Platforms: How Change in Industry is Driving Change in Strategy
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Presentation at MIT Platform Summit on how economic change in the Internet era parallels change in the Industrial era, but for the opposite reason. This inverts marketing, operations, finance, IT, strategy and innovation.
These sources of value are outside the firm
eBay Buyers
Uber Riders
Xbox Gamers
Amex CardHolders
SAP Enterprise Clients
YouTube Viewers
AirBnb Renters
Tesla Car Drivers
Mechanical Turk Jobs
LinkedIn Job Seekers
Upwork Freelancers
Android Users
eBay Sellers
Uber Drivers
Xbox Developers
Amex Merchants
SAP Developer Network
YouTube Videographers
AirBnb Rooms
Tesla Charge Stations
Mechanical Turk Laborers
LinkedIn Job Listings
Upwork Project Listings
Android Developers
@InfoEcon
API Economy Visualized: Amazon vs Walmart
Walmart
Amazon SNS
Alexa Web Inform
Amazon
Marketplac
e
Amazon
SimpleDB
Amazon Product
Advertising
Amazon
CloudWatch
Amazon
Flexible
Amazon
Redshift
Amazon
SC2
Amazon S3 Amazon
Mechanical
Turk
Amazon
RDSAmazon
DynamoDB
Amazon Queue
Service
Social media / web
Job search / work
E-commerce
Tools / cloud / big data
Payments
API Clusters
Messaging services
Source: Rahul Basole and Peter Evans, with data
from ProgrammableWeb, Center for Global
Enterprise, 2015
Walmart
Amazon
Companies
Enterprise / storage
1. Introduction: Welcome to Platform World
2. Network Effects: The Power of the Platform
3. Architecture: Basic Principles for Designing Successful Platforms
4. Disruption: How Platforms Conquer &Transform Traditi’l Industries
5. Launch: Chicken or Egg? 8 Ways To Launch Successful Platforms
6. Monetization: Capturing the Value Created by Network Effects
7. Openness: Defining What Platform Users/Partners Can &Cannot Do
8. Governance: Policies That Increase Value and Enhance Growth
9. Metrics: How Platform Managers Can Measure What Really
Matters
10. Strategy: How Platforms Change Competition
11. Policy: How Platforms Should (and Should Not) Be Regulated
12. Future: Industries Facing Imminent Change
Platform Revolution: February 2016 (click to pre-order on Amazon)
Kodak 145,300 people, $30B market Cap
Instagram 13 people, $1B market Cap (now $35B) (Kodak more than 11,000 x as many people!)
Toyota: 339,000 people, $210B market Cap
Uber 163,000 active drivers (at least 4 rides/ week). Over 330,000 since inception. Crunchbase ~ $5k employees
Great Wave of Kanagawa 1830-33
Coca Cola >= $3B+ global $565.1 US
Google $569M US,
Others include blogspot, baidu & wikipedia
http://internet-map.net/
Market caps as of January 20, 2015
Go from building a “better shoe” to building a “better you.”
NOT stupid people, Each company made right decision by old business model. Under their world view, it used to be the right business model (use also for Sony)
The goal is more matches and more transactions volume creating more customer value.
Ford Model T 1908-27
Locomotives 1860s
William Henry Vanderbilt Collosus of (rail) roads 1879
Westinghouse dynamo 1893
Blast furnace Acklam Ironworks Middlesborough 1924
Rockefeller Standard Oil (Linden, US), Royal Dutch Shell (Netherlands)
Bill Gates for OS
Dick Costolo (joined later)
Jack Ma - Alibaba
WeChat / Tencent / QQ– Ma Huateng worth 12B+
Mark Zuckerberg – more people than China
Professional Networks – LinkedIn, Reed Hoffman
Mobile operating systems – Android, Brin & Page
Taxi Service – Uber, Kalnikov
Hotels – Airbnb, (team)
Android
Lightbulb lasts longer than your lease. Why would you buy?!?
Uber 163,000 active drivers (at least 4 rides/ week). Over 330,000 since inception.
Assets & Finance
Kodak
145,300 people
$30B market cap
Instagram
13 people
$1B market price
Toyota
339,000 people
210B market cap
Uber
100s of people
Xxx market cap
Price to max network value capture NOT individual value capture
Price to max network value capture NOT individual value capture
The goal is more matches and more transactions volume creating more customer value.
Siemens should become Airbnb of expensive medical equipment like MRIs that have a 47% utilization rate
Lightbulb lasts longer than your lease. Why would you buy?!?
Gillette razor is only the traditional value chain
Apple uses both the traditional and platform value network
Airbnb uses only the platform value network
Gillette razor is only the traditional value chain
Apple uses both the traditional and platform value network
Airbnb uses only the platform value network
Siemens should become Airbnb of expensive medical equipment like MRIs that have a 47% utilization rate
Note: Today, there are over 10,900+ APIs, 6,000+ mashups, across 100's of categories ranging from search and e-commerce to transportation, tools, and enterprise. This visualization has been filtered to focus only on core APIs. The results in roughly 4,000 APIs or 37 percent of the total presented.
Honk Honk Catch a Taxi
While Facebook focused on creating a robust platform that allowed outside developers to build new applications, Myspace did everything itself.
Can replace OS but as Judge Jackson says “can’t replace 60,000 apps” These are 60,000 barriers to entry.
Best example of switching sides: Salesforce couldn’t compete with Oracle & SAP so used innovations of customers to create AppExchange. Much higher performing stock! NOT just cloud but cloud plus network effects.
Competition starts with platform to platform as with Sony PlayStation versus Microsoft xBox
Competition also concerns multi-homing. You prefer that your best apps are not available on competitor’s platforms.
You also worry about competition among suppliers. Enhance their investments with category exclusivity
Partners also compete with the platform itself. Developers for Microsoft Windows had a love / hate relationship. The ecosystem is huge but Microsoft appropriated browsing, streaming audio, multithreading
Doesn’t even include IT industries – too easy (almost pure info goods)
Services would include Uber & Airbnb
Doesn’t even include IT industries – too easy (almost pure info goods)
Services would include Uber & Airbnb
Lightbulb lasts longer than your lease. Why would you buy?!?
Luminous Efficiency https://en.wikipedia.org/wiki/Luminous_efficacy#Lighting_efficiency
Already have WiFi or Bluetooth to communicate
Can turn on/off motion sensor to save power
Change temp to 65 & Order pizza
Remind my son to take out the garbage. If he’s still playing games after three reminders, kill the internet in his room.