platform business strategy

Tactic 3: Tap/piggy-back onto an existing network 4. Airbnb rewards property owners for building up good reviews and posting accurate photos of their properties. • Set a strategy for where to compete in tomorrow’s marketplace, considering what B2B platforms will offer. From there, they expanded to other campuses. And it can be a great opportunity for a platform to reduce one (or several) of these. But that doesn’t mean to leave your ideas to chance (or never get started at all). Co-platforming is the next generation of platform strategy. She conducts much of her work at the intersection of marketing, economics, and law. But you can still get started if you don’t know exactly what the endgame looks like. Work smart with the Thinking Forward newsletter. There are uncountable ways of reducing transaction costs. Example: Economic theory says that, as prices fall, demand increases (and it depends on the elasticity of the demand and supply function by how much). Now we are taking it a step further. His general research interests lie at the intersection of technical change, labor, health, and organizational economics. This is true. They also state that some of the B2B platforms argued that they would get the best price for buyers which however happens to be the worst price for the sellers. If you liked this article, please share. For a long time, they had difficulties getting to critical mass. We are looking at platforms that help existing businesses to reduce their transaction and search costs and thereby connect them with the demand side in a competitive way. Tactic 2: Accelerate early demand (with subsidies) 3. Generally speaking, platforms create new connections and new opportunities for trade. But they have taken the next step which is helping interested drivers get a loan to buy a vehicle. You will also receive some of my most popular articles on this topic as ebooks: “Uber  Business Model Canvas,” “Airbnb Business Model Canvas” and the “Complete Guide to the Revolutionary Platform Business Model”  as a pdf ebook and some bonus downloads to fuel your ideas and for future reference – all for free. Sign up for my future articles which will contain similarly valuable innovation knowledge. The final step … The platform strategy is a growing area that has provided the business firms with multiple opportunities for generating value. Platform Strategy. ... (2) Generate new, competitive supply by reducing transaction costs. – Current and former Advisor to start-ups ranging from early phase companies to multi-million user platforms During this time some of the upper-class restaurants still used their software as a table management system (rather that a booking system). I.e. In construction, a platform is something that lifts you up and on which others can stand. A special opportunity for partner and affiliate schools only. Grab a copy of Forbes, Entrepreneur, or Inc. from the past five years. Platforms often subsidise one side and often charge only one side when in reality both sides derive benefits. It’s easy to fall for the idea that building a platform is a pathway to success — if not at Mark Zuckerberg levels, at least within your industry. opened their retail platform to other sellers, thereby creating competition to themselves on their own sales pages. Thereby, they have helped create new sources of supply. Last time I have shown the intriguing example of OpenTable who had the right idea for a platform but struggled to get the details right until they eventually figured things out. Over the last 2 months, I have covered the platform business model extensively. Murat Uenlue, PhD ("IoT"), Program Management Professional (PgMP), Project Management Professional (PMP). Goldman Sachs, for example, estimated it to be a whopping $4.5 trillion dollar industry in the US alone. They show me pictures of their user interface and how the app’s going to be really cool and all these kinds of things. That improves the selections of goods, and Amazon further improves its cost structure so it can decrease prices which spins the flywheel.. Getting the core tr… They also noticed it was the higher-rated restaurants that valued the table management features of their software. Connections are built between police officers and other law enforcement staff and attorneys with the goal of boosting efficiency, such as reducing the time officers spending writing and filing reports. Maybe they would have been the biggest app store in the world by now. A 2014 survey of 300 small business owners done by Yodle found that 78 percent were concerned about negative reviews. But things are changing. This is one of the best guides to platform businesses I’ve ever seen. When it comes to fragmented supply, i.e. many small disbursed suppliers, platforms are able to do a good job bringing them onto their platform. Within this line is where a range of other things … In the last 4 articles, we have already covered the platform business model in depth. The company, which folded earlier this year after a cancelled sale, sought to replace the usually fraught used car buying process with a certified inspection (inspectors were employed by Beepi) and free delivery. In the early days, they attracted also a lot of traffic with