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)

LevelUp: A Rewarding Network $$
mtv0302
Last modified on October 5, 2015 at 1:05 am
LevelUp, a mobile-first payment and customer loyalty platform is channeling multiple network effects and value capture decisions to disrupt the point of sale experience for consumers and merchants.
DogVacay: Building a Network of Dog Sitters
Fisher
Last modified on October 5, 2015 at 11:38 am
DogVacay's multi-sided platform connects dog owners and sitters, and eliminates the need for expensive and unnatural kennels.
Nextdoor to Replace Yelp?
Julie
Posted on October 4, 2015 at 8:47 pm
Nextdoor is creating virtual neighborhood communities with lucrative demonetization opportunities.
Waze: Using Network Effects to Improve Your GPS System
CC24
Last modified on October 4, 2015 at 9:30 pm
Waze is a different kind of GPS navigation system. It uses data generated by its users to map cities, provide real time data about traffic patterns, alert users to accidents and police checkpoints, and even identify the cheapest places to [...]
Daimler’s struggle to become a platform player in urban transportation
hawkeye
Last modified on October 19, 2015 at 6:10 pm
Car manufacturer Daimler, who owns the Mercedes brand, has been quite aggressive in pursuing new business opportunities in the evolving context of urban transportation. Along the way the company is shifting from a product-centric business model to a platform approach [...]
Alexa, Amazon and the Beauty of a Platform that Makes No Money
Rob C.
Posted on October 4, 2015 at 2:32 pm
Amazon, Apple, Google, Microsoft are battling it out for dominance of voice as the next UX and for creating a truly intelligent personal assistant. Each has taken a difference approach, which will determine the strength of the network effects at [...]
Is it looking terminal for the Bloomberg Terminal?
SDS
Last modified on October 4, 2015 at 5:01 pm
After decades of dominating the financial data market through strong network effects, the Bloomberg Terminal may be facing some serious competition from its own community of users.
Can Lyft survive as #2 in the car-sharing battle, or is this a winner takes all game?
Ximena
Posted on October 4, 2015 at 1:12 pm
Even though Lyft entered the market before Uber, today it is lagging far behind. While Uber is worth more than $50 billion and has presence in more than 300 cities, Lyft is worth less than $3 billion and has presence [...]
PayPal’s head start not enough to dominate online payments
vlad.hanzlik
Last modified on October 4, 2015 at 8:56 pm
Fuelled by its user base and network effects PayPal once looked invincible. The network effects have since crumbled and PayPal faces real threats.
SmackHigh: A social media platform fighting teen bullying
Angela Zhang
Last modified on October 4, 2015 at 10:12 pm
SmackHigh aims to build inter-school community through friendly smack talk and shared experiences in a safe online space
Microsoft: Took the Lead Early
Grace
Last modified on October 2, 2015 at 3:15 pm
Microsoft is a company that achieved their dominance within the PC market by capitalizing on direct network effects. Compatibility Arguably the most obvious way in which Microsoft leveraged success through direct network effects is due to the very nature of [...]
Epic EHR Systems: The Role of Network Effects
RFD123
Posted on October 4, 2015 at 5:18 pm
Epic's use of perverse network effects to lock in users may be its downfall...
The rise and demise of Groupon: the importance of satisfying both sides of a two-sided network
ilny
Last modified on October 19, 2015 at 5:26 pm
80% of Groupon's market value evaporates after it fails to satisfy one side of the two-sided network on which its business model relies
WeWork: What can they do to make their platform even more valuable?
Nazli O
Last modified on October 4, 2015 at 10:37 pm
WeWork rides the wave of shared economy and provides cheap office solutions to SMBs and startups. But can the company become a hot spot for these companies and attract them for anything more than low rent and a cool workspace?
Teladoc: How network effects are evolving in the world of telemedicine
Belowthefold
Last modified on October 4, 2015 at 5:52 pm
Teladoc is currently the market leader in the new world of telemedicine, but competitors are on the horizon and growing fast. Teladoc will need to find a way to increase the network effects of its service if it plans on [...]
AMAZON KINDLE IS KING OF NETWORK EFFECTS
Madrid
Last modified on October 4, 2015 at 2:10 pm
Amazon brings together readers, publishers, authors, and advertisers in a platform/environment that creates mutual value for all stakeholders and allows Amazon to capture value for itself.
eBay – The Perfect Store(y) of network effects
Y.S.H.
Posted on October 4, 2015 at 11:53 pm
A few thoughts on why eBay is a great example of how a business grew through indirect network effects
Predix – Turning Data into Insights and Insights into Action
LMT
Last modified on October 4, 2015 at 11:53 pm
With its pattern-finding platform, Predix, GE is transforming from a traditional equipment manufacturer to a full-fledge customer solutions provider – optimizing both customer outcomes and profitability.
GoPro – A Platform Worth $3 Billion
Jonathan T
Posted on October 4, 2015 at 4:30 pm
The GoPro Camera Platform utilized direct network effects to grow its user base, while utilizing indirect network effects to defend against large competitors.
Visa – Leveraging Indirect Network effects
RS
Last modified on October 19, 2015 at 5:26 pm
Visa has dominated the payment processing industry for decades, leveraging indirect network effects
Poshmark: Disrupting the $13 Billion Resale Industry
Golden
Last modified on October 19, 2015 at 6:10 pm
Four years ago fashion marketplace, Poshmark, launched an iOS app which allows consumers to buy and sell second-hand clothing, shoes and accessories. The company has grown its online community to millions of followers, was on track to make $200m in sales [...]
The Arduino Community
Donald Frump
Last modified on October 4, 2015 at 9:13 pm
The Arduino community keeps alive a simple piece of hardware that was made obsolete years ago.
Map My Money: How MapMyFitness Became a $150 Million Platform
Damla
Last modified on October 19, 2015 at 5:26 pm
How MapMyFitness mastered the art of direct and indirect network effects
The Next Evolution of Autodesk : Product to Platform?
MaskOfZorro
Last modified on October 4, 2015 at 2:46 pm
Autodesk : Time to capitalize on the design revolution it catalyzed?
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