Competing with Network Effects

October 04, 2015

Read The Full Prompt

One consequence of the digital transformation of the economy is that many industries today are exhibiting network effects.

For this module please pick ONE company/organization and discuss how networks effects may affect its value creation, value capture and/or operating model and/or how it can take advantage of network effects to grow its business.

Issues you may want to address (feel free to consider other related issues not listed below):

– How to scale up businesses that exhibit Direct Network Effects?

– How to scale up businesses that exhibit Indirect Network Effects?

– How should incumbent firms compete when their industries become susceptible to network effects?

– How can an entrant take over market leadership when competing with an incumbent in a networked industry?

– How can product-centric firms grow into platform-centric firms?
Create an approximately 500-750 word post to make your contribution. Please create appropriate tags for your post. Please also respond to and comment on three other posts per module. Feel free to use graphics, data, videos and links to other sites to corroborate your points.

Note: Since our third module is on crowd-based business models (business models that leverage collective intelligence from a large number of users), please do not pick crowd-based companies such as Kickstarter, Wikipedia, and Threadless for this OK blog post.

Submitted (138)

SpotHero: Making city parking work better for you
The future ex Mrs. Kevin Branch-Elliman-Obara
Last modified on October 6, 2015 at 6:30 am
SpotHero dramatically improves the self-parking experience for city drivers
Old School Network Effects
Clay W
Posted on October 4, 2015 at 8:32 pm
Harvard and other elite schools depend on network effects. Can they survive when networks get too big and too open?
Textbook Network Effects: How Instagram Achieved Instagrowth
Austin
Last modified on October 5, 2015 at 12:01 am
Instagram is the textbook example of how a business initially attracts users in the absence of network effects and quickly grows by leveraging those network effects.
Tinder: The dark side of network effects
Jennifer B.
Last modified on October 19, 2015 at 5:26 pm
With the proliferation of the internet and smartphones, we live in a world of unlimited options, including those related to romantic possibilities. Due to network effects, there is a new source of value creation and capture in the dating world. [...]
PlayStation: How Sony came to dominate the gaming industry
GA
Last modified on October 4, 2015 at 11:59 am
Game consoles had been around for a while. During the 80’s, Atari and Nintendo dominated the industry and during the first years of the 90’s, Nintendo and Sega were the key players. But it was not until Sony’s entrance to [...]
Apple Watch: Betting on the Apple Ecosystem
Atima Lui
Last modified on October 4, 2015 at 5:52 pm
Why Apple Watch will be the leading platform in wearables
How clever is Clever?
SEA8
Last modified on October 5, 2015 at 11:08 am
Clever's multi-sided data sharing and learning application platform for K12 school districts
“Fasten” Your Seatbelts – Gunning for Uber Late in the Game
Austin
Posted on October 4, 2015 at 10:44 pm
New startup Fasten looks to disrupt Uber's dominance in Boston by eliminating surge pricing and taking fixed $1 cuts from drivers
Get In Ma Belly: How A Little Blue Card Helped Out Mom & Pop
John R
Last modified on October 4, 2015 at 3:46 pm
Chicago-based Belly Card (commonly known as Belly) is rapidly transforming customer loyalty space for SMBs and may soon make store-specific loyalty cards obsolete. Belly’s tremendous growth epitomizes what is possible by leveraging multi-sided, localized network effects, silly name be damned.
Clash of Clans: Network effects and stickiness in mobile gaming
Gonzalo
Posted on October 2, 2015 at 1:47 pm
A view of how network effects apply to one of the most popular mobile games.
Bitcoin: can it be a mainstream currency?
AK
Posted on October 4, 2015 at 11:24 pm
Bitcoin is a digital currency based on a peer to per electronic cash system. The rise of Bitcoin well illustrates the power of an ecosystem and the network effect.
UberPOOL: The New and Improved Tinder
Jess
Last modified on October 4, 2015 at 8:40 pm
Unlike @Tinder, #UberPOOL actually starts with a conversation #IRL. #modernlove
Twitch.tv: Amazon’s Billion-Dollar Bet on Network Effects in Streaming Video
Sean L
Last modified on October 19, 2015 at 6:10 pm
As their features converge, Twitch and YouTube Gaming will continue to coexist in an untipped market unless one platform can utilize network effects to its advantage and lock in users through high switching and multi-homing costs.
Twitter: A network potentially losing its effects
AS
Last modified on October 4, 2015 at 7:33 pm
Twitter's ability to capture users quickly led to its early rapid growth, but recent slowing in active users and the rise of competing social platforms questions the strength of their direct network effects, and could potentially have lasting consequences on [...]
Swing-by-swing: Network Effects Drive Success for(e) this Golf App
Drew O.
Posted on October 4, 2015 at 10:50 pm
Swing-by-swing (SBS) is a GPS enabled golf application (app) that gives players precise yardage estimates based on where they are standing on a given golf course. SBS also provides a digital scorecard so players can keep track of their scores, [...]
China’s Taxi Wars: Winner-take-all or lose-lose for Uber and its rivals?
hbs2016
Posted on October 5, 2015 at 3:08 pm
Rival taxi-hailing and ride-sharing apps are sustaining heavy losses in the battle for market share. Can a differentiated competitor win in the end?
Care.com: a two sided marketplace for all your care needs
Dani Johnson
Last modified on October 4, 2015 at 8:50 pm
Care.com's 16.5 Million member base provides huge networks effects for caregivers and families
WeWork is betting on network effects in networking
ahc
Last modified on October 4, 2015 at 11:59 pm
WeWork has created network effects in a traditional real estate leasing business model that has allowed it to scale bigger and faster than its competitors.
Netflix – Getting Smarter Everyday
DIGIT Girl
Posted on September 30, 2015 at 1:03 pm
Netflix exhibits both direct and indirect network effects through its recommendation engine, content acquisition process, and enabling devices.
Skype: The ultimate network business
Starfish23
Last modified on October 4, 2015 at 11:35 pm
Skype is the largest VoIP service in the world. Its success has been driven largely by the fact that its user base effectively grows itself. The sheer size of this network provides ample opportunity for value capture.
Ola Cabs: The “Copy-Cat” beating Uber at its own game in India.
Karthik
Last modified on October 1, 2015 at 4:25 pm
Ola Cabs, which built its business model on Uber’s success in the US, is significantly ahead of Uber in India with estimates suggesting an almost 80% market share to Ola. How could an India based start-up beat a giant like [...]
Apple Music – Locking Customers In Through Network Effects
David
Last modified on October 4, 2015 at 1:43 pm
For almost 15 years the success of Apple’s devices and iTunes services has been primarily based on indirect network effects. Now the rapid growth of music streaming services shifts the focus towards direct network effects.
Rue La La is declining in ooh la la
#mustshop
Posted on October 4, 2015 at 11:31 pm
Rue La La may come to rue the day it decided the novelty of flash sale sites was enough to create and capture value.
Where Dropbox success is coming from and how they can compete today?
Sabina
Posted on October 3, 2015 at 5:16 pm
Dropbox is a personal cloud service storage system. It is a place where you can store all your files and they automatically will appear on all your computers, phones and tablets. With Dropbox one can open his documents from anywhere. [...]
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