April 9, 2020

Data, network effects, and competitive advantage

TL:DR;

  • Although data-enabled learning can offer many "Aha!" moments, it shouldn't be viewed as a transplant for regular network effects.

No doubt, companies can learn and improve their products with insights from customer data, but the leverage it provides is often exaggerated. Typically, the competitive advantage offered by data-enabled learning is lower than what is gained by regular network effects.

“A lot of products will become ‘smart’ and connected, however, that doesn’t mean that they are going to magically acquire unassailable competitive positions.”

In this tech talk from the Harvard Business School Executive Education Advanced Management Program, Andrei Hagiu of Boston University unpacks the conditions under which customer-generated data can build a defensible competitive position, both when network effects are present and when they are not.

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