games (remember “Farmville”?). Your best platform strategy: Occupy an influence point. Entrepreneurs pitch their startups as the next Uber, the next Facebook, or the next Airbnb, while executives in established companies are retooling their strategies around platforms to drive growth and compete digitally. Your team will likely need industry insiders who understand platform business models and the unique nuances of digital businesses. But they have also added more variety to their catalogue which attracts more buyers who may buy more Amazon products. Tucker says she can tell right away that someone has a platform strategy if they have a plan to drive the first users to a platform “when there is nothing there.”, “That is a plan for how you get over the chicken and the egg problem,” she says. As defined in Platform Revolution, “A platform is a business based on enabling value-creating interactions between external producers and consumers. Pierre Azoulay is a professor of technological innovation, entrepreneurship, and strategic management at MIT Sloan. Experience Design and Product Capability. You may have new opportunities to focus on products and customers, rather than on business … In return, the company gets 30 percent of all app store purchases. Amazon, e.g. Add to this that Alibaba also has a huge B2B platform. In any case, building on a limited, under-served network is another strategy to get started. Or you can extend your assets in a new direction altogether. As you can see, this combines several of the tactics described here, but adding value through their software to one side was critical in getting through the tough times. I so often find that many people, because they’ve got a product mentality, think about features. Just be sure you retain control of your data, Tucker says. During the last decade, platform businesses such as Uber, Airbnb, Amazon and eBay have been taking over the world. Previously, they were in many cities but none achieved critical mass. A platform strategy is an approach to entering a market which revolves around the task of allowing platform participants to benefit from the presence of others. My view is that even in industries with consolidated players you have a chance to get into. A non-degree, customizable program for mid-career professionals. This assumption breaks down when studying platforms, as platform participants’ participation is interdependent with the choices of other users. The authors of “Modern Monopolies” and “Matchmakers” refer to the spectacular failure of most B2B start-ups in the dot-com bust. “It’s also how well that driver behaves on that Uber ride. reducing user skills required for installation on side of the user. OpenTable, the restaurant reservation system, was in a classic chicken-or-egg situation. It allowed users to interact better than by phone or email. people stay at home). Tactic 1: Accelerate early supply (with subsidies) 2. Car access tripled in value during early COVID-19, MIT Sloan expert insights: 4 books from 2020. A rigorous, hands-on program that prepares adaptive problem solvers for premier finance careers. Today, we are going to have a look systematically how to get started on a platform business. This 20-month MBA program equips experienced executives to enhance their impact on their organizations and the world. This is different to the previous approach which helped the creation of. But they focussed in on advertising (and they are doing extremely well). Platform Business Model [part 5]: how to get started (1) Generate demand by reducing search cost. Both combined feature a staggering 350 million storefronts (more than the US population). “’Platform Strategy’ is one of our few courses where participants can spend an hour debating on what they are learning about is,” MIT Sloan Professor Catherine Tucker tells students in her executive education course on platform strategy. As we’ve defined before, a platform is a business model that facilitates the exchange of value between two or more user groups, typically a consumer and a producer. But if you study how these platforms came about, the clear impression is that their inventors did not even remotely anticipate the magnitude of their idea. Some will point out that review writers and review consumers are different sides of the platform. – Program managed innovative multi-billion dollar projects & multi-billion dollar business cases These sources describe the events as follows: “Friction is a key to understanding whether an entrepreneur even has a hope of starting a viable multisided platform business. “There are a lot of non-pricing rules involved. I believe it is the most revolutionary business model of the last decade. The same is true in business. Arguably, your platform strategy is more critical to success than the idea behind the platform itself. By late 2001 it was a close-to-zero-dollar industry. This strategy is about connecting with users from other platforms to … Here 8 tactics that have helped some of the most successful platforms to get to critical mass: 1. Prof Parker lists still many targets industries for the platform business model: Is your industry already listed? Once they were established on campuses, they opened their network further. Earn your master’s degree in engineering and management. Example Apple News, What exactly is disruptive innovation? The digital platform strategy will vary from company to company. This is a curated series on trending news on platform business model: creating a platform strategy. You can read all our articles on the platform business model here. Other people bought them. The previous approach was different in that it does not rely on existing supply. 