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)

Tinder: The dark side of network effects
Jennifer B.
Last modified on October 19, 2015 at 5:26 pm
With the proliferation of the internet and smartphones, we live in a world of unlimited options, including those related to romantic possibilities. Due to network effects, there is a new source of value creation and capture in the dating world. [...]
Nike – from products to platform
Last modified on October 5, 2015 at 12:45 pm
While I was interning in Seattle this summer, I learned from a friend — who happens to be both a software developer and a fitness enthusiast — that she had applied to “enroll” her startup idea with the Nike+ Accelerator [...]
Skype: The ultimate network business
Last modified on October 4, 2015 at 11:35 pm
Skype is the largest VoIP service in the world. Its success has been driven largely by the fact that its user base effectively grows itself. The sheer size of this network provides ample opportunity for value capture.
PlayStation: How Sony came to dominate the gaming industry
Last modified on October 4, 2015 at 11:59 am
Game consoles had been around for a while. During the 80’s, Atari and Nintendo dominated the industry and during the first years of the 90’s, Nintendo and Sega were the key players. But it was not until Sony’s entrance to [...]
How clever is Clever?
Last modified on October 5, 2015 at 11:08 am
Clever's multi-sided data sharing and learning application platform for K12 school districts
Get In Ma Belly: How A Little Blue Card Helped Out Mom & Pop
John R
Last modified on October 4, 2015 at 3:46 pm
Chicago-based Belly Card (commonly known as Belly) is rapidly transforming customer loyalty space for SMBs and may soon make store-specific loyalty cards obsolete. Belly’s tremendous growth epitomizes what is possible by leveraging multi-sided, localized network effects, silly name be damned.
Bitcoin: can it be a mainstream currency?
Posted on October 4, 2015 at 11:24 pm
Bitcoin is a digital currency based on a peer to per electronic cash system. The rise of Bitcoin well illustrates the power of an ecosystem and the network effect.