The new new competition - How digital platforms change competitive strategy

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The new new competition - How digital platforms change competitive strategy

  1. 1. THE NEW NEW COMPETITION Marshall Van Alstyne | Sangeet Paul Choudary | Geoffrey G Parker How digital platforms transform competitive strategy platformrevolution.com
  2. 2. Based on the book Platform Revolution platformrevolution.com
  3. 3. TODAY: Welcome to the platform revolution NETWORK EFFECTS: The power of the platform ARCHITECTURE: Designing a platform DISRUPTION: How platforms conquer industries LAUNCH: Launching a successful platform MONETIZATION: Capturing the value OPENNESS: Defining user and partner rights GOVERNANCE: Policies to manage value creation METRICS: Measuring what really matters STRATEGY: How platforms change competition POLICY: Regulating platforms TOMORROW: The future of the platform revolution A comprehensive and practical guide to the new platform economy CLICK TO PRE- ORDER All pre-orders unlock access to exclusive bonus frameworks. Details here.
  4. 4. The new competitor looks 
 nothing like the old one platformrevolution.com
  5. 5. Marriotts Airbnb Intercontinental Group The new competitor the old competitorlooks nothing like platformrevolution.com
  6. 6. Houghton Miffin Harcourt Amazon McGraw Hill The new competitor the old competitorlooks nothing like platformrevolution.com
  7. 7. NBC Network Netflix ABC Network The new competitor the old competitorlooks nothing like platformrevolution.com
  8. 8. Lexis Google & Legalzoom West law The new competitor the old competitorlooks nothing like platformrevolution.com
  9. 9. Whirlpool Nest Siemens The new competitor the old competitorlooks nothing like platformrevolution.com
  10. 10. Facebook Instagram, WhatsApp & Snapchat MySpace The new competitor the old competitorlooks nothing like platformrevolution.com
  11. 11. Competition is changing dramatically platformrevolution.com
  12. 12. The WHO of competition is changing The new competitor the old competitorlooks nothing like platformrevolution.com
  13. 13. But the HOW of competition is changing even more dramatically ? platformrevolution.com
  14. 14. Firms are competing and achieving global dominance much faster platformrevolution.com
  15. 15. American businesses in steel and heavy machinery took decades to overtake once-dominant rivals in Britain and Germany platformrevolution.com
  16. 16. After World War Two, Japanese upstarts required three decades to seize leadership roles in auto making and electronics from industry leaders in the U.S. platformrevolution.com
  17. 17. In contrast, Uber, a little over 5 years old, competes around the world platformrevolution.com
  18. 18. Alibaba, relatively unknown in the US before its IPO, may pose significant threat to Ebay and Amazon globally platformrevolution.com
  19. 19. We’ve understood traditional competition well so far platformrevolution.com
  20. 20. But the new competition works on different rules platformrevolution.com
  21. 21. This deck is about the new rules! platformrevolution.com
  22. 22. Too busy to get all the details? Download this deck platformrevolution.com
  23. 23. Better still, click here to get the whole book. All pre-orders unlock access to exclusive bonus frameworks. Details here.
  24. 24. TODAY: Welcome to the platform revolution NETWORK EFFECTS: The power of the platform ARCHITECTURE: Designing a platform DISRUPTION: How platforms conquer industries LAUNCH: Launching a successful platform MONETIZATION: Capturing the value OPENNESS: Defining user and partner rights GOVERNANCE: Policies to manage value creation METRICS: Measuring what really matters STRATEGY: How platforms change competition POLICY: Regulating platforms TOMORROW: The future of the platform revolution Learn about all aspects of the Platform Revolution CLICK TO PRE- ORDER
  25. 25. Let’s dig deeper platformrevolution.com
  26. 26. To understand the new competition, let’s start by revisiting the old platformrevolution.com
  27. 27. Strategy in the twentieth century: a capsule history platformrevolution.com
  28. 28. The simplest and most compelling representation 
 of competitive strategy as we’ve known it platformrevolution.com
  29. 29. The goal of strategy: control these five forces in such a way as to build 
 a moat around the business and thereby render it unassailable.