2020 MIT Platform Report champions growth, The promise and peril of The Hype Machine, How platforms are pivoting during the pandemic, Platform Strategy: Building and Thriving in a Vibrant Ecosystem, Matchmakers: The New Economics of Multisided Platforms. Article by Dr Murat Uenlue / Platform business model, Platform business model fundamentals, Strategy. “ Platform Design Toolkit helped us craft our vision and get into YCombinator with a scalable business model. relatively small operations to invest heavily into marketing. The underlying concept covers companies from Google to Facebook to video game platform Steam to Taser (more on that later). For some platforms, reduction of search costs can be the main driver (though there will always be the element of reducing transaction costs as well). The platform business model is undoubtedly the most important and revolutionary business model of the last decade or two. platform business model: A platform business model is a plan for creating revenue by allowing registered members to create content that can be consumed by a specific user group or general audience. They generate incremental aggregate demand. The 'platform' metaphor has long been used in a variety of ways. Now, the above strategies have a defined starting point (either demand or supply side, etc). transaction costs) were not substantial enough for platforms to lower these costs substantially. Alibaba is great at connecting small sellers to other markets (local and global). This is why I opt for the more straightforward view of 2 sides. What is the value your idea adds? I appreciate it. Maybe you can add another supplier side to your customer side. Alibaba is helping small businesses to overcome these on their two B2C platforms. A joint program for mid-career professionals that integrates engineering and systems thinking. Having to worry about only one side should make approach (1) an easier starting point. Depending on the industry, different types of transaction costs play a role. They have reduced transaction costs in multiple ways. From Wikipedia, we learn that: This creates powerful incentives for a platform to be more present on Yelp which is where Yelp makes its revenues from [Wikipedia]: Remember what we said. It orchestrates those interactions and makes them more efficient — just like farmers’ markets or stock exchanges do. Firms such as Apple, Alibaba, Facebook, SalesForce, Uber and Yelp operate platform ecosystems that match buyers and sellers, gain value and market share from network effects, and harness their users to innovate. – Program Management Professional (PgMP) I believe this approach can be well suited to Software-as-a-Service (SaaS) companies. It generates benefits for those restaurants that obtain good ratings and reviews. And how will you make your technology the core of an ecosystem? reducing user skills required by providing a harmonised user interface&experience, they too have added massive supply and increased demand at cost of other leisure “activities”, such as TV. Search by location, dates, type of accommodation. They believe that many of those industries were already consolidated with only a few big players sharing the market among themselves. – Founder-owner Innovationtactics.com It took a gruelling 6 years and several CEOs to get to the right idea (with the founder jumping off). External scale: scale the ecosystem with more apps and services. And we are starting to understand it better. According to economic theory, this t is one important reason for their existence. Rapidly design, deliver and evolve exceptional products and experiences. Wow. And of course, there are free-riders who don’t bother to even rate the restaurant that they found through Yelp. Uber can help their case with future anticipated earnings. Which transaction and search cost improvements can you deliver? Tactic 7: … But their main revenue idea was through bookings ($1 per guest to be paid by the restaurant that comes through OpenTable’s webpages). TMall specialises in branded and often more upscale products. She has expertise in online advertising, digital health, social media, and electronic privacy. They aggregate and channels demand and encourage consumption. Leveraging our network of trusted partners to amplify the outcomes we deliver for our clients And so you have to adopt a policeman or a governance role, which is quite alien for the average product manager.”. “And it needs to be decided very early on.”