Fantastic post. Nike has absolutely been very smart about using Nike+ to reinforce its entire business model, from the CVP to the sales and marketing, and ultimately driving customers to keep purchasing Nike products in order to benefit from the integration of the different products (i.e. Nike+ chip; Nike+ app; Nike+ online community etc). Furthermore, the partnership with Apple – pure gold, as this takes advantage of the value network that Apple has already created for its consumers.
Agreed with @moniguzman. This is great and certainly holds promise for indie film makers who are often budget constrained and so targeted marketing through the use of data is a novel idea. Hopefully it takes off! I’m interested in how Roth sourced his data and how cost effective this was relative to the ultimate proceeds made off his film. If the economics can work for niche films, this is going to be amazing!
This is an interesting look at AA. I think the question you pose at the end is what plagues most companies that have access to tons of consumer data but the value creation / capture will only come once they know to what end they want to use the data. I think using the data for predictions of customer behaviour, for instance, is cool. But once AA knows how the customer is going to behave, how are they going to integrate this information into their planning, product design, supply chain etc. This goes beyond the online experience but also in-store. Not sure whether they know right now but will certainly be the uphill battle they will need to fight to restore their value proposition.
Point taken. I think one could say similar for say Upwork, which we covered as an example of digital crowds so perhaps the course’s definition has been a bit loose in terms of what constitutes a crowd. Ultimately, I think the point is that GLG is able to concentrate expertise on a single platform from different people. The experts on GLG’s network sign up voluntarily and I would posit that this factor makes them a “crowd of professionals” or something similar. Whether the outcome is that the engagements are more consulting in nature is beside the point. GLG is ultimately leveraging a crowd for its business model.
Absolutely agreed. I think the challenge is that right now, the expert network market is not very well understood by regulators. GLG and its competitors have done a good job in keeping the industry opaque. Furthermore, GLG has had to cooperate with the SEC in the past on investigations and has never been found guilty of wrongdoing. They have done a very good job so far of covering themselves legally. I think regulation of the expert network market is going to be difficult as a result because you can contract your way out of these legal grey areas.
I was introduced to Fiverr over the summer. The startup I worked for used the service to complete some grunt work that needed to get done. As such, I think the business idea is great but I also question some of the ethical aspects of the business. For instance, there are a ton of inane tasks posted that get completed by say a qualified PhD in Delhi because the $5+ price tag is worth more in rupees. Is this ok? I don’t think so. And while Fiverr is a fun concept, those kind of elements may eventually start to affect (maybe hurt) Fiverr’s value proposition.
Great post! I actually think Wikipedia will continue to be relevant precisely because of the fact that it’s crowdsourced! Google’s capabilities still require you to string together the relevant bits of info, whereas Wikipedia has most of the info in a single article. Value creating for users everywhere! Until Google and Yahoo answers can do that, Wikipedia will stay in my opinion.
This is fantastic! I didn’t even know that that’s how blue M&Ms ended up in my candy bag. I think it’s a great engagement strategy. I have to wonder though whether the difference with Frito Lays may be that Frito Lays is not necessarily looking to make a permanent change to its flavor portfolio? As such, they are ok with getting unlimited suggestions relative to M&Ms strategy of keeping it to strictly 3 colors. Might be a deliberate strategy choice. Great post though!
Thanks for your reply. I agree that for most individual users, what matters more are the users in your own network. I think that this is the initial pool. However, the applications can grow from there right? I conducted 3 interviews for my summer internship via Skype. I also did my HBS interview via Skype. Those aren’t users in my personal network per se, but certainly Skype then becomes an enabler for all kinds of other interactions with mere acquaintances.
You bring up an interesting point on indirect network effects. I also can’t think of other obvious stakeholders in this case in order to assess value derived from indirect network effects, but certainly it would be interesting to explore.
I interned at a startup that worked in a WeWork location in NY over the summer. From my experience, I actually think that WeWork’s indirect network effects are stronger than the direct network effects. Even though the value proposition is that the co-working experience will foster collaboration between startups and a sense of community, in practice, startups strike me as a bit more insular. I found that startup founders and teams were a lot more preoccupied with getting their own businesses off the ground. Therefore, even though WeWork members are cordial with each other, the actual interactions, be it at mixers or on the app, are far more transactional i.e. “How can you help me with this one part of my startup I’m struggling with.” This is exacerbated by the turnover of startups located in a WeWork location and so investing in the relationships between different startups in a WeWork space may not yield the value that WeWork may be banking on. This part of the value proposition is weaker than WeWork’s provision of value-added services. The indirect network effects may be where WeWork should focus its energy in the hopes that in the medium to long run, these effects prove strong enough to weather some of the cyclicality described in the post. Great choice of company though! It will be super interesting to see where WeWork takes this.
This is a great post and I really enjoyed the perspective that IG was able to provide standalone value. The fact that the platform has value even without the network effects is really powerful. I am curious as to your thoughts on how the tie-up with Facebook will allow IG to capture value. Ads have started popping up on my IG feed but I’m not sure how users will react to this. It certainly makes sense from a business perspective, but will this in any way weaken the network effects that IG has built up? Or do we think that the network is strong enough to withstand any backlash?
Thanks for this post! I tried to use Handy for the first time over the summer for a one-time cleaning and it was a complete disaster. The cleaner cancelled on me on very short notice and there was no way to recover the payment that had already been processed. Instead, Handy offered me credit which I was unable to convert into a refund given that there was absolutely no way to contact their customer service! As such, I’m probably not very objective in my commentary. 😉
While disintermediation is a real risk, I think the bigger problem and honestly where Handy falls flat, is on the standardisation of its service offering. Handy may claim that all cleaners have to undergo training etc but I have heard (and read) very mixed reviews of the service, which speaks to the variability of the service. This is the part over which Handy has no real control and yet this quality variable may play into the utility that users are able to derive from Handy. Furthermore, shoddy customer service does nothing to retain customers. As such, I think the network effects (both direct and indirect) are too weak for Handy to be a viable long term business. They may be forced to switch to an employee model – it seems inevitable, otherwise people will find other options for home services.
Great post! I think Dominos has done phenomenally well in using tech to capture consumers like me who were it not for the online interface, would probably never order pizza from there. The experience is pretty great and even with all the gimmicks, I still love the fact that I can track my pizza and I know that I will get exactly what I ordered. Furthermore, I love that they have integrated the front end with back end tech for their operations allowing them to streamline their process from end-to-end. This is the stuff that our TOM profs dream of! Yes, I agree with the concern that their digital strategy this may be replicable but I now certainly never think to try to order pizza online from Pizza Hut or any other chains. I wonder how many other consumers they have managed to lock-in (for the time being) and whether this may actually make it harder for others to get in on the action?
This is an interesting take! I would be interested in understanding how much market share Viber is capturing from say Skype or Facetime. In addition, Whatsapp now also allows you to make calls. This is huge, given how successful Whatsapp is in the developing markets mentioned in the post. I’m curious as to whether current Viber customers will prefer to just use one app for both messaging and free calls? In which case, does Viber still have a defensible customer value proposition against the likes of Skype, Facetime, Whatsapp etc?
Great post! What I find most intriguing is the statement that “we have placed enough trust on online communities that we feel safe meeting strangers after a few digital conversations.” Absolutely true and a little bit scary, given that Tinder is barely a step up from meeting weirdos / serial killers who post on Craigslist’s personal ads. I think that a big part of The Match Group’s digital win is convincing people that signing up via a Facebook profile provides sufficient verification of a person’s identity, relative to say Craigslist. Smart way to get over a hurdle to getting into the dating app funnel.