Platform disruption is a significant force in business, far surpassing product disruption. Unlike product disruption, which replaces existing products with superior alternatives, platform disruption changes the underlying business model, transforming entire industries. For instance, Uber hasn’t just improved taxi service; it has altered the way we view transportation.
The power of a platform lies in its ability to create and harness network effects. As more people use a platform, it becomes more valuable to each user, creating a virtuous cycle that can lead to rapid growth and market dominance. However, this also means platforms can be vulnerable to sudden collapses if they fail to maintain their networks.
Platforms are not just limited to tech companies. Traditional businesses can also become platforms by connecting users, producers, and resources in innovative ways. Yet, this transition can be challenging. It requires a shift from a product-centric mindset to a network-centric one, which can be a significant cultural change.
Moreover, platform businesses must also manage complex ecosystems and balance the interests of various stakeholders. They need to ensure fairness, trust, and stability to keep their networks thriving. In the end, it’s not about who has the best product, but who can build and manage the best network.
Go to source article: https://hbr.org/2016/04/why-platform-disruption-is-so-much-bigger-than-product-disruption