Product paper
Following your