Session3-Platform value structure. Digital business Model pdf

Business Models

1. PIPELINES TO PLATFORMS
EVOLUTION OF VALUE ARCHITECTURE DUE TO DIGITAL CAPABILITIES
THIS MATERIAL IS IS CREATED BY PROF. VIDUSHI PANDEY FOR CLASSROOM TEACHING AT INDIAN INSTITUTE OF MANAGEMENT
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2. PIPELINE BUSINESS MODEL

3. PLATFORM BUSINESS MODEL
¡Platform businesses bring together producers and consumers in high-value exchanges.
¡Chief assets are information and interactions, which together are also the source of the value they create and
their competitive advantage.
¡E.G. Apple’s App store

4. PIPELINE TO PLATFORMS
Traditional Platforms: Shopping Malls, Newspapers
Information technology Intervention:
¡Reduced the need to own physical infrastructure and assets
¡Made building and scaling up platforms vastly simpler and cheaper
¡Enhanced the ability to capture, analyze, and exchange huge amounts of data

5. PLATFORMS MEDIATED NETWORK
¡In a platform-mediated network, a platform encompasses the common components and rules
employed by network users in most of their interactions.
¡“Components” include hardware, software, and services required by users, along with an architecture that
specifies how these components fit together.
¡“Rules” include standards that ensure technical compatibility, policies constraining the behavior of network users,
and contracts specifying terms of exchange and the rights and responsibilities of network participants.

6. PIPELINE TO PLATFORMS
¡Apple’s handset Business : Pipeline
¡Apple’s App Store : Platform
As Apple demonstrates, firms needn’t be only a pipeline or a platform; they can be both.

7. VALUE
ARCHITECTURE
OF PLATFORM
BUSINESS
MODELS

8. DISCOVERY PLATFORMS
¡Provide information as a service
¡Also, called info-mediation platforms
¡Core value : search, find, identify, select specific partners to interact with
¡E.g Just Dial
¡Should master three capabilities
¡Extensive access to supply side user data
¡Clear understanding of demand side search criteria
¡Ability to leverage data

9. MATCHING PLATFORMS
¡A step ahead of discovery
¡Enable choice making by ensuring preferences of both sides of the users are aligned
¡E.g. dating platforms, online gaming platforms
¡Essential capabilities
¡Ability to capture preferences of both sides of users
¡Segment users based on these preferences
¡Curate and customize results for each user group

10. TRANSACTION PLATFORMS
¡Reduce transaction costs such as
¡Contracting + defining terms of exchange
¡Pricing or determining the fair value to be paid
¡Arbitration of recourse charges
¡E.g. : car rental platforms, e-commerce platforms
¡Essential capabilities
¡Adequate and accurate information collection from both parties
¡Handle pricing and other monetary transactions
¡Be accountable for arbitration and recourse

11. EVALUATION PLATFORMS
¡One of the most critical utilities provided by platforms to the users
¡They reduce information asymmetry between user groups
¡May form the basis of decision making
¡Evaluations can be in form of – ratings, reviews, recommendation and feedback
¡E.g tripadvisor.com
¡Essential capabilities
¡Enable evaluation mechanisms like credible revies, ratings etc.
¡Internalize risk of adverse selection in case of service failure
¡Keep information current and reliable

12. DMTE AS A CYCLE
¡It is not necessary all platforms must provide all these
values
¡They can choose the right portfolio of utilities depending
on user groups
¡All these utilities can be conceptualized in a concentric
cycle

13. DISCUSS VALUE ARCHITECTURE OF SWIGGY

14. PLATFORM INTERMEDIARY ROLES &
STRUCTURE OF PLATFORM CONTROL

15. PLATFORM INTERMEDIARY ROLES
¡Platform providers
¡Provide the infrastructure
¡mediate network users’ interactions;
¡they serve as users’ primary point of contact with the platform.
¡One vs many platform providers
¡Platform sponsors
¡Do not deal directly with network users; rather, they hold rights to modify the platform’s technology and to determine who may participate in the network as platform providers, component suppliers, and network users.
¡Sponsored Vs Unsponsored platforms
¡One vs many sponsors
¡Platform Component suppliers
¡Make available to network user essential goods and services that are not provided by the platform providers directly.
¡Components (essential ) Vs Complements (non essential)
¡Platform users (They are network Users, not Platform intermediaries )
¡Independent people and organizations that interact with platform and other users

16. WINDOW’S PLATFORM INTERMEDIARIES
¡Platform Sponsors
¡Platform Providers
¡Platform Users
Windows (Pltfrm)
Provider (Dell, HP )
Sponsor (Microsoft)
Component
(keyboard , monitor,
security)
App developerEnd users
Complementors
Bluetooth devices
Wifi routers

17. SWIGGY’S PLATFORM INTERMEDIARIES
¡Platform Sponsors
¡Platform Providers
¡Platform Users

18. STRUCTURE OF PLATFORM CONTROL
Source : Platform mediated networks (HBR Module Note)

19. PROPRIETARY PLATFORMS
¡Single sponsor who serves as its sole provider, for example, Apple ioS ecosystem
¡Complementary service providers are exclusive to the platform
¡Hight switching cost for the users
¡Threat of lock-in for the users
¡Platform has complete control over critical resources in the market

20. SHARED PLATFORMS
¡Multiple firms collaborate in developing the platform’s technology and then compete with each other in providing
differentiated but compatible versions of the platform.
¡E.g. as Visa or Linux; DVD standard
¡Platform attract wide variety of complements that are compatible across each other
¡More users attracted due to large number of complementors
¡Low switching costs
¡Platforms require large investments for developing core and initial branding stage
¡Risk of fast followers

21. JOINT VENTURE PLATFORMS
¡Several firms (sponsors) cooperate in developing the platform, but a single entity serves as its sole provider
¡e.g., the online recruitment site CareerBuilder, created by three newspaper groups.
¡Roomkey, formerly Room Key, was a hotelmetasearch engine, a joint venture founded byChoice Hotels
International,Hilton Worldwide,Hyatt Hotels Corporation,InterContinental Hotels Group,Marriott
International, andWyndham Worldwide, or their respective affiliates.
¡Sponsors play important role in attracting users while providers service levels ensures loyalty

22. LICENSING PLATFORMS
¡Single company develops a platform’s technology then licenses other providers
¡E.g., American Express, which licensed MBNA to issue its cards in 2004
¡E.g. Unified Payments Interface
¡May need high initial investments
¡The licensees (providers) should possess unique capabilities valued by users.

23. THANKYOU