Chap 04 course slides disruption dist
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Chapter 4 of 'Platform Revolution' discusses the disruption caused by platforms in various industries, elaborating on how platforms utilize superior economics and network effects to outcompete traditional pipelines. It identifies two stages of disruption: the first where efficient pipelines replace inefficient ones, and the second where platforms overtake pipelines entirely. The chapter concludes with insights on how incumbent companies can adapt to fight against platform-driven transformation by creating their own value-creating ecosystems.
Chap 04 course slides disruption dist
- 1. Geoffrey Parker Dartmouth College @g2parker Marshall Van Alstyne Boston University @InfoEcon Chapter 4 Disruption Platform Revolution: Making Networked Markets Work for You Questrom School of Business 2016 Parker & Van Alstyne with Choudary – licensed under Creative Commons Attribution- ShareAlike 4.0 Int’l (CC BY-SA 4.0). Sangeet Choudary Platform Thinking Labs @sanguit
- 2. 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 Traditional 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: Chapter 4 - Disruption (click to order on Amazon) 2016 Parker & Van Alstyne – licensed under Creative Commons Attribution-ShareAlike 4.0 International (CC BY-SA 4.0). 2016 Parker & Van Alstyne, with Choudary – licensed under Creative Commons Attribution-ShareAlike 4.0 International (CC BY- SA 4.0).
- 3. 2016 Parker & Van Alstyne – licensed under Creative Commons Attribution-ShareAlike 4.0 International (CC BY-SA 4.0). Pathway to disruption: online pipes’ superior marginal economics of production & distribution https://www.poynter.org/2012/times-picayune-confirms- end-of-daily-publication/175038/ http://newspaperdeathwatch.com /pittsburgh-post-gazette-hikes- prices-even-as-circulation- plummets/ http://www.nbcnews.com/id/22452666/ns/business- us_business/t/cincinnati-post-stops-press-after-years/ Disruption Past: Efficient pipelines disrupt inefficient pipelines Newspapers under tremendous pressure
- 4. 2016 Parker & Van Alstyne – licensed under Creative Commons Attribution-ShareAlike 4.0 International (CC BY-SA 4.0). http://articles.latimes.com/2013/nov/06/ entertainment/la-et-mn-blockbuster- video-stores-closing-20131106 Disruption Past: Efficient pipelines disrupt inefficient pipelines Media retailers under tremendous pressure Pathway to disruption: online pipes’ superior marginal economics of production & distribution
- 5. Disruption Stage 2 - Platforms disrupt pipelines Emergence of Platforms into traditional print news and classified markets Path: Aggregation; Classified Ad Revenue Superior economics: Social Curation
- 6. Path: Low cost new supply; fixed costs covered, low variable costs Problem Solved: Trust/Insurance Disruption Stage 2 - Platforms disrupt pipelines Airbnb lists rooms without having to commit capital
- 7. Path: New Supply; Break the Bundle. Problem To Solve: Certification Disruption Stage 2 - Platforms disrupt pipelines Traditional Bricks and Mortar Schools under pressure
- 8. Disruption Future: Professional & Financial Services Path: Bypass Gatekeepers. Problem To Solve: Regulatory Restrictions http://apptology.com/blog/tag/blockchain/
- 9. Disruption Future: Distributed Energy Resources http://www.siliconvalley.com/2015/0 2/25/solarcity-and-google-partner- on-750-million-solar-fund-largest-of- its-kind/ http://www.intechopen.com/boo ks/progress-in-gas-turbine- performance/micro-gas-turbine- engine-a-review https://www.tesla.com/powerwall
- 10. PLATFORM SPONSOR System Status by time & location Prices by time & location Ecosystem Rules Architecture Disruption Future: A Platform Distributed for Energy Resources Platform Provider/Distribution System Adjacent Service Providers Household RetailESCOs Facilitate user role change Government/ Commercial Industrial Supply: Bulk Power & DER http://scholarspace.manoa.hawaii.edu/bitstream/10125/41519/1/paper0370.pdf Path: New Supply; Market Aggregation. Problems To Solve: Launch, Federal vs. State Regulations
- 11. Why Now? Dramatic increase in computational power http://aiimpacts.org/trends-in- the-cost-of-computing/
- 12. Why Now? Many new users and devices! http://mobilemarketingmagazine.co m/four-connected-devices-per- person-worldwide-by-2020/
- 13. Why Now? New Behavior
- 14. TAKEAWAYS FROM CHAPTER FOUR The disruption of business by the Internet has proceeded through two stages. In stage one, efficient pipelines ate inefficient pipelines. In stage two, platforms eat pipelines. Platforms are able to outcompete pipelines because of their superior marginal economics and because of the value produced by positive network effects. As a result, platforms are growing faster than pipelines and taking leading positions in industries once dominated by pipelines. The rise of platforms is also disrupting business in other ways. It is reconfiguring value creation to tap new sources of supply; reconfiguring value consumption by enabling new forms of consumer behavior; and reconfiguring quality control through community-driven curation. The rise of platforms is also causing structural changes in many industries—specifically, through the phenomena of re-intermediation and market aggregation. Incumbent companies can fight back against platform-driven disruption by studying their own industries through a platform lens and beginning to build their own value-creating ecosystems, as Nike and GE are doing. 2016 Parker & Van Alstyne – licensed under Creative Commons Attribution-ShareAlike 4.0 International (CC BY-SA 4.0).
- 15. Platform Revolution: Next Chapter 5 – Launch 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 Traditional 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 (Click on left hand icons to access content) 2016 Parker & Van Alstyne, with Choudary – licensed under Creative Commons Attribution-ShareAlike 4.0 International (CC BY- SA 4.0).
