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January 20 - February 8, 2020
in the interest of platform managers to take control of the major sources of value created by and for users in their ecosystem.
A platform business need not own all the inimitable resources in its ecosystem, but it should seek to own the resources whose value is greatest.
Less valuable, or more niche, resources can be ceded to ecosystem partners without significantly weakening the competitive position of the platform itself.
use is in the performance of A/B testing,
Tactical data analysis is quite effective
Strategic data analysis is broader in its scope. It seeks to aid ecosystem optimization by tracking who else is creating, controlling, and siphoning value both on and off the platform and studying the nature of their activities.
When Facebook uses data about member activity to observe Zynga doing something unexpected or to spot Instagram diverting traffic in novel ways, that is strategic data analysis.
leaders should pursue targets that either add complementary products or market access or subtract supply chain costs.
the key question is whether the target company creates value for a user base that significantly overlaps with the one they are currently serving. If the answer is yes, then a tentative conclusion that the target may be worth acquiring can be reached.
Unlike a traditional pipeline company, a platform owner can delay an acquisition until it has observed how a partner transacts on the platform.
This solves the traditional challenge of information asymmetry in M & A evaluation.
As the very term vertical integration implies, any new business a platform purchases must be integrated with the platform, which creates both technical and strategic challenges.
can choose either to provide a similar feature directly or to offer it indirectly via an ecosystem partner.
But as the story of Monster versus LinkedIn demonstrated, a platform that offers superior value to users can win a competitive battle despite an initial size disadvantage.
Airbnb initially had far fewer users than the much older Craigslist, which also provides listings of rooms and apartments for short-term rent. However, Airbnb did a much better job at the key platform functions of facilitation and matching.
This is a market in which specific forces conspire to encourage users to gravitate toward one platform and to abandon others.
supply economies of scale, strong network effects, high multihoming or switching costs, and lack of niche specialization.
Thanks to positive network effects, the value created and the profit margins enjoyed by the company both increase as more users join the ecosystem.
By contrast, high multihoming costs are one reason Microsoft has had such difficulty entering the mobile market behind Apple and Google, despite its advantage in desktop operating systems and the market share it gained when it acquired mobile phone maker Nokia.
market with little or no niche specialization is particularly susceptible to the winner-take-all effect.
cooperation and co-creation.
Control of relationships becomes more important than control of resources.
In winner-take-all markets, competition is apt to be particularly fierce.
These include access to platforms, compatibility, fair pricing, data privacy and security, national control of information assets, tax policy, and labor regulation.
suggest that dominance alone is not necessarily cause for government intervention. Rather, failure to manage externalities, abuse of dominance, manipulating populations, and delaying innovation can indicate when intervention in platform markets is necessary and appropriate.
incumbents
Information-intensive industries. In most industries today, information is an important source of value—but the more crucial information is as a value source, the closer the industry is to being transformed by platforms.
scalable gatekeepers. Retailing and publishing are two examples of industries that traditionally have employed expensive, non-scalable human gatekeepers—buyers and inventory managers in the case of retail, editors in the case of publishing.
Highly fragmented industries. Market aggregation through a platform increases efficiencies and reduces search costs for businesses and individuals looking for goods and services created by far-flung local producers.
incumbents and work against the interests of startups trying to unlock new sources of value.
Industries with high failure costs. The costs of a defaulted loan or matching a patient with the wrong doctor are much higher than the cost of showing inappropriate content on a media platform.
As more and more processes and tools get connected to the Internet, every industry has the potential to become an information-intensive industry.
Through its rider data, Uber can gain unique insight into where users live, where they work, when and how often they commute, and many other such aspects of behavior.
skyrocketed
As students gravitate to MOOCs—especially those that teach specific work skills, like the many online courses in fields such as software engineering, design, marketing, and film editing
the real-world abilities they are honing than in such traditional symbols of achievement as a class transcript or a diploma.
in which millions of individuals and organizations are interconnected and able to play varying roles as circumstances change—consuming energy one moment, producing and selling it the next.
Leveraging contextual data captured on the platform, these new tools encourage users to transact by determining the next possible payment opportunity, prompting the user toward it, and facilitating the interaction.
The analytics derived from this data will help banks target small businesses with financial products for the first time in a highly relevant manner. Likewise, some banks are offering digital services to assist consumers with real estate searches in the hope of gathering data that could indicate lending opportunities.
Still another potential source of future growth is the hundreds of millions of “unbanked” people, both in the developing world and in less affluent neighborhoods in the U.S. and other developed countries, who currently have no access to tools that can help them pay their bills, borrow money, save, and make investments.
The trend toward freelance work, self-employment, contract labor, and nontraditional career paths will also continue to accelerate. The Freelancers Union estimates that one in three American workers already does some freelance work; that percentage is likely to increase in the years to come.
The remarkable efficiency improvements, innovative capabilities, and enhanced consumer options that platforms make possible have already begun to create amazing new forms of value for millions of people in many walks of life.
From newspaper publishers to record producers, taxi companies to hotel chains, travel agents to department stores, numerous businesses have seen their market shares, revenues, and profitability plummet in the face of platform competition.
with high regulatory control and high failure costs as well as those that are resource-intensive.
