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The inner workings of Digital Disruption

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A framework to understand the shift in business models and the opportunities for incumbents in a time of disruption.

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The inner workings of Digital Disruption

  1. 1. The Inner Workings Of How a combination of forces is eating every industry… and why yours could be next? DIGITAL DISRUPTION Sangeet Paul Choudary | Geoffrey Parker | Marshall Van Alstyne 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. Disruption has a shape platformrevolution.com
  5. 5. Can we trace a set of common patterns across… platformrevolution.com
  6. 6. What drove the failure of Borders and Blockbuster? platformrevolution.com
  7. 7. How did Airbnb move from hipster mattress sharing site to a global accommodation provider challenging big hotel chains? platformrevolution.com
  8. 8. Why is GE becoming a software company from a heavy industry giant? platformrevolution.com
  9. 9. Is the news business no longer profitable? platformrevolution.com
  10. 10. Why are banks concerned about LendingClub and BitCoin? platformrevolution.com
  11. 11. How is a simple messaging service like WeChat eating everything in China? platformrevolution.com
  12. 12. Could Starbucks be a threat to Visa or Mastercard? platformrevolution.com
  13. 13. Why is McCormick Foods hiring data scientists? platformrevolution.com
  14. 14. We cannot solve our problems with the same thinking we used when we created them. platformrevolution.com
  15. 15. Disruption has a shape platformrevolution.com
  16. 16. Let’s dig into working out these patterns platformrevolution.com
  17. 17. Too busy to get all the details? Download this deck platformrevolution.com
  18. 18. Better still, click here to get the whole book. All pre-orders unlock access to exclusive bonus frameworks. Details here.
  19. 19. 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
  20. 20. A CAPSULE HISTORY OF DIGITAL DISRUPTION platformrevolution.com
  21. 21. We often think of digital disrupting the physical platformrevolution.com
  22. 22. The offline trumping the online platformrevolution.com
  23. 23. But there’s a much larger shift in business models afoot platformrevolution.com
  24. 24. A deeper transformation of the way business and markets are organized. platformrevolution.com
  25. 25. HERE’S A STORY OF INTERNET-ENABLED DISRUPTION platformrevolution.com
  26. 26. PIPE THINKING platformrevolution.com
  27. 27. Pipes: Firms would assemble and deliver products and services to a market of consumers platformrevolution.com
  28. 28. Value created upstream,
 delivered downstream Production Assembly Distribution platformrevolution.com
  29. 29. Our factories work like pipes, running supply chains to assemble products and send them out via distribution channels platformrevolution.com
  30. 30. Traditional media has worked like a pipe spewing content to an audience platformrevolution.com
  31. 31. PLATFORM THINKING platformrevolution.com
  32. 32. Business leaders, today, are building platforms that enable diverse participants to connect and interact with each other platformrevolution.com
  33. 33. USERSDEVELOPERS platformrevolution.com
  34. 34. HOSTS TRAVELLERS platformrevolution.com
  35. 35. VIDEO CREATORS VIDEO VIEWERS Videos platformrevolution.com
  36. 36. TWEET CREATORS TWEET READERS platformrevolution.com
  37. 37. PRODUCERS CONSUMERS PLATFORM VALUE platformrevolution.com
  38. 38. A host of technologies ranging from cheaper publishing tools and mobile connectivity to wearables and 3D printers are democratizing access to the tools of production. Anyone can be a producer. platformrevolution.com
  39. 39. Networked platforms aid the creation of large open ecosystems, by connecting producers to consumers and enabling them to interact platformrevolution.com
  40. 40. The platform creates pull to attract producers and consumers platformrevolution.com
  41. 41. It provides a plug-and-play infrastructure that enables them to connect and interact with each other platformrevolution.com
  42. 42. Finally, it leverages data to connect the most relevant producers and their products or services with consumers platformrevolution.com
  43. 43. 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 every aspect of the platform revolution CLICK TO PRE- ORDER
  44. 44. Three stages of internet enabled disruption3 platformrevolution.com
  45. 45. Disruption 1.0: 
 Efficient pipes ate inefficient pipes platformrevolution.com
  46. 46. Most Internet applications during the 1990s involved the creation of highly efficient pipes - online systems for distributing goods and services that outcompeted incumbent industries Disruption 1.0: 
 Efficient pipes ate inefficient pipes platformrevolution.com
  47. 47. Benefiting from near-zero marginal costs of distribution Disruption 1.0: 
 Efficient pipes ate inefficient pipes platformrevolution.com
  48. 48. News and print media were the first to feel the heat Disruption 1.0: 
 Efficient pipes ate inefficient pipes platformrevolution.com
  49. 49. Amazon’s initial rise as an e-commerce store eventually led to Borders’ fall, as the latter failed to compete with the better distribution economics of Amazon Disruption 1.0: 
 Efficient pipes ate inefficient pipes platformrevolution.com
  50. 50. Netflix followed a similar playbook to beat Blockbuster Disruption 1.0: 
 Efficient pipes ate inefficient pipes platformrevolution.com
  51. 51. Amazon and Netflix still followed the pipe model but won through superior distribution economics Disruption 1.0: 
 Efficient pipes ate inefficient pipes platformrevolution.com
  52. 52. Disruption 2.0: 
 Platforms eating Pipes
  53. 53. platformrevolution.complatformrevolution.com
  54. 54. This has been the dominant shape of disruption over the last decade Disruption 2.0: 
 Platforms eating Pipes platformrevolution.com
