Platform Strategy: Building and Thriving in a Vibrant Ecosystem

Over the past two decades, some of the most profitable and successful firms are those that have adopted a digital platform model—a platform strategy whereby the company allows two or more disparate groups to interact over a platform to co-create value. For example, website developers and users on Akamai, recruiters and employees on LinkedIn, and drivers and customers on Uber. Participants eager to develop or launch a digital platform approach will learn why and how their business strategies may need to be revised to be successful.

In 2018, eight of the top ten global brands (according to Brandz) were digital platform-orientated companies —companies that created and now dominate arenas in which buyers, sellers, and a variety of third parties are connected in real time. In today’s networked age, the cloud, social media, and mobile devices are fueling this platform competition, and more and more companies want in. However, many companies fail in becoming platform leaders because their technology and/or business strategies fall short.

While many digital platform strategies are well known (e.g., Apple’s iTunes), there are other less-heralded platforms that are exploring new ways to create and capture value. These include dynamic pricing, usage fees, highly targeted product and service offerings, inbound marketing, and network effects.

By the end of this course, participants should be able to:

• Identify examples of traditional and non-traditional forms of digital platforms
• Describe the common evolution patterns of multisided platforms, including same-side vs. cross-side network effects
• Identify customer and user groups whose affiliation with the platform is most valuable
• Decide whether to try to “tie” customers to a platform or not – the value of open vs. proprietary networks
• Design strategies to undermine an established platform or to defend against such attacks
• Describe the principles of platform pricing and how to inform the design of an effective pricing format
• Recognize the concrete implications of trade-offs in platform design, governance, and staging
• Decide whether a given value proposition is best developed as a stand-alone platform, as a complement embedded into another platform’s ecosystem, or whether to pivot away from digital platform strategies all together.

Upon successful completion of your course, you will earn a certificate of completion from the MIT Sloan School of Management. This course may also count toward MIT Sloan Executive Certificate requirements.

The course will cover these cases and important examples of digital platform strategy:

• Interviewing.io
• Beepi
• Google vs Bing
• Dropbox v. Google Drive
• E-Harmony
• Roppongi Hills
• PayPal
• Uber
• Hulu vs Netflix

Key questions the faculty explore in this course include:

• Is a customer segment with the highest “willingness to pay” the most valuable segment?
• When is tying a customer to a platform (sometimes called “lock in”) counter-productive?
• Which pricing formats seem to boost revenues but slow platform adoption?
• How can companies get in front of the common evolution patterns of platforms?
• When should leaders be wary of “platform envy?”