linear vs platform business

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The use cases for pipes are usually well established. Television and Radio are pipes spewing out content at us. Many platforms launch and follow pipe-tactics like the above. Think of Toyota, which makes cars and sells them to drivers, or a company like Adidas, which creates clothing and sells it to consumers. Value is produced upstream and is consumed downstream. The media industry is struggling to come to terms with the fact that the model has shifted. Theres only so much that customer development helps your with. Had the internet not come up, we would never have seen the emergence of platform business models. This is a massive shift from any form of business we have ever known in our industrial hangover. The internet, being a participatory network, is a platform itself and allows any business, building on top of it, to leverage these platform properties. Download now and impress your audience. However, by virtue of the fact that they are internet-enabled, even they have elements that make them platform-like. canadanewsmedia councillor It's time for NEW regulation! Use them to share invaluable insights on services, supply chain, products, business model and impress your audience. Deliver and pitch your topic in the best possible manner with this selling products and services through business networking linear vs platform business model download pdf. This means the platform business model scales way more efficiently than a linear business model because its able to reduce its transaction costs also as the scale reached is massive. Also, a linear business model has to be closed and controlled by definition, as this is the way value can be captured. Topics like linear vs platform business model can be discussed with this completely editable template. In short, platform business models take their value from network effects. Getting users in, and trying to convert them to certain actions. The same goes for retail banking the bank lends you money at a specific interest rate. This is a four stage process. However, platforms often have no value when the first few users come in. All features are built with a view to enable consumers to find and consume airline tickets. Blogs run on a pipe model. gaikai watching gaming cloud inside easy vs playstation xbox specific else anything platform created each game If you go about building a platform the way you would build a pipe, you are probably setting yourself up for failure. This formula works extremely well for ecommerce shops or subscription plays. The company provides the service and you receive it. All of manufacturing runs on a pipe model. You get users in and convert them to transact. video viewing, voting etc.). They allow users to create and consume value. This model was brought over to the internet as well. They allow users to create and consume value.9 At the technology layer, external developers can extend platform functionality using APIs. You could be running your startup the wrong way if youre building a platform, but using pipe strategies. They provide you a service and you receive it. These businesses both create value by making a product and then they push that product out to consumers. Solving the chicken and egg problem to get both producers and consumers on board, 2. Therefore, a platform business model wont own assets, but it will make it possible to its end users to exchange things. On a platform business, monetization isnt quite as straightforward. In other words, where linear business models hardly scale to the total size of the market, platform business models not only might scale to the size of the market; but they might actually expand these markets altogether. Tweet, In the future, every company needs to be a tech company. As trade, labor, and money grow increasingly digitized and are exchanged on platforms, countries need to rethink their positions in global flows and pursue a platform strategy. Startups often fail when they are actually building platforms but use Pipe Thinking for user acquisition. Much like driving footfalls into a retail store and converting them, online stores also focus on getting users in and converting them. Producers upload photos on Flickr and product listings on eBay, which consumers consume. More on that soon, but first a few definitions. A platform business model unlocks value for its end users and consumers by enabling them to interact and transact smoothly with the other side of the transaction, be it another consumer or a producer. Platforms create value by bringing these people and businesses together and enabling them to exchange value. Tweet, How to regulate Facebook and Google Hint: NOT as platforms, Platform Scale: Announcing the launch of my first book, The State of the Platform Revolution 2021. Presenting this set of slides with name modifying supply chain digitally digitally enabled supply ecosystem vs traditional linear supply chain ppt powerpoint presentation slides maker pdf. Keeping two separate lenses helps us build out the right features. Users often take platforms in surprisingly new directions. Take your healthcare provider as an example. Our classrooms still work on a Pipe model but Udemy and Skillshare are turning on the Platform model for education. This is a completely editable PowerPoint presentation and is available for immediate download. E.g. TV Channels work on a Pipe model but YouTube works on a Platform model. I did mention earlier that blogs, ecommerce stores and single-user SAAS work on pipe models. Hence, without producers there is no value for