Is 827 Platform Strategy 2015b
Is 827 Platform Strategy 2015b
Is 827 Platform Strategy 2015b
1 Paragraph Description:
To thrive in modern economies, executives, entrepreneurs and investors need a thorough understanding of
business platforms and information markets. Thousands of firms, from Facebook to Kickstarter to
Yammer, now operate as open ecosystems that match content creators and content consumers, gain value
and market share from network effects, and harness users to innovate. Many of these firms transact in
information. Drawing on cases from social media, entrepreneurship, enterprise software, e-communities,
mobile services, healthcare, and consumer products, students will analyze and learn to negotiate platform
startup, convert existing businesses, and make vital decisions on issues of openness, cannibalization, and
competition. Students will interact with execs of major firms such as Cisco and SAP and with startups in
the Boston area. They will learn to apply concepts from two sided networks, industrial organization,
information asymmetry, pricing, intellectual property, and game theory to real problems. Known
worldwide for his work on network business models, Professor Van Alstyne provides students with the
tools to leverage key principles into hands-on creation and management of real-world platforms.
Jobs for students that know course content are available at places like AT&T, BCG, Bertlesmann,
Bloomberg, IBM, Cisco, Goldman Sachs, PatientsLikeMe, McKinsey, Microsoft, Pearson Publishing,
Sony, and several entrepreneurial startups.
Rationale
This course is aimed at managers, executives, investors, and entrepreneurs interested in creating,
managing, or understanding business platforms. Firms such as Facebook, Amazon, SalesForce, and Apple
operate as ecosystems in which independent parties add value. Topics include startup, converting existing
businesses, openness, network effects, innovation, cannibalization, pricing, governance, and competition.
The course will combine rigorous theory with real-world experience. Case studies will emphasize
practical approaches and draw from social media, healthcare, entrepreneurship, enterprise software,
mobile services, and consumer products to provide foundations and definitions. This course will also
demonstrate established economic principles from the literature on industrial organization, two-sided
network effects, information asymmetry, pricing, and game theory. A basic prior class in microeconomics
is recommended.
Define platform businesses, distinguishing among input suppliers, markets, and true
platforms, and why these differences matter.
Recognize and know how to compete in winner-take-all markets, one and two sided
networks, and the context of multi-homing. Know how to win standards battles.
Understand how traditional pricing models break down in the context of platforms,
choosing from an array of freemium, bundled, and two-sided pricing.
Address the barriers that firms face in trying to organize themselves as platform firms.
Develop strategies for launching new platforms when critical mass is important. Learn
the process of making markets.
Develop recovery strategies in declining platform markets. Understanding timing in the
cannibalization of an old platform by a new one.
Apply tools developed in data analytics courses to the process of recommender systems
and match making.
Understand the anti-trust implications of platform strategies and safe harbor defenses.
Required Materials:
Please be sure to read and study the cases that are assigned. Students are expected to come to
class prepared (for both cases and readings) and ready to contribute.
Grading:
In-Class Participation
25%
Case write-ups / Homework
20%
Outside Participation (Blog/Wiki)*
10%
Take Home Exam
10%
Final project (paper & presentation)
35%
* plus up to 5% individual extra credit for bringing platform news and opportunities to class.
The Final Project will be a hands-on blueprint for solving a real platform problem with an
existing business. This will include a team developed 20 page paper and 20 minute presentation.
These will give students both real world practical expertise and points of contact for finding jobs.
Last year, executives from Cisco, IBM, Microsoft, Polycom, Receivables Exchange, Pearson
Publishing, SAP, and the United States Postal Service committed to spending time with students
and describing a platform problem critical to their businesses. For example, Cisco wanted to
learn how to create a platform in smart grids; Polycom wanted to transition from a product
company to a platform company; SAP wanted to navigate organizational structural problems
where their internal application developers compete with external application developers. USPS
wanted to implement a digital services platform, involving households and businesses, that
minimizes cannibalization of their physical delivery service. Pearson wanted to develop a
publishing platform of academic material that could compete with Amazon as well as Coursera.
Attendance and Participation
It is crucial that you attend class regularly and participate actively. The concepts we cover are
challenging and so a passive stance will limit your learning. Your active participation in the
course materials not only enhances your own learning, but also enhances the learning of others.