. A full-time MBA program for mid-career leaders eager to dedicate one year of discovery for a lifetime of impact. The platform business model uses technology to connect people, organizations, and resources in an interactive ecosystem. The platform is solely focused on building and facilitating a … The offers serve as quantity discounts or sales promotion. Learn from them and apply the lessons to your ideas. Are you starting on the demand side or on the supply side or using another approach? The pitch is so obvious that it’s a well-mocked cliché. The only way to create these platforms is with a customer-centered approach in which business models and monetization strategies are squarely rooted in what customers need. Don’t forget though that most users will be in both roles. This reduces barriers to entry for those who would like to become an Uber driver but don’t have an appropriate vehicle and potentially are at the edge with their credit rating. Platforms have started reducing transaction costs for individual providers and small entities. The strategy must integrate business and IT needs and establish a collective leadership vision. “You’re right to be platform-curious, but you shouldn’t necessarily be platform-envious,” he says. The company, formerly called Taser, still makes stun guns for law enforcement and for personal self-defense. According to MIT Sloan Professor Catherine Tucker, a good platform strategy will help you dodge the traps, and may even send you in a different, more prosperous direction.. A platform strategy is … Over the past two decades, some of the most profitable and successful firms are those that have adopted a digital platform model—a strategy whereby the company allows two or more disparate groups to interact over a platform to co-create value; for example, website developers and users on Akamai, recruiters and employees … With the supply side boycotting the platform, the platforms could never achieve critical mass. “Platform strategy is, in some sense, one of the most ambitious ways of entering a market you could have, because it requires coordinating the behaviors of multiple parties that might not know each other, that might not even want to know each other,” Azoulay says. “We’re Uber for dog-walking.” “We’re Uber for coffee.” “We’re Uber for child care.” While some of these companies have carved out a niche with an Uber-like on-demand platform, many more have failed. If it was not for the table management features, this most likely would not have happened. The idea is to initially get users on board and pivot as required. And who knows what would have happened if they had decided to fully focus on apps. Work smart with the Thinking Forward newsletter. Most of the over 1500 start-ups went bust in the dot-com boom-bust cycle. But generating revenue was. Bring a business perspective to your technical and quantitative expertise with a bachelor’s degree in management, business analytics, or finance. Here are some examples: In any case, the B2B space is still a field with relative few platforms. But without any doubt, there is also a portion of new demand that would not exist without the platform’s service (i.e. Uber, meanwhile, is dogged by allegations that it does not support drivers and disavows itself of responsibility when riders are assaulted. I have analysed the 3 most authoritative books on the platform business model. In almost every sector, traditional businesses are under attack from digital disrupters that are effectively harnessing the power of communities. Many booking & reservation platforms have started in a similar way, such as Expedia.com. Many platforms started this way. Develop innovation ideas you can be proud of. Matchmakers: The New Economics of Multisided Platforms; Platform Revolution; Modern Monopolies. In fact, many of the sellers on Taobao and Tmall source their supplies from Alibaba’s B2B platform. Your platform pitch sounds great in the boardroom, but the reality is so much harder. The Business of Platforms is an invaluable, in-depth look at platform strategy and digital innovation. No more going it alone. He teaches courses on strategy and technology strategy. A platform ultimately enables this value creation by facilitating transactions. It seems much more difficult in industries where there has been a lot of consolidation. This course teaches you how to convert products to platforms and how to innovate in a platform environment. Once the cities are up and running, expand further. But these were not accessible supply prior to the existence of the platform. The first insight from the survey is the extent to which platforms have become an essential part of the business landscape and no longer the domain solely of digital natives. Finally, with the early platform in hand, Makerbot leveraged the work and devotion of their early adopters to create broader momentum for their platform, their product, and for 3D printing (phase 3). A solid platform strategy will answer two key questions: How will you attract customers? Yelp.com has over 100 million reviews (as per early 2017) reducing search costs for some 150+ million users/visitors per month. This gives us as innovators the opportunity to apply its principles to our own ideas. You could argue that the user side also pays by contributing reviews and ratings. I don’t believe you will be able to start with a master plan where you tick off one planned milestone after the other. and absence of mechanisms to evaluate the trustworthiness of trading partners. Limitations to form relationships beyond their local market. Earn your MBA and SM in engineering with