consumers and without consumers, there is no value for producers. This template can be altered and modified as per your expectations. In some cases, platforms may license API usage. Crises like the Covid-19 lead to sudden changes in supply-side and demand-side dynamics, driving migration of value from established business positions to new ones. Also, a linear business model that scales will want to own more assets; thus, it will require more capital to be managed. Deliver an awe inspiring pitch with this creative incorporating platform business model in the organization linear vs platform business model clipart pdf bundle. Weve been building pipes for the last few centuries and we often tend to bring over that execution model to building platforms. Platform Thinking: Weve got to figure who creates value and who we charge for that. Pipe Thinking: We charge consumers for value we create. This is very different from your typical one-sided business, which caters to just one basic customer group for each product. When producers create content to engage consumers (YouTube), the platform may monetize consumer attention (through advertising). Tweet. There are two types of business models: Pipes and Platforms. So how do you avoid this as an entrepreneur? We are moving from linear to networked business models, from dumb pipes to intelligent platforms. As a result, platforms create valuable ecosystems driven by network effects. Platform Thinking: Build network effects before you optimize conversions. Every consumer good that we use essentially comes to us via a pipe. We see pipes everywhere. Two key shifts - increasing data interoperability and improvements in AI and machine learning - are driving down coordination costs, leading to the rise of platforms in healthcare. Value is produced upstream and consumed downstream. users (producers) can create value on the platform for other users (consumers) to consume, Get more insights into how companies apply platform strategies, Get early access to implementation criteria, Get the latest on macro trends and practical frameworks. The State of the Platform Revolution 2021 annual report covers the key themes in the platform economy in the aftermath of the Covid-19 pandemic. There are two broad business models: pipes and platforms. Why do most social networks never take off? Creating a pipe is very different from creating a platform. There are two types of business models: Pipes and Platforms. If the internet hadnt happened, we would still be in a world dominated by pipes. Pipe Thinking: Optimize conversion funnels to grow. Platforms are a fundamentally different business model. Topics like linear vs platform business model can be discussed with this completely editable template. If you go about building a platform the way you would build a pipe, you are probably setting yourself up for failure.3. The more users there are on one side of the platform, the more valuable the platform becomes to other users groups. At least one side is usually subsidized to participate on the platform. There is a linear flow, much like water flowing through a pipe. Monetization for a pipe, again, is straightforward. Unlike pipes, platforms do not just create and push stuff out. An online travel agent like Kayak.com is a pipe that allows users to consume air lie tickets. This concept is critical to understand as a linear business model would start from the assumption that the value is in the supply chain, and as it grows it can grab more market shares, by controlling more pieces of it. This annual report, based on Sangeets international best-selling book Platform Revolution, highlights the key themes shaping the future of value creation and power structures in the platform economy. Why do startups with the best technology fail so often? Pipes have been around us for as long as weve had industry. Think back to your one-sided business. Our education system is a pipe where teachers push out their knowledge to children. Traditional retail, a pipe, is being disrupted by the rise of marketplaces and in-store technology, which work on the platform model. Every business on the internet has some Platform properties. Ecommerce sites have reviews created by users, again an intelligent platform model. Moving fast and breaking things combined with archaic antitrust laws have let BigTech platforms run unchecked far too long. Our product has no value unless users use it. They suffer from a chicken and egg problem, which I talk extensively about on this blog. Themes covered in the 2021 report have been presented at multiple Fortune 500 board meetings, C-level conclaves, international summits, and policy roundtables. Not every platform company takes a pure platform approach, and not all aspects of products and services are best served through a platform. Startups that dont realize this fail. Tweet, Startups with the best technology often fail because they build for the wrong business model. Why are marketplaces such difficult businesses? This dynamic allows platforms to scale in ways that traditional, one-sided businesses cant. The value platforms provide also scales as they grow. AirBnB, SitterCity, Etsy), one or both sides pays the platform a transaction cut. Different Types of Platforms, implications on future of work, Difference between Linear and Circular Economy, Introduction, Advantages of Linear Programming, International Business: Scope, Trends, Challenges and Opportunities, Consumer Behavior: Concept and Importance. Tweet. Heres a quick summary of the ways that these two models of building businesses are different from each other. Platforms grow primarily by