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Digital Transformation > Digital Platforms > Flashcards

Digital Platforms Flashcards

1
Q

The value of an open platform and its digital complements add to the value of a physical product. True or False. Give examples:

A

True. Example, Apple, since the iPhone benefits from iPhone apps, which are digital complements to the iPhone. The value of the physical product (iPhone) increases as the number of digital complements (iPhone apps)
increases.

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2
Q

4 gift ways of monetization:

A
  1. Direct cross-subsidies
  2. The three-party market
  3. Freemium
  4. Non-monetary markets
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3
Q

Explain Direct cross-subsidies form of monetization.

A

Examples: Free samples Apple classes store (trial period) or Open Source Software with paid modules.
* What’s free: any product that entices you to pay for something else.
* Free to whom: everyone willing to pay eventually, one way or another

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4
Q

Explain The three-party market form of monetization.

A

Examples: Nº 800 Free, Free e-mails, Popularity Dealer/fake calls.
* What’s free: content, services, software, and more.
* Free to whom: everyone.

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5
Q

Explain Freemium form of monetization.

A

Examples: Skype/Skype for Business or Buy 1 get 1 free.
* What’s free: anything that’s matched with a premium paid version.
* Free to whom: basic users.

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6
Q

Explain Non-monetary markets form of monetization.

A

Examples: MIT OpenCourseWare, xMOOCs, Wikipedia, Google.
* What’s free: anything people choose to give way with no expectation of payment.
* Free to whom: everyone.

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7
Q

What is a platform?

A

A platform is a business that creates value by facilitating direct interactions between two or more distinct types of customers.

A platform can be defined “as a digital environment characterized by near-zero marginal cost of access, reproduction, and distribution”.

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8
Q

What is a digital platform?

A

A digital platform aggregates supply and demand, usually by connecting users who may be using the same product or complementary products.

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9
Q

Do companies really need to build their own platform?

A

Companies can derive benefits from platforms either by building a platform themselves or by participating in an existing platform. Either way, platforms cannot be ignored. This is because of their ability to disrupt traditional product-based businesses, as well as the new business models and pricing strategies they enable.

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10
Q

What are the benefits from an open platform for digital complements to a physical product?

A
  • The number of digital complements increases much more rapidly because the physical product benefits from two-sided network effects, with positive feedback between the number of physical product owners and the number of digital complement developers.
  • The number of digital complements increases at much lower cost. These outside digital complement developers are, in essence, providing free work to the platform because it is in their own interests to do so.
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11
Q

From “Competition within defined industries” to (…):

A

“Competition across fluid industries”

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12
Q

From (…) to “Blurred distinctions between partners and rivals”:

A

Clear distinctions between partners and rivals

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13
Q

From “Competition is a zero-sum game” to (…):

A

Competitors cooperate in key areas

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14
Q

From (…) to “Key assets reside in outside networks”:

A

Key assets are held inside the firm

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15
Q

From “Products with unique features and benefits” to (…):

A

Platforms with partners who exchange value

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16
Q

From (…) to “Winner-takes-all due to network effects”:

A

A few dominant competitors per category

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17
Q

Platforms just with traditional businesses. True or False

A

Platforms don’t compete just with traditional businesses (Uber vs. a traditional car service). They also compete against other platforms on 5 areas of value.

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18
Q

What are the areas of value where platforms compete against each other?

A
  1. Network-added value
  2. Platform-added value
  3. Open standards
  4. Interaction tools
  5. Trust enablers
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19
Q

What is the platform business model map?

A

This tool is an analytic and visualization tool designed to identify all the critical parties in a platform and analyse where value creation and exchange take place among the different customers and with the platform business itself.

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20
Q

What are the different shapes that are present in the platform business model map?

A
  1. Circle
  2. Diamond
  3. Rectangle
  4. Spike
  5. Double-borders
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21
Q

What does the circle represent in the platform business model map?

A

Platform

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22
Q

What does the diamond represent in the platform business model map?

A

The payers (customers that provide revenue to the platform)

23
Q

What does the rectangle represent in the platform business model map?

A

The sweeteners (customers that provide no revenue but help to attract other valuable customers)

24
Q

What do the spikes represent in the platform business model map?

A

The number of other customer types that are attracted (e.g., publishers in Facebook have one spike because they attract only users, but users have four spikes because they attract publishers, advertisers, app developers, and more users like themselves)

25
Q

What do the double-borders represent in the platform business model map?

A

The linchpin (the customer type with the most spikes; the king of network effects)

26
Q

What do arrows indicate in the platform business model map?

A

Indicate value exchange. Arrows in each direction show the value provided, or received, by each customer type

27
Q

What do values in boldface represent in the platform business model map?

A

Monetary value

28
Q

What do values in parentheses represent in the platform business model map?

A

Are provided by the platform itself or to the platform itself (e.g., the platform’s share of revenues)

29
Q

What do values not in parentheses represent in the platform business model map?

