Sunday, November 13, 2022

Products to Platforms

Here are my reading notes from great research article about transitioning from products to platforms.

1. Start with a Defensible Product and a Critical Mass of Users

Platforms connect two or more distinct groups of users and enable their direct interaction—can generate many revenue streams.

A great platform starts with a great product—one that claims a critical mass of customers and provides enough value to keep them from defecting to competitors (in other words, is defensible).

No platform can thrive unless it creates value for those third parties.

Popularity doesn’t necessarily make a product defensible. (Need moat)

2. Apply a Hybrid Business Model Focused on Creating and Sharing New Value

It’s foolish to think that moving to a platform will revive a struggling product.

In a product business model, firms create value by developing differentiated products for specific customer needs, and they capture value by charging money for those items. In a platform business model, firms create value primarily by connecting users and third parties, and they capture value by charging fees for access to the platform.

Thus successful product-to-platform transitions require firms to engage in activities to increase the value of the product while also trying to attract third parties.

Firms stumble when a “product mindset” leads them to view the value pie as fixed.

3. Drive Rapid Conversion to the New Platform

Provide adequate value.
Stay consistent with your brand.
Involve users in improvements.

4. Identify and Act on Opportunities to Deter Competitive Imitation

One effective way to fend off copycat competitors is to identify and control the openings for value creation.

Firms should consider which aspects of their platforms to own and control. (Control own destiny)

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