‘Welcome to the platform revolution’ & ‘The power of platforms’

Question 1

Platform

Answer 1

A business model based on creating value by interactions between external producers and consumers (through an open, participative infrastructure. Its main purpose is to match users and facilitate the exchange of goods, services, or social currency)

Question 2

Pipeline

Answer 2

A traditional system that operates through a linear, step-by-step value chain (where producers create a product or service, and it is delivered directly to consumers)

Question 3

Platform Revolution

Answer 3

The shift in the business model from linear pipelines to interactive platforms (transforming industries by creating new ways to connect producers and consumers)

Question 4

Networked Markets

Answer 4

Markets where platforms enable interaction among multiple participants, breaking the traditional producer-consumer pipeline.

Question 5

Value Creation

Answer 5

The process through which platforms enable users to create, exchange, and consume value (often without owning the resources involved in the process)

Question 6

Gatekeepers

Answer 6

Traditional roles or intermediaries that control access and regulate value flow in pipeline businesses. Platforms eliminate gatekeepers, allowing for direct interaction.

Question 7

Feedback Loops

Answer 7

Systems in which platforms gather data from user interactions to continuously improve services (ensuring that only high-quality content or products remain popular)

Question 8

Community Feedback

Answer 8

User-generated responses that platforms rely on to assess and improve offerings (replacing traditional quality controls used in pipeline models)

Question 9

Inverting the Firm

Answer 9

A transformation where the focus of a platform business shifts from internal activities to external activities (engaging users as co-creators and facilitators of value)

Question 10

Sharing Economy

Answer 10

An economic model where individuals use platforms to share access to underutilized assets, like cars or homes, thereby unlocking additional supply without new production.

Question 11

Just-in-Time Inventory

Answer 11

A lean business strategy used by traditional firms to manage resources efficiently, contrasted with platform models that leverage user-generated resources.

Question 12

Not-Even-Mine Inventory

Answer 12

A concept unique to platforms, where inventory (such as rental rooms or ride-sharing cars) comes from individuals rather than from company-owned resources

Question 13

Ecosystem Governance

Answer 13

The approach platform companies use to manage and organize interactions within the ecosystem, focusing on user engagement rather than internal product control.

Question 14

Network Effects

Answer 14

Impact that the number of users of a platform has on the value created for each user. Positive network effects increase value with more users, while negative network effects decrease value due to poor management or over-saturation.

Question 15

Demand Economies of Scale

Answer 15

Economic advantages that emerge as user numbers grow on platforms, making the network more valuable and dominant

Question 16

Supply Economies of Scale

Answer 16

When the cost per unit decreases as production volume increases

Question 17

Metcalfe’s Law

Answer 17

A principle stating that a network’s value grows as more consumers use it

Question 18

Two-Sided Network Effects

Answer 18

Two distinct groups of users

Question 19

Price Effects

Answer 19

Temporary market-share gains through discounts or low prices (Price effects can drive short-term growth but often lack long-term sustainability)

Question 20

Brand Effects

Answer 20

Long-term growth and loyalty generated by associating quality with a brand, but often costly to establish and maintain

Question 21

Frictionless Entry

Answer 21

The ability of users to quickly and easily join a platform and begin participating in the value creation that the platform facilitates

Question 22

Side Switching

Answer 22

When users alternate between roles on a platform, like an Uber rider becoming a driver. This flexibility can enhance platform growth.

Question 23

Negative Network Effects

Answer 23

Occur when excessive user growth or poor platform management makes it harder for users to find valuable matches, reducing platform appeal

Question 24

Curation

Answer 24

The process by which a platform filters, controls, and limits the access of users to the platform, the activities they participate in, and the connections they form with other users.

Question 25

Same-Side Network Effects

Answer 25

Network effects created by the impact of users from one side of the market on other users from the same side of the market

Question 26

Cross-Side Network Effects

Answer 26

Network effects created by the impact of users from one side of the market on users from the other side of the market—the effects that consumers have on producers and those that producers have on consumers

Question 27

Data-Driven Network Effects

Answer 27

When a product’s value grows as a result of more usage via the accretion of data