  30. 30. Firms win through creation of moats
  31. 31. A particularly effective barrier to entry is control of an indispensable and inimitable resource platformrevolution.com
  32. 32. DeBeers’ control of a diamond cartel enabled it to maintain a near- monopoly over the diamond industry for the entire 20th century platformrevolution.com
  33. 33. But these control-driven rules of competition are changing today platformrevolution.com
  34. 34. Nimble firms are using new technologies to navigate the moats established by control of scarce resources
  35. 35. Today, flexibility provides the crucial competitive edge, competition is perpetual motion, and advantage is evanescent platformrevolution.com
  36. 36. ▪ The purpose of strategy is to avoid competition The Porter View platformrevolution.com
  37. 37. ▪ The purpose of business is 
 “to create and keep a customer”. The Drucker View platformrevolution.com
  38. 38. In a world where sustainable advantage is 
 an illusion, the Drucker view trumps the Porter view platformrevolution.com
  39. 39. Or as Peter Thiel would put it ▪ “Competition is for losers” platformrevolution.com
  40. 40. “A company’s relationships with its users are its only lasting source of value.” - Denning platformrevolution.com
  41. 41. So how does this change competition? platformrevolution.com
  42. 42. Enter platforms platformrevolution.com
  43. 43. Two new realities are shaking up the world of strategy platformrevolution.com
  44. 44. Firms are using network effects to create and remake markets, not just respond to them platformrevolution.com
  45. 45. Uber creates a new market for transportation from scratch instead of playing within the boundaries of the existing one platformrevolution.com
  46. 46. Network effects build the new moats platformrevolution.com
  47. 47. In the world of platforms, competition is no longer a zero-sum game platformrevolution.com
  48. 48. Traditional firms re-divide a pie platformrevolution.com
  49. 49. Platform businesses often grow the pie platformrevolution.com
  50. 50. Amazon grew the publishing pie instead of competing for author control platformrevolution.com
  51. 51. Platforms bake a new pie platformrevolution.com
  52. 52. Airbnb unlocks new supply that never existed platformrevolution.com
  53. 53. Platforms turn businesses inside out platformrevolution.com
  54. 54. Competitive strategy involves factors in the ecosystem and beyond the firm’s internal control platformrevolution.com
  55. 55. ▪ Platform against platform, ▪ Platform against partner, ▪ Partner against partner Competition today emerges at three different levels: platformrevolution.com
  56. 56. Platform competition is a lot like 3D chess platformrevolution.com
  57. 57. Competitors can hit you from any side platformrevolution.com
  58. 58. TODAY: Welcome to the platform revolution NETWORK EFFECTS: The power of the platform ARCHITECTURE: Designing a platform DISRUPTION: How platforms conquer industries LAUNCH: Launching a successful platform MONETIZATION: Capturing the value OPENNESS: Defining user and partner rights GOVERNANCE: Policies to manage value creation METRICS: Measuring what really matters STRATEGY: How platforms change competition POLICY: Regulating platforms TOMORROW: The future of the platform revolution Platforms change more than just competitive strategy CLICK TO PRE- ORDER
  59. 59. Level 1: 
 Platform vs. Platform platformrevolution.com
  60. 60. Strategic advantage is based on the power of entire ecosystems platformrevolution.com
  61. 61. Uber, a little over 5 years old, competes around the world platformrevolution.com
  62. 62. The Sony PlayStation Portable was a stronger gaming device than the iPhone platformrevolution.com
  63. 63. But the iPhone ecosystem vastly out-stripped that of the PSP platformrevolution.com
  64. 64. Ecosystems are the new competitive advantage platformrevolution.com
  65. 65. Level 2: 
 Platform vs. Partners platformrevolution.com
  66. 66. Microsoft appropriated partner innovations like browsers, multithreading, streaming media, and instant messaging into its operating system platformrevolution.com
  67. 67. Amazon 
 is notorious for competing with partner merchants that perform well platformrevolution.com
  68. 68. Level 3: Competition between ecosystem partners platformrevolution.com
  69. 69. How is platform competition different? ? platformrevolution.com
  70. 70. The resource-based view ▪ A firm must own/control the inimitable resource platformrevolution.com
  71. 71. On platforms, the inimitable resource shifts from physical assets to access to community interactions platformrevolution.com
  72. 72. How platforms win platformrevolution.com
  73. 73. Let’s dig deeper platformrevolution.com