adding participants to their ecosystem, rather than by adding physical resources or direct labor. Value is produced upstream and consumed downstream. Reliance Jio rewrote the incumbent playbook for platform disruption. The use cases for platforms, sometimes, emerge through usage. Users (as producers) typically produce value for other users (consumers). Deliver an awe inspiring pitch with this creative expedite multi sided system linear vs platform business model information pdf bundle. Some companies like Apple and Amazon take a hybrid approach that combines linear and platform business models. Platforms are a fundamentally different business model. In contrast, a platform requires us to build with both producers and consumers in mind. Our product is valuable of itself. For pipes, a simple formula helps understand monetization: Customer Acquisition Cost (CAC) < Life TIme Value (LTV). Producers may even be incentivized to participate. Unlike pipes, platforms do not just create and push stuff out. Firms create stuff, push them out and sell them to customers. Building YouTube, Dribbble or AirBnB requires us to build tools for producers (e.g. 1. Theyve been the dominant model of business. It is available for immediate download depending on the needs and requirements of the user. Combining these two business models can be tremendously effective and lucrative allowing a business to capitalize on the strengths of each business model. In contrast, platforms facilitate the exchange of value. Those logics do not apply to platform business models; The key difference between platforms and most traditional business models is that platforms are multisided. It started off as something which allowed you to express yourself within the constraints of 140 characters (hardly useful? Readers co-create value. While platform businesses soar to new valuation heights, the workers in many of these platforms ecosystems are increasingly commoditized and disenfranchised. They deliver you a product or service and you consume it. Thus, its value starts by controlling the supply chain. Pipe Thinking: Our users interact with software we create. Theyve been the dominant model of business. weve had industry. Blogs allow comments and discussions. Incumbents need to go beyond product innovation to changing industry economics. Encyclopaedia Britannica worked on a Pipe model but Wikipedia has flipped it and built value on a Platform model. An ecommerce store like Zappos works as a pipe as well. Startups that dont realize this fail. Prior to the internet, much of the services industry ran on the pipe model as well. When producers and consumers transact (e.g. ), moved to a platform for sharing and consuming news and content and ultimately created an entirely new model for consuming trending topics. It is available for immediate download depending on the needs and requirements of the user. In the future, every company will be a tech company.4 We already see this change around us as companies move to restructure their business models in a way that uses data to create value. By definition, they cater to multiple user groups. The stages in this process are customer, consumer, distribution, production, supplier, supply chain control tower. In this model, value creation is linear and one way. Single-user SAAS runs on pipe model where the software is created by the business and delivered on a pay-as-you-use model to the consumer. Value creation here isnt linear, and it isnt one way its networked and its mutual. All businesses will need to move to this new model at some point, or risk being disrupted by platforms that do. Tweet, This is why most social networks and marketplaces fail. Traditional service businesses are very similar. The path of the product or service from manufacturer to consumer is described pretty well by your traditional, linear supply chain. They cater to multiple user groups that need each other in some way and who depend on the platform to bring them together. Ensuring that producers produce, and create value. User acquisition is fairly straightforward for pipes. Creating a pipe requires us to build with the consumer in mind. The main interaction involves the blogger pushing content to the reader, but secondary interactions (like comments) lend a blog some of the characteristics of platforms. Platform Thinking: Our users interact with each other, using software we create. There is a linear flow, much like water flowing through a pipe.3. This is an over-simplification of the intricate art of pricing, but it captures the fact that the customer is typically the one consuming value created by the business. On platforms, more of a systems view is needed to balance out subsidies and prices, and determine the traction needed on either side for the business model to work. Firms create stuff, push them out and sell them to customers. Without solving for these two challenges, driving site traffic or app downloads will not help with user acquisition. Twitter developed many use cases over time. Pretty simple. Platform economics isnt quite as straightforward either. So, grab it now. A linear business model creates value by selling products or services down the supply chain. Tweet. video hosting on YouTube) as well as for consumers (e.g. At the business layer, users (producers) can create value on the platform for other users (consumers) to consume. You calculate all the costs of running a unit through a pipe all the way to the end consumer and you ensure that Price = Cost + Desired Margin. In the future, every company will be a tech company.

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