Platforms - Handouts

Platform Economy

-> OBJ: identify ways to create value.

When there are thousand of product developed.

Product Platform:

-> DEF: A set of components, along with and the linkages among them, common to different products.

📌 is not a product itself.

Sony Case:

-> In the ’80s, Sony deteined the 40% market share in volume and 50% in $.

The premium price was of 20$

-> The innovation process:

The average obsolescence time was…

Sony	Competitors
2 years	1.2 years

=> Competitors cannot get into the niches already filled by Sony and are forced to stay on the mass market competing through higer innovation frequency.

Aggregate Project Plan:

-> We can dicide the project in more phases:

Generational Projects: 5 in ten years
Derivative Projects: 250 in 10 years
- Incremental innovations (20-30): funcitonal or miniaturization innovations (autoreverse, graphic equalizer, chromo tape readers Dolby Stereo)
- Topological (220-230): changes in the look and feel

-> 3 PLATFORMS:

WM 2 (1981): compact and lightweight (300 gr + 30 gr headphone). Renewed in 190 (cost reduction)
WM 20: 50% thinner
WMDD (1982): hi-fi platform (direct transmissio & tape speed control)

=> The impact of this strategy was to

Lower cost of R&D: the first innovation has higher costs, but the 250 after were lower.
Can invest more in the development of the platform bcse the costs are spread.
Reduce Time-To-Market.

Volkswagen Case: MQB platform

-> The Volkswagen group MQB latforms is the company’s strategy for shared modular construction of its trasverse, front-engine, front-wheel-drive layout.

It allowed to assemble any cars based on this platform across all ot Volkswagen’s MQB ready factories.

Types:

INTERNAL PLATFORMS: set of assets organized in a common structure from which a company can efficiently develop and produce a stream of derivate products.

E.g. Sony walkman

EXTERNAL/ INDUSTRY PLATFORMS: (are) products, services or technologies developed by one or more firms.

They serve as foundations upon which a large number of firms can build further complementary innovations and potentially generate network effects.
🔗Internal Platforms: inudstrial one provide a foundation of reusable common components or technologies, but differently from the first, the foundaiton is “open” to outisde firms.
Degree of openness: vary on a number of dimensinos (level of access to information on interfaces to link to the platform or utilise its capabilities, type of rules governing use of the platform os cost of access).

INDUSTRYWIDE PLATFORMS: products, services or technologies that acts as a foundation upon which edternal innovators, organized as an innovative business ecosystem, can develop their own complementary products, technologies or services.

E.g. Intel, Microsoft, IBM, iOS. Developer for a platform is…
- Supplier bcse they provide technology and knowledge to the users
- Customers bcse they pay to have a space.

TWO(or MULTI)-SIDED PLATFORM: products/ services where two (or multipe) groups of customers are get together through a platform that internalizes indirect network externalities.

DIRECT NETWORK EFFECTS: an increase in usage leads to a direct increase in value for other users.

-> Is called same-side N.E.

INDIRECT EXTERNALITIES: an increase in the usage of one product/network leads to an increase in the value of a complementary product/network, which in turn increase the value of the original.

-> Is also called a cross-side network effect (it’s typical of two-sided markets).

Transactional Two-Sided Platform:

-> DEF: There are two side, one is demanding smth to the platform, the other one that is providing the product. This last is a customer too, bcse it’s paying to stay there.

At least 2 sides (buyers & sellers)
Bidirectioal cross-side Network externalities.

-> CHAR: necessary to be 2SM

Two o more dinstict groups of customers are required.
Cross-side (or indirect) network effects associated with two or more group of customers must exist.

-> In some cases the indirect effects have got a reciprocal impact (there are two indirect network effects) but one sufficies

In intermediary, that can internalize the externalites, must exist.

Orthogonal Two-Sided Platform:

-> DEF: platform that profits from selling two complementary services to two different groups of customers (it doesn’t enable a transaction between the two groups).

Client-as-a-Target.
There are two side:
- The one that is using the site, and he’s paying google
- The other that pay for visibility

-> CHAR: necessary

Two or more distinct groups of customers (can join in different moments, no paradox)
Unidirectional cross-side network externalities
Intermediary, can internalize the externalities.