  55. 55. Networked platforms scale rapidly in their ability to create value and coalesce an open ecosystem Disruption 2.0: 
 Platforms eating Pipes platformrevolution.com
  56. 56. The marginal cost of scaling both supply and demand is minimal ▪ Efficient Pipe: Marginal costs of scaling demand was near-zero ▪ Platform: Marginal cost of scaling both supply and demand is near-zero Disruption 2.0: 
 Platforms eating Pipes platformrevolution.com
  57. 57. Network effects powered by positive feedback lead to rapid scale Disruption 2.0: 
 Platforms eating Pipes platformrevolution.com
  58. 58. Disruption 2.0: 
 Platforms eating Pipes A virtuous feedback loop sets in platformrevolution.com
  59. 59. Apple and Android leveraged an ecosystem of developers to disrupt Nokia and Blackberry Disruption 2.0: 
 Platforms eating Pipes platformrevolution.com
  60. 60. Nokia and Blackberry used the pipe model, sourcing and vetting the apps that were pre-loaded into handsets Disruption 2.0: 
 Platforms eating Pipes platformrevolution.com
  61. 61. Apple created an extendable handset using the app store’s ecosystem of developers Disruption 2.0: 
 Platforms eating Pipes platformrevolution.com
  62. 62. Android created the infrastructure for anyone to build a phone Disruption 2.0: 
 Platforms eating Pipes platformrevolution.com
  63. 63. Airbnb has built an alternate global market for travelers accommodation without investing in building or leasing a single room Disruption 2.0: 
 Platforms eating Pipes platformrevolution.com
  64. 64. Traditional hotels have higher marginal costs of expansion and servicing and much smaller network effects Disruption 2.0: 
 Platforms eating Pipes platformrevolution.com
  65. 65. Amazon’s marketplace scales with the warehouse distributed across its partner merchants Disruption 2.0: 
 Platforms eating Pipes platformrevolution.com
  66. 66. Traditional incumbents like Target and WalMart find it difficult to compete against this Disruption 2.0: 
 Platforms eating Pipes platformrevolution.com
  67. 67. Carpooling and ridesharing platforms, like Blablacar, allow consumers to share rides with each other for a small fee Disruption 2.0: 
 Platforms eating Pipes platformrevolution.com
  68. 68. These platforms are posing significant threats to public transportation Disruption 2.0: 
 Platforms eating Pipes platformrevolution.com
  69. 69. And to the very idea of car ownership Disruption 2.0: 
 Platforms eating Pipes platformrevolution.com
  70. 70. Disruption 3.0: 
 Pipes start behaving like Platforms platformrevolution.com
  71. 71. A third wave of disruption Disruption 3.0: 
 Pipes start behaving like Platforms platformrevolution.com
  72. 72. Traditional pipe incumbents are leveraging the same principles to scale like platform startups Disruption 3.0: 
 Pipes start behaving like Platforms platformrevolution.com
  73. 73. Pipes have traditionally scaled in one of two ways Disruption 3.0: 
 Pipes start behaving like Platforms platformrevolution.com
  74. 74. Vertical integration: 
 Own more of the flow through the pipe Disruption 3.0: 
 Pipes start behaving like Platforms platformrevolution.com
  75. 75. Vertical integration: Media and manufacturing firms regularly rely on vertical integration Disruption 3.0: 
 Pipes start behaving like Platforms platformrevolution.com
  76. 76. Horizontal integration: 
 Widen the pipe to push more value through it Disruption 3.0: 
 Pipes start behaving like Platforms platformrevolution.com
  77. 77. Horizontal integration: Consumer brands often pursue horizontal integration Disruption 3.0: 
 Pipes start behaving like Platforms platformrevolution.com
  78. 78. Apple rewrote the playbook on integration Disruption 3.0: 
 Pipes start behaving like Platforms platformrevolution.com
  79. 79. Apple’s products and services are integrated to each other over the cloud, using data Disruption 3.0: 
 Pipes start behaving like Platforms platformrevolution.com
  80. 80. Ownership of multiple Apple products is more useful, because of their ability to interact with each other Disruption 3.0: 
 Pipes start behaving like Platforms platformrevolution.com
  81. 81. Nike’s FuelBand, connected shoes and mobile apps follow the same playbook Disruption 3.0: 
 Pipes start behaving like Platforms platformrevolution.com
  82. 82. Nike is pursuing ecosystem integration, like Apple Disruption 3.0: 
 Pipes start behaving like Platforms platformrevolution.com
  83. 83. GE is integrating its machines - The Industrial Internet Disruption 3.0: 
 Pipes start behaving like Platforms platformrevolution.com
  84. 84. Pipes are increasingly behaving like platforms Disruption 3.0: 
 Pipes start behaving like Platforms platformrevolution.com
  85. 85. GE’s machines interact with each other, learn from each other and provide better and more reliable service Disruption 3.0: 
 Pipes start behaving like Platforms platformrevolution.com
  86. 86. Disruption is just getting started platformrevolution.com
  87. 87. The information-intensive portions of any industry are open to disruption platformrevolution.com
  88. 88. Banking is information-intensive platformrevolution.com
  89. 89. With the rise of electronic health records, healthcare is information-intensive platformrevolution.com
  90. 90. Sensors and the internet of things have the potential to convert any industry based on physical assets into an information-intensive industry platformrevolution.com
  91. 91. The adoption of platform-based business models across industry is just getting started platformrevolution.com
  92. 92. 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 More decks coming up featuring other chapters of the book CLICK TO PRE- ORDER All pre-orders unlock access to exclusive bonus frameworks. Details here.
  93. 93. Better still, click here to get the whole book. All pre-orders unlock access to exclusive bonus frameworks. Details here.
  94. 94. Get your copy of the slides Download this deck platformrevolution.com
  95. 95. STAY TUNED!

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