
focus on identifying new functionalities monitor competitive threats of adjacent platforms and new ones from within your own platform |
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The 3 A’s test of a platform metric |
–actionable(clear guidance for strategic decisions) –accessible(comprehensible to those collecting and using the it) –auditable(real meaningful, on clean accurate data) |
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Platform Openness (Manager & Sponsor) |
Platform manager interacts with users while sponsor retains control and IP over the platform |
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Manager & Sponsor Platform Types |
1)Proprietary Model (1 manager and 1 sponsor)2) Licensing Model (many managers and 1 sponsor) 3) Joint Venture Model(1 manager and many sponsors) 4) Shared Model (many managers and many sponsors) |
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Developer Participation |
–Core developers for core interactions, typically are platform employees –Extension developers add features to platform, often are outside parties, APIs (Amazon 300 vs. Walmart 1; Salesforce 50% vs. Expedia 90% of revenues) –Data aggregators enhance matching by pooling data from multiple sources, typically resell for ads |
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User participation |
•Producer participation is the key issue: –trade off b/w content quality and producer openness –sides witching enables consumer to become producer •Limiting openness through artful curation – rely on community standards and social pressure –screening decides who to let in and who to keep out –feedback encourages desirable behavior via rating |