this transformative two-year program. They generate incremental aggregate demand. But the approach listed in (1) starts with the demand side. (Some companies call this a “tribe.”) They work in an agile manner , delivering the solution itself, enabling continuous business-led innovation, and developing and running all necessary IT. “People were selling plasma TV boxes with stones in them,” Tucker says. people stay at home). Trust matters. Car sellers and car buyers could complete a transaction without meeting and without a test drive. You can study how other firms got started and how they achieved their successes. “Yelp’s revenues primarily come from selling ads and sponsored listings to small businesses. This often means pushing the business into uncharted spaces. Facebook has started as a network connecting students on the Harvard campus. – Project Management Professional (PMP) “In a really connected world what a platform business does is to optimize supply and demand between the producers of certain goods and services and consumers. More about me here, Wow – I highly recommend the @InnoTactics blog that I just stumbled across – awesome MBA-level analysis of companies like Uber, Airbnb, Tripadvisor, etc – https://t.co/UshELRoMYu, — Joe Robison (@josephrobison) January 1, 2019. Academic work and some business books often use the term in a wider sense, to include non-digital matchmakers like a business … If not, list it … Personally, I believe there are tremendous opportunities even in those fields where large platforms have already emerged. Any business, particularly start-ups and small businesses, but even businesses with a more traditional business model can and should think how and where they could apply a platform business … Another way to get started is to reduce transaction costs for an established supply base. Apple’s strict development guidelines for its app store helped it grow its user base. But without any doubt, there is also a portion of new demand that would not exist without the platform’s service (i.e. Remember the early days of eBay? With a large number of small sellers, there was enough value for the bigger wholesalers to join Alibaba as they could sell to the small sellers. Some of it may be taken away from other restaurants (substitute). Tucker points to Axon as an example of a company reinventing itself as a platform leader with a unique value proposition. Uber – has reduced search costs for both sides drivers and passenger significantly. The risk is that they might also undermine the ability of individual companies to capture their fair share of the value being created, especially if they do not own the platform. Combine an international MBA with a deep dive into management science. Partnerships. So, venture capital was not an issue. In fact, hardly any platform would have started with a master plan and gotten there without pivoting. Ebay and Amazon are examples in the West. They would see the restaurants as the third side. Cusumano, Gawer, and Yoffie address how a small number of companies have come to exert extraordinary influence over every dimension of our personal, professional, and political lives. In traditional competitive strategy, it is generally assumed that customers can determine their willingness to pay for the product or service independently. Employees (as of May 2017): 4,350+; market cap $2.1b; revenue: $700m (2016); Enter your email address & check your inbox: covered the platform business model in depth, Matchmakers: The New Economics of Multisided Platforms, they have to yet figure out how to be profitable, Download the platform business model worksheet and mindmap (click here), in-depth examples on the platform business model, Creative Commons Attribution-ShareAlike 4.0 International License, Can the Value Chain help App creators? Is it in your industry, an adjacent industry or an altogether different one? Catherine Tucker is a professor of marketing at MIT Sloan. A doctoral program that produces outstanding scholars who are leading in their fields of research. industries characterised by few, large companies. This has made Alibaba an end-to-end B2B2C platform. Economists Evans and Schmalensee state that in the US friction (i.e. Create adaptable technology platforms that move with your business strategy. It is the process that turns potential connections into transactions. Plus example Airbnb, How to create a Sharing Economy App and its business model. At the time, eBay saw itself as a matchmaker, not responsible for the quality of the products or the transactions. The service was, at its core, a search platform. This is where search cost reducing platforms come in. Search costs are everywhere and can come in a lot of different forms. If you prefer this view, feel free to conceptualise it this way. Most of his work deals with the organization of the “ideas sector” of the economy and the consequences of different institutional arrangements for innovation and economic growth. Advertisers can pay to have their listing appear at the top of search results, or feature ads on the pages of their competitors As of 2016, advertising revenue was growing at a rate of 30% year over year.”