Platform businesses, those that create value by connecting different groups, are susceptible to traps that can hinder growth and profitability. One such trap is mispricing, where companies either undervalue or overvalue their platform’s services, leading to a loss of users or profits. Another is the failure to protect core transaction, which can occur when platforms expand their services too quickly and neglect their core transaction.
The third trap is the failure to optimise metrics, where businesses focus too much on vanity metrics that do not contribute to the platform’s health. The last trap is the failure to adapt the business model, where companies stick to a single business model and fail to adapt to changes in the market.
To avoid these traps, businesses should properly price their services, protect their core transaction, focus on meaningful metrics, and be willing to adapt their business model. By doing so, platform businesses can ensure sustained growth and profitability.
Go to source article: http://sloanreview.mit.edu/article/how-to-avoid-platform-traps/