- 16. For More Chapter 4 Information Suggested background: MBA Course Readings 1. David Ferris, Jeffrey Tomich and Edward Klump, "NRG's David Crane wants to rule -- and overthrow." EnergyWire: Tuesday, September 9, 2014. http://www.eenews.net/stories/1060005411 2. Charles Moldow. "A Trillion Dollar Market By the People, For the People: How Marketplace Lending Will Remake Banking As We Know It." Foundation Capital Whitepaper 3. Marc Andreessen, “Why Software Is Eating the World,” Wall Street Journal, August 20, 2011, http://www.wsj.com/articles/SB10001424053111903480904576512250915629460. 4. Arun Sundararajan, “From Zipcar to the Sharing Economy,” Harvard Business Review, January 3, 2013, https://hbr.org/2013/01/from-zipcar-to-the-sharing-eco/ 5. Dan Charles, “In Search of a Drought Strategy, California Looks Down Under,” The Salt, NPR, August 19, 2015, http://www.npr.org/sections/thesalt/2015/08/19/432885101/in-search- of-salvation-from-drought-california-looks-down-under. 6. Jason Tanz, “How Airbnb and Lyft Finally Got Americans to Trust Each Other,” Wired, April 23, 2014, http://www.wired.com/2014/04/trust-in-the-share-economy/. Geoffrey Parker @g2parker Marshall Van Alstyne @InfoEcon 2016 Parker & Van Alstyne, with Choudary – licensed under Creative Commons Attribution-ShareAlike 4.0 International (CC BY- SA 4.0).
- 17. For More Chapter 4 Information Suggested background: PhD Course Readings 1. Hemant K. Bhargava and Vidyanand Choudhary, “Economics of an Information Intermediary with Aggregation Benefits,” Information Systems Research 15, no. 1 (2004): 22– 36. 2. Marco Ceccagnoli, Chris Forman, Peng Huang, and D. J. Wu, “Cocreation of Value in a Platform Ecosystem: The Case of Enterprise Software,” MIS Quarterly 36, no. 1 (2012): 263– 90. 3. Thomas Eisenmann, Geoffrey Parker, Marshall Van Alstyne, "Platform Envelopment,” Strategic Management Journal 32 (2011). 4. Peter C. Evans and Marco Annunziata, “Industrial Internet: Pushing the Boundaries of Minds and Machines,” General Electric, November 26, 2012, http:// www.ge.com/ docs/ chapters/ Industrial_Internet.pdf. 5. Feng Zhu and Marco Iansiti, “Entry into Platform-Based Markets,” Strategic Management Journal 33, no. 1 (2012): 88– 106. 6. Richard Tabors, Michael Caramanis, Elli Ntakou, Geoffrey Parker, Marshall Van Alstyne, Paul Centolella, Rick Hornby (2016), “Distributed Energy Resources: New Markets and New Products.” Geoffrey Parker @g2parker Marshall Van Alstyne @InfoEcon 2016 Parker & Van Alstyne, with Choudary – licensed under Creative Commons Attribution-ShareAlike 4.0 International (CC BY- SA 4.0).
- 18. For More Chapter 4 Information Suggested video for disruption 1. Platform Revolution - Lecture at MIT Platform Symposium - Geoff Parker https://www.youtube.com/watch?v=F-EJrG3J4GQ 2. Platform Revolution - MIT Initiative on the Digital Economy - Marshall Van Alstyne https://www.youtube.com/watch?v=jfd3k4VUYh4&t=817s 3. Four forms of market-driven disruption - Sangeet Paul Choudary https://www.youtube.com/watch?v=32nTvAzS8Tg 2016 Parker & Van Alstyne, with Choudary – licensed under Creative Commons Attribution-ShareAlike 4.0 International (CC BY- SA 4.0).
- 19. Platform Revolution Author video links 1. Geoff Parker https://www.youtube.com/playlist?list=PLMMkE0nV-WxySm4apD9EsOFXHjgc5mMdP 2. Marshall Van Alstyne https://www.youtube.com/results?search_query=marshall+van+alstyne 3. Sangeet Paul Choudary https://www.youtube.com/channel/UCv9bXzmPIQBXpWSPgBGzF2g/videos 2016 Parker & Van Alstyne, with Choudary – licensed under Creative Commons Attribution-ShareAlike 4.0 International (CC BY- SA 4.0).
Editor's Notes
- #4: Lightbulb lasts longer than your lease. Why would you buy?!?
- #5: Lightbulb lasts longer than your lease. Why would you buy?!?
- #6: Incumbent: Ad supported newspapers Platform entrant: eBay, Google, Craigslist How: Destroy ad revenue; call forth new (and cheaper) supply Key problem entrant solved [aggregation of supply and demand… need good way to say this]
- #7: Incumbent: Hotel chains such as Hilton, Marriott Platform entrant: AirBNB, X, Y, Z How: Expose latent supply Key problem entrant solved Bilateral Trust; central trust insurance; matching;
- #8: Incumbent: Boston University, Georgetown, Tulane; MIT, Harvard, Princeton (eventually) Platform entrant: Coursera, Khan, edX How: Peel off the low end that provides cross subsidy for research, upper level classes Key problem entrant needs to solve Certification
- #9: Incumbent: Boston University, Georgetown, Tulane; MIT, Harvard, Princeton (eventually) Platform entrant: Coursera, Khan, edX How: Peel off the low end that provides cross subsidy for research, upper level classes Key problem entrant needs to solve Certification