Participation consists of answering questions when asked as well as asking questions,
contributing opinions and describing personal experiences; all of this improves class discussion
and learning. If you need to miss class, you must contact me before class (email is easiest) to
have an excused absence. When you take an excused absence you will be responsible for turning
in a "write-up" answering the case or reading questions covered for the day you missed and turn
it in by the following class period. Your write-up should be uploaded into the "Absence Writeups" directory, under resources, on SMGTools. An unexcused absence will drop your grade by
half a step.
Missed Class
If you must miss a class, get permission from the instructor. You must also do a case write-up
answering the questions posed on this syllabus for that specific class. You can get full credit for
no more than one missed class without this affecting your participation grade. The write-up is
due before the start of the next class.
Collaboration on Assignments
I encourage you to collaborate as your go over the reading material and cases. Collaboration will
be especially valuable in summarizing what you read and picking out key concepts. You can also
collaborate as you prepare for your individual assignments, but everyone must write up their
individual assignments by themselves. Obviously collaboration is NOT permitted on the
midterm.
Plagiarism
Simple rule: don't do it. Although we encourage study groups and wide ranging research, it's
simply part of academic integrity to claim credit only your own unique contribution. Real people
have received a failing grade for plagiarism in this class. If in doubt, cite references for ideas and
always quote text directly lifted from another document. For written submissions, be sure to cite
references for any related work that provided the basis for your ideas. Set off any quotation of
text with quote marks and provide citations in either foot or end notes.
2.
Optional:
Apple vs. Google: Did Apple Learn Anything from its War with Microsoft? Fred Vogelstein
(wired.com, 2013)
3.
4.
5.
6.
Building Communities
i) Motivating content contributions
ii) Social tradeoffs in commercialization
iii) Managing same-side network effects
Readings
Building Online Communities, Ch 2 motivating content contribution (Kraut & Resnick, 2012)
Case: iStockPhoto Turning Community into Commerce (Grant & Stothers)
Case Goal: What are the challenges in peer production? How does a platform encourage
voluntary participation and the decision to contribute? What steps are necessary to building
community? How does monetizing the community destroy the community?
What are the values of iStockphoto partners? How do these values express themselves in the
current business model? What is iStockphotos competitive advantage? How vulnerable is the
company to competition? What conflicts emerge in the process of growing the company? What
steps would reduce this conflict? How can iStockphoto motivate content contribution? How can
iStockphoto monetize its content and/or community?
7.
Optional:
Who Really Believes in Permissionless Innovation? Adam Thierer, techliberation.com
The Era of Open Innovation (Chesbrough 2006)
Haiers microenterprise open innovation model AMR speech of CEO Zang Ruimin
8.
Case Goal: How can an environment shift rapidly? Why did MySpace fail? How would you save
MySpace? What should platforms measure to succeed? What should they watch out for? What
strategic options exist for platforms that are in trouble?
Why is Sony failing? How would you save Sony? Does Sonys internal organization (prior to
restructuring) foster or inhibit the growth of a platform ecosystem and network effects? Were all
of the restructuring efforts implemented by former and current Sony CEOs necessary for Sony?
Sonys former CEO Nobuyuki Idei said, 100% of the people around here agree we need to
change, but 90% of them dont really want to change themselves. What can Stringer do to
overcome internal resistance?
Optional:
Case: Research In Motion (RIM) (McCormack, Dunn, Kemerer)
9.
Ecosystem Governance
i) Licensing, Fairness
ii) Multilateral bargaining problem
iii) Managing internal / external conflicts
iv) Internal: Align incentives to promote information reuse and shared infrastructure
v) External: Information asymmetry organizing to help partners without stealing ideas
vi) Distributed project coordination/management
Readings
Platform Revolution: Ch 8 Governance
How eBay, Amazon & Alibaba Fuel the Worlds Top Illegal Industry (SMGT)
Swedes get it right Friedman, (SMGT)
Case: SAP AG: Orchestrating the Ecosystem
Case Goal: How do you ensure third parties support your platform? When should platform
owners tie their own hands and restrict themselves? How does the platform signal to developers
where they should and should not build? Whose interests does a platform optimize?