. A platform strategy is an approach to entering a market which revolves around the task of allowing platform participants to benefit from the presence of others. If you want to compete on the playing field with the most successful companies of today, then you might need to consider a platform strategy. With this, they had their approach: Get some of the most up-class restaurants for the selected cities on board, then get guests on board. But the thing is that search costs – even if often intangible and immeasurable – need to go into this equation. Her research interests include how technology allows firms to use digital data to improve their operations and marketing, and in the challenges this poses for regulations designed to promote innovation. I have described the benefits of getting to critical mass using this approach last time. – VP Global Sales and Marketing at an amazing start-up (to be disclosed soon) Tactic 5: Start as useful single-sided platform 6. Piggyback. Is the reduction of friction and associated cost savings sufficient to provide competitive offers? Building trust can happen a number of different ways. Apple’s iTunes intruded into an adjacent industry and this could be a starting point for your thinking. Current and former Advisor and Consultant to great start-ups. “You’re designing a new way for these participants to interact,” says MIT Sloan Professor Pierre Azoulay. Who can join, what kind of information you get to have on what’s happening on the other side, how open the data that’s generated by your platform is to others, how easy it is for others to play with that data.”, “All of that needs to be decided,” Azoulay says. Professor Parker sees Google, Amazon, Facebook and iTunes as accidental platforms. Best way to contact me is LinkedIn (click here). Tactic 6: Extend your existing assets 7. But Azoulay, who teaches competitive strategy and innovation strategy, among other courses, reminds students not to get starry-eyed. But Mark Zuckerberg sensed there is a need for being connected better on their campus. One of the most successful platforms in this field is Alibaba. follow us on LinkedIn where we share new articles and resources: Dr Murat Uenlue, PgMP, PMP This is a fairly limited network. In traditional competitive strategy, it is generally assumed that customers can determine their willingness to pay for the product or service independently. Enter your email address & check your inbox: #28 Platform Business Model – Fintech is taking over Banks #27 Platform Business Model – Platform Business Strategy and Leadership #26 Platform Business Model – Platform Economy for Banking #25 Platform Business Model – Future of Mobility #24 Platform Business Model – Luxury Platform Business Register for Platform Strategy: Building and Thriving in a Vibrant Ecosystem, a two-day MIT Sloan Executive Education course taught by Azoulay and Tucker twice each year. Here is from the last article: If you already have assets serving a single side, this can be a great starting point to add another side. Sign up for Tuesday insights. There’s a decent chance the face on the cover is a platform company CEO. Who benefits in which ways? Or possibly add a customer side to your supplier side. Tucker calls it “coring,” that is, making your platform the core of an ecosystem, the place where users meet and make connections, where commerce happens. Through intellectual rigor and experiential learning, this full-time, two-year MBA program develops leaders who make a difference in the world. What is the core transaction? Being a savvy, successful participant may offer a path to profit without the enormous risk of managing the platform itself, if you’re willing to cede the glory in favor of growth and stability. And it had the benefit that you knew you are on the same network as similar people (overcoming trustworthiness issues). But its new focus begins with body cameras and includes data storage and collaboration tools. Notice: JavaScript is required for this content. “You’re sort of this orchestra conductor, and as a result of being very ambitious, it also fails very often.”. safety of transaction via identification. I am also covering in-depth examples on the platform business model. Platforms can be effective vehicles to create new value. This is why the formulation of a platform strategy requires somewhat distinct tools to help platform entrepreneurs and managers tackle the challenges of value creation and value capture. “If you’re the only person in the world on Uber, it’s really not that good. In Platform Strategy, Laure Claire Reillier and B. Read “Matchmakers: The New Economics of Multisided Platforms,” co-authored by MIT Sloan professor emeritus and dean emeritus Richard Schmalensee, and “How companies become platform leaders,” a classic and still-relevant 2008 MIT Sloan Management Review article by MIT Sloan Professor Michael Cusumano and University of Surrey Professor Annabelle Gawer. They created a table management software that they licensed out to restaurants. Both point out the success of Alibaba which was grounded in the fact that they unified a large number of small vendors. The platform provides an open, … “This is a place where a platform strategy is not a crazy thing to want to implement, because if you’re successful, you’ll practically fix the market.”