A

Are passed through the platform and is provided to other customers

30
Q

What are the different types of platforms?

A

Platforms can be described in terms of whether they connect one category of users (one sided), two categories of users (two-sided), or more than two categories (n-sided)

31
Q

What are one-sided platforms?

A

These have a single category of participant who benefits from the growth in the number of participants on the platform (for example, WhatsApp and Dropbox)

32
Q

What are two-sided platforms?

A

These have two categories of users, each benefiting from members of the other category using a complementary product. For example, ride-hailing services such as Lyft and Uber (at least in the beginning, right now it is more than two-sided platform) connect riders and drivers. Riders benefit from network effects of drivers while drivers benefit from network effects of riders

33
Q

What are n-sided platforms?

A

These platforms have three or more categories of users who each benefit from members of the other complementary categories. For example, the Android system has Android phone buyers, Android app developers, and Android device (hardware) makers: three sides that mutually benefit from the numbers of participants in the other categories

34
Q

Facebook is a one-sided platform. True or False

A

False.
Facebook is a one-sided platform at the level of its social network function of consumers connecting to consumers. Facebook is also a two-sided platform from the point of view of advertisers, who see the network’s value in terms of the number of consumers they can reach.

Facebook has another two-sided network effect with the many app developers who can integrate with Facebook pages. An interesting aspect of multi-sided platforms is their ability to enable the development of other businesses that enhance the business of the platform.

35
Q

What are O2O platforms?

A

The type of platform that is the most powerful and capable of disrupting traditional industries is an online-to-offline (O2O) platform. In this type of platform, the platform creator finds a way to bring the economies of the digital world to a physical good.

Example: GO-JEK (Indonesia) lets people hail an ojek, which is a nimble motorbike that can weave around traffic and queues of cars. Riders and drivers easily connect on the platform. GO JEK added a third side to its platform in the form of restaurants and other businesses that need deliveries.

36
Q

What is liquidity?

A

Liquidity is the assurance that a transaction will happen without huge price changes. Liquidity is an important performance measure of two-sided (or n-sided) O2O platforms such as GO-JEK, Uber, and others.

37
Q

What does liquidity means in the case of a ride-hailing platform?

A

Liquidity means riders don’t have to wait long for drivers and drivers don’t have to wait long for riders

38
Q

Is liquidity a good measure of network value? Why?

A

The total numbers in a network are one proxy for the likely value of a network. Liquidity is a better measure of network value because the total number of drivers GO-JEK has doesn’t matter if none of them are available and nearby when a rider hails a ride

39
Q

A platform that lacks liquidity is likely to be used. True or False

A

False.

A platform that lacks liquidity is likely to be abandoned because the participants aren’t being satisfied and come to see the platform as unreliable

40
Q

Facebook is a n-sided digital platform type. True or False

A

True

41
Q

Everytime a third party creates an app, iPhone and Apple decreases value. True or False

A

False

42
Q

What are the two key points of a digital platform value?
a) Open platform and one-sided platform type
b) Open platform and digital complements
c) Closed platform and digital complements
d) None of the answers

A

b)

43
Q

A company should build its own platforms, if the efforts at brand building will be in conflict with the existing ones. True or False

A

True

44
Q

Uber is a:
a) Two-sided platform
b) n-sided platform
c) O2O platform
d) One-sided platform

A

b) and c)

45
Q

Uber is a:
a) Two-sided platform
b) n-sided platform
c) O2O platform
d) One-sided platform

A

b) and c)I

45
Q

Uber is a:
a) Two-sided platform
b) n-sided platform
c) O2O platform
d) One-sided platform

A

b) and c)

46
Q

If a platform has many customer types they do not have to complement each other to increase value. True or False

A

False

47
Q

If a platform has many customer types they do not have to complement each other to increase value. True or False

A

False

47
Q

Uber is a:
a) Two-sided platform
b) n-sided platform
c) O2O platform
d) One-sided platform

A

b) and c)

48
Q

Uber increased value because it changed the platform strategy from Two-sided platform to n-sided platform. True or False

A

True

49
Q

Build platforms for digital transformation, means:
a) Building a disruptive technological platform
b) None of the alternatives
c) Deploying a platform where the business can engage and deliver value
d) Build a technological infrastructure that support value distribution.

A

c) and d)

50
Q

Uber is a One-sided platform. True or False

A

False

51
Q

Explain emergent vs. constrained network growth

A
  • Hub and spoke: (star schema, only second order nodes) traditional finance: many platforms with API keys where exchanges are only with the central authority.
  • Scale-free network: (second, third, etc order nodes) open source software development: wikipedia, social networks, smart contract blockchains.
52
Q

Explain Metcalfe’s Law and Reed’s Law.

A
  • Metcalfe’s law: v=n^2. Network value increases exponentially with an increasing number of devices on the network.
  • Reed’s law: v=2^n. Social networks, messaging apps: network value increases even more than Metcalfe’s as subgroups become easier to form.

Digital Transformation (7 decks)

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