As promised for a few posts now, let’s take a look at some academic research around the dynamics of elephants, elephant herds, dancing with elephants and more. There are some real gold nuggets in this pile of research that can really help start-ups think through how to best dance with elephants (and not lose sight of the environment you are building a business in). I must warn you the terminology used by researchers in academia can be a “bit much” at times with terms like “multi-sided platforms”, “two sided platforms”, and “social efficiency” taking some time to get your head wrapped around. On the plus side, academia just loves researching “platforms” so there is plenty to learn.
So here is a list of academic papers on platforms and partnering - what we’ve been calling dancing with elephants – with my elevator description on what I believe are important conclusions – as well as at risk of embarrassing myself – my occasional disagreement.
Why Dance with an Elephant? Why Not Go It Alone?
Invisible Engines: How Software Platforms Drive Innovation and Transform Industries
Video games. Social networks. Operating systems. Smart phones. Buying networks. Music services. This is one of the classic books on platforms (elephants) . Though it is starting to feel a bit dated, it covers most of the basics on why there are elephants, why dancing with elephants makes sense (and frankly is a necessity unless you have a number of wealthy friends), and how elephants plus riders and myriad other dancers together are a major source of innovation in our world.
The Elephant’s Dance
Platform Rules: Multi-Sided Platforms as Regulators
Using Facebook, TopCoder, Roppongi Hills (a retail center in Japan no less!) and more as foundations to develop their platform concepts, these academics create a simplified (for an academic but not for me!) framework for looking at and thinking about how a platform provider develops and manages their ecosystem. We all know the way a platform provider make information available, technical limitations they apply (that at times feel arbitrary), use of social media, contests, conferences, license agreements and so on impacts development of partnerships and an overall ecosystem. But can you imagine trying to create a framework that make objective sense about the effectiveness of all this? Do I sound skeptical? So I don’t fully buy into the model – but this research does give someone dancing with an elephant (or two) some insights on what the elephant might do – and why they might do it (that is sometimes very much not obvious). If you know more about what the elephant is considering and might do – you are more likely to get a ride on top of him instead of dodging his steps.
Dynamics of Platform Competition: Exploring the Role of Installed Base, Platform Quality and Consumer Expectations
This is a video game industry based research effort – so beware applying to other industries. If you are having to make a hard decision about what platform (elephant) to ride, this paper provides a wee bit of insights into factors to consider when trying to “pick the winner” in an elephant race. Nothing is uglier than building your business riding - or running with - the elephant that stumbles before the race is over (taking much of your sweat equity investment down with it). The paper uncovers the interplay of indirect network effects - more people with the platform leads to more apps for the platform which leads to more people with the platform circling skyward - with customer expectations - does a customer want/need more than a few apps? Also is poor quality in a platform (sort of like n with a drunken elephant) a mortal or surface wound? Unless you are a math major (I am surly not), I suggest skipping the development of the differential equations that try to model and predict the growth or failure of a platform.
What About “Open” Platforms?
Opening Platforms: How, When and Why
Why work with “proprietary” platforms such as from Adobe, Apple, Microsoft or Autodesk? Why not stick to open platforms like HTML, WebGL, and SVG? Platforms have a lot of different stakeholders – it’s not just the platform provider, customer and ISV. There are various forms of complementors including service providers, hardware providers, educators, and others – all with their individual needs, wants and unique motivations (mostly they are all trying to make a living and have the occasional chance to do better than just make a living). This paper comes to the conclusion that successful platforms naturally evolve into a hybrid mix of proprietary (the platform) and areas of “shared responsibility” (open). This paper covers a lot of ground – and makes observations and draws conclusions that mirror a lot of what I have seen personally in the development of ecosystems in CAD industry over the last 20 years. It evens talks about what I would rephrase as the dancers putting the elephant(s) in a cage!
It’s Not Just About the Elephant’s Dancing Skills – Yours Too (The Most Common Strategy Mistakes)
Understanding Michael Porter: The Essential Guide to Competition and Strategy
This is not about dancing with elephants – but valuable anyone pointing out key strategy mistakes that kill companies – such as the need to make tradeoffs – the necessity of deciding who your customers are and are not. We all avoid making tradeoffs that might limit the number of customers we could have. Yet all too often fewer tradeoffs mean less focus and fewer sales. More tradeoffs mean more focus and more sales. Counter intuitive? Sort of. Themes similar to Geoffrey Moore’s classic “Crossing the Chasm” and “Inside the Tornado”. On a tangent, I fondly remember well over a decade ago purchasing a few hundred copies of “Crossing the Chasm” and giving them out to hundreds of Autodesk partners – as well as many many senior managers at Autodesk.
Had enough of academic papers about platforms? Want to hear about more research that applies to building a new business dancing with elephants? Let me know – as I have a lot more (and just may do one more post). On the other hand, I suspect I may be putting too many of you asleep and it’s time to move on to more stimulating discussions. If you are having trouble dancing with an elephant or deciding what elephant to dance with, tell me a little bit about it - and I'll attempt to do justice to "Ask Abby".