-> Other CHAR:

There is no a transaction of product
The platform is giving you a target (fishes), it provide the fish for those who want to pay to fish.

-> TYPE:

Enhanced Adertising Model: improves on the traditional advertising-based mechanism by using customer data to help advertisers target their messages

Data Trading Model: companies can generate revenue from user data in a much more direct way, by selling user dta to a third party.

E-Ethnography Model: companies employ user data to improve their core products or services and to develop their relationship with their customers.

-> TYPE:

Client-as-a-Target: platform uses first side as the target of the second side. The first side is an asset to be exploited by offering its attention to the second side

-> E.g. Google: offer two different services to two different groups of customers. First side: free service, secon side: attention of the first side.

-> La presse invented this mechanism

Client-as-a-Source: platform uses the fist side as a source for the second side. The second side is offered data collected during the service offered to the first side.

-> E.g. Netflix: offers a service to the second side by exploiting data collected during the service offered to the first side to match the two sides.

Strava Case:

-> Strava, realized that thei had a lot of data about people that cycle.

Was a premium service, has a free model, but u can pay to have a premium account.
Public administration & sharing companies are intresting in this kind of data. Municipality paid 30 000 dollars to have access to those data.

Platform Thinking:

-> DEF: ability to use platform-based mechanisms to unlock digital business transformations

Network Goods:

-> For some goods the value that the customer is perceiveing depends on the quantity of people already adopting that technologies.

We chat is bigger than whatts’app

-> Network goods (or services) can exploit their ability to gather end users by involving other customers and evolving towards Hybrid Multi-Sided Platforms.

What’s NOT a platform:

A linear value chain system (Porter: supplier -> firms -> Customers)
All digital services
All aggregators
Everything based on a subscription, everything with an IT infrasctructure
Is not a network whose value depends on the number of users

-> Airports are platforms: incrasing the time u (people that have to flight) have to be in the airport => the shops (other side) will earn more and pay more to stay in that place.

-> Different way to create, deliver and capture value:

Solving market frictions
Exploiting critical mass
Capturing unaware co-created value
Multiples sets of (mutually dependent) customers
The presence of cross-side network externalities.

1.Solving Market Frictions

Opportunities

Scalability: they are (often based on a zero-marginal cost structures)

-> E.g.:SpotifyVSAirbn

Potential for disruption: fast diffusion in multiple markets

-> E.g.:AirBnb,Uber

Challenges

Chicken and Egg Paradox: to get on board the two sides, without having the other, is difficult…since the platforms is worthless
Double (or multi) sided value proposition: it needs to be designed…leveraging the right ingredients

2.Exploiting critical mass:

3.Capturing unaware co-created value

-> Hybrid multi sided platform

(Successful) Platforms are Idle-Asset Hunters

Identify an Idle Assets: we are relying on an assets that it’s already there.
Design value propositions: from the idle assets we design multiple propositions.
Get players on board.

=> It’s a cycle, the beginning of the innovation journey.

-> There are some platform that don’t push exetrnal side effect, bcse they would fail (like be my eyes)

Take Away:

Platforms can be mixed together: eliminating the egg-chicken dilemma

Frictions on the market are the starting point, not the final
Value need to be designed and clear for all the sides involved
Users need to join on all the sides…generating new idle assets

-> Repeat and grow

Uber Case:

-> Uber was founded in 2008 to rend a balck car for a nigh, spending 200 dollars.

The day after they ask theirself if they could have find smth like that but cheaper.
Crisis was leaving a lot of people at home, without a job and with the car parked in front of their house => they found an opportunity!
They frames the idea to be an entrepreneur, to be your own boss,

-> Their understood that it is an illusion thinking that once u find two sided it’s make.

-> They designed 2 serivces for their customers.

-> They realized that they could provide other services, based on the same platform: uber eats.

People want to stay at their home

Telepass Case:

-> Telepass sell the feel that you have hearing the beep and make u feeling smarter than to insert the card => make your life easier.

They understood that they can provide the same mechanism in other situations.