How does SAP categorize different parties in its ecosystem? How does SAP foster engagement
and participation? How does it mobilize partners? What are the levels of partnership available to
companies within the SAP ecosystem? How should SAP extract value from the platform (where
should it charge) and why? What would you recommend vis--vis its proposed new partnership?
Optional:
How Intel Manages Conflicts of Interest (Ch 4 Platform Leadership Gawer & Cusumano 2002)
Platform Rules: multi-sided platforms as regulators, Boudreau and Hagiu (Book Chapter, 2009)
Six Challenges in Platform Licensing (Parker & Van Alstyne, 2008)
10.
11.
Policy Implications
i) Antitrust
ii) Copyright, Patent & Private Ordering
iii) Information Markets
Readings
Platform Revolution Ch 11 Regulation
Regulation the Internet Way: A data first model for establishing trust, security & safety
Grossman (online)
The Dark Side of Sharing and How to Lighten it (Malhotra & Van Alstyne 2014) (SMGT)
Case: Uber: 21st Century Tech Meets 20th Century Regulation
Case Goal: Do platforms play by different rules and should they? When and how should
platforms be regulated? Can platforms become anticompetitive monopolies?
What regulatory hurdles does Uber face? Are these legitimate hurdles? How should Uber address
these regulatory challenges? How will incumbents respond?
Optional:
Antitrust Analysis of Multi-Sided Platforms, (Evans & Schmalensee 2012) (SMGT)
Government as a Platform (OReilly 2013) (SMGT)
The Web Economy, Two-Sided Markets and Competition Policy, Evans (SSRN, 2010)
Open Standards and Intellectual Property Rights (Simcoe 2005)
12.
Future
iv) Antitrust
v) Copyright, Patent & Private Ordering
vi) Information Markets
Reading
Platform Revolution: Ch 12 Whats next?
Bitcoin: The Beginning of Open Source Governance? (SMGT)
Case: Bitcoin
How do you put it all together? How many sides of a Bitcoin platform might there be? Will there
be few or many payment platforms? If few, which payment platform is most likely to succeed? If
you were an investor, what would you do to build a Bitcoin business? Would this be trading in
bitcoins or doing something else?
13.
Date
Main Topics
Reading Assignments
01
Sep 2
Platform Revolution Ch 1
02
03
04
05
06
07
08
Sep 9
Sep 16
Sep 23
Sep 30
Oct 7
Oct 14
Oct 21
Introduction
Foundations
Case: Intuit*
Case: Brightcove
Monetization
Case: Videogames
Launch
Building Community
Case: iStockPhoto
Open vs Closed
Case: Makerbot
TakerBot
Unpacking Etsys S1
09
10
11
12
Oct 28
Nov 4
Nov 11
Nov 18
Governance
Regulation, the Internet Way: A Data First Model for Establishing Trust,
Safety, and Security Nick Grossman (SMGT)
(SMGT)
Case: Uber
How eBay, Amazon and Alibaba Fuel the World's Top Illegal Industry
Future
Case: Bitcoin
Nov 25
<Thanksgiving Break>
13
Dec 2
Presentations
14
Dec 9
Presentations
Ethics
Sessions 12 on Policy
Implications and 10 on
Open Innovation will
specifically describe
properties of fairness
in motivating users to
participate in a platform
ecosystem.
Analytical
Thinking
Introduces formal
models of 2-sided
processes, pricing,
and multihoming.
Models will carry
throughout most
sessions.
Risk
Readings cover
initiative risks-familiar
uncertainties of
project mgmt;
interdependence
risks-uncertainties of
coordinating
with
complementary
innovators; and
integration
risks-uncertainties
presented by
adoption process
across value
chain.
Globalization
Discussed in
Session 8 on
External
Governance and
Session 10 on
Decentralized
Open Innovation
Digital
Technology
Energy &
Environment
Health
Failed launch of
the Google Health
platform and
successful launch
of PatientsLikeMe
case will be used
to develop
insights into
healthcare
platforms.
Concentration
/Degree
Programs
Relevance to IS,
Strategy, Ops
(supply chains),
and Marketing
(sales to 1-side of
a network changed
by 2-sides).