. Tucker and Azoulay encourage students in their platform strategy class to think about where their company fits best within a platform ecosystem. Beepi, a platform for used car purchases founded by an MIT Sloan alumnus, also connected users in a new way. Incredible piece of work by ⁦@InnoTactics⁩ https://t.co/wyRD3NC2oj, Click here if you have already created an account, © InnovationTactics.com - all rights reserved Privacy --- Terms & Conditions, A Harvard Business School study published in 2011 found, A 2012 study by two Berkeley economists found that. – PhD in System Development (“IoT”) This is not meant in a derogatory way. But rather than having a feature mindset, you have to have a seeding mindset.”. Alibaba does this in China. Apple has strict developer guidelines for its app store. The idea for Groupon (“Group” + “Coupon”) was born from asking for discounts when getting enough people interested in an offer. When a company like Airbnb hits big or Salesforce pivots to a platform strategy, words like “billionaire” and “genius” start getting thrown around. The reduction of substantial friction is a necessary consideration – but not a sufficient condition – for a multisided platform to succeed” [Evans and Schmalensee]. People listed hard-to-find or unique items for sale. The players may be different, but the platform must provide predictability and reliability. Platforms are environments, computing or otherwise, that connect different groups and derive benefits from others participating in the platform. “For it to go well, it’s not how well the Uber app works or how beautiful its interface is,” Tucker says. Platform strategy, explained. Traditionally, large corporations (I am speaking of non-platform businesses) have internalised transaction costs and with increasing scale minimised those. Which of the approaches above is the best starting point for your ideas? These days, Groupon is the go-to point for all people seeking deals. By creating far more visibility into options and facilitating the ability of participants to switch from one resource or provider to another, platforms can commoditize business … There’s a great deal of enthusiasm about platform strategies these days. Incumbent companies, including Daimler, Nike, and Unilever, have launched their own platforms as their business models mature, although we found they are only about half … She is chair of the MIT Sloan PhD program. Whatever a platform does, it only comes down to two main issues which are relationship building and solution delivery (products and services). Or focusing on low prices or free services can backfire when users become accustomed to and anchored on that low price for the long run. Building a platform, especially after a decade of buzzworthy attempts and a few huge successes (Amazon, eBay, Uber, Airbnb), is really, really hard. Google, Facebook, Alibaba, Uber, Airbnb, Paypal and many other of the most successful startups are built on it. How could the numbers look like. Merchants offer special discounts for a  product or service for a limited amount of time (or contingency). Tactic 4: Attract high-value users (or celebrities) 5. Platform definition. What’s the playbook? But scams were abound. While there are a number of ways to seed users into a platform, the strategies all have the potential to backfire. An interdisciplinary program that combines engineering, management, and design, leading to a master’s degree in engineering and management. And of course, these players did not want another middleman thus didn’t sign up to the respective platforms. Though this could be overcome through subsidies to the seller side, there was not enough friction to overcome to add enough value to the other side to pay for these subsidies (plus the platform). The company is applying its expertise in building up ecosystems on top of Amazon business … What is your starting point idea? A good platform strategy will help you dodge the traps, and may even send you in a more prosperous direction. The value of the platform increases with the number of reviews, especially those that are of quality. We share MBA-level innovation and business management knowledge with Entrepreneurs, Founder-CEOs, App Creators, Startups, Professionals, Executives, MBA Students/Graduates, Business School Professors and other smart people. In the context of platform economy, 21st-century usage of the word platform sometimes refers solely to online matchmakers – such as Uber, Airbnb, TaskRabbit etc. Here are some examples: Search cost on side of the consumer (demand side): Search cost on side of the provider (supply side): As you can sense a lot of factors can contribute to search costs. Platform Strategy is the clearest, most comprehensive and most practical book about platform businesses available today - what they … There are countless ways to flub this. They were founded during the dot-com hype. Project Manager of multi-billion dollar projects and business cases. Today, the company offers disagreement resolution, buyer protection plans, and occasionally will refund wronged users directly, earning itself a reputation of reliability. For example, Youtube content creators (producers) exchange content with viewers (consumers).

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