  74. 74. Model 1: 
 Own the ecosystem platformrevolution.com
  75. 75. Platforms win by seeking exclusive access to their ecosystem platformrevolution.com
  76. 76. Uber vs. Lyft ▪ No clear winner yet because they do not have exclusive access to the ecosystem platformrevolution.com
  77. 77. Both drivers and riders may participate simultaneously on both platforms platformrevolution.com
  78. 78. Model 2: 
 Monitor ecosystem activity and own the most important resources that emerge platformrevolution.com
  79. 79. Alibaba owns the search functionality on its platform, refusing to partner with Baidu platformrevolution.com
  80. 80. Twitter acquired Periscope and closed access for Meerkat ▪ It realized the value of live streaming on the platform platformrevolution.com
  81. 81. The best way to identify what’s important is to foster greater innovation within the ecosystem platformrevolution.com
  82. 82. Meerkat and Periscope were outcomes of innovation outside of Twitter, the company
  83. 83. Watch out for new features or apps that appear on the platform platformrevolution.com
  84. 84. Model 3: 
 Leverage the value of data platformrevolution.com
  85. 85. Data is the new oil ▪ A cliche but certainly true on platforms platformrevolution.com
  86. 86. Platforms use data analysis to detect spurious activity among users platformrevolution.com
  87. 87. They also use data to identify ways to grow faster and stay competitive platformrevolution.com
  88. 88. Platforms may also win through ownership of superior data platformrevolution.com
  89. 89. Monster has long reigned on the online recruitment market ▪ But LinkedIn captured a much richer data set platformrevolution.com
  90. 90. LinkedIn knows more about the profiles of professionals ▪ More importantly, LinkedIn helps recruiters access professionals not actively looking for a job platformrevolution.com
  91. 91. Model 4: 
 The new M&A platformrevolution.com
  92. 92. Buy someone who’s already built on your platform platformrevolution.com
  93. 93. Increasingly, incumbents are opening their data encouraging startups to build on their platform platformrevolution.com
  94. 94. Model 5: 
 Monitor adjacent and indirect competition platformrevolution.com
  95. 95. Competitors who look different but serve the same user base platformrevolution.com
  96. 96. Instagram vs. Facebook ▪ Started out as a photo sharing app platformrevolution.com
  97. 97. Whatsapp vs. Facebook ▪ Started out as an alternate to SMS platformrevolution.com
  98. 98. Model 6: 
 Superior technological design platformrevolution.com
  99. 99. Vimeo coexists with YouTube… … by providing a superior offering for discerning producers. platformrevolution.com
  100. 100. Airbnb competed with Craigslist …through a superior management of the end-to-end interaction platformrevolution.com
  101. 101. Better trust mechanisms, transaction capabilities and superior governance of the ecosystem encouraged interactions on Airbnb platformrevolution.com
  102. 102. Winner take all markets A final note on platform competition platformrevolution.com
  103. 103. “Being second is to be the first of the ones who lose.” - Ayrton Senna platformrevolution.com
  104. 104. A winner-take-all market ▪ A market in which specific forces conspire to encourage users to gravitate toward one platform and to abandon others platformrevolution.com
  105. 105. Traditional industries created winner-take-all through supply side economies of scale platformrevolution.com
  106. 106. Platforms create winner take all through demand side economies of scale platformrevolution.com
  107. 107. Understanding the dynamics of platform competition will be important for those pursuing a platform strategy as well as those participating in a platform’s ecosystem platformrevolution.com
  108. 108. Want to understand this better? platformrevolution.com
  109. 109. Better still, click here to get the whole book. All pre-orders unlock access to exclusive bonus frameworks. Details here.
  110. 110. Get your copy of the slides Download this deck platformrevolution.com
  111. 111. TODAY: Welcome to the platform revolution NETWORK EFFECTS: The power of the platform ARCHITECTURE: Designing a platform DISRUPTION: How platforms conquer industries LAUNCH: Launching a successful platform MONETIZATION: Capturing the value OPENNESS: Defining user and partner rights GOVERNANCE: Policies to manage value creation METRICS: Measuring what really matters STRATEGY: How platforms change competition POLICY: Regulating platforms TOMORROW: The future of the platform revolution Learn about all aspects of the Platform Revolution CLICK TO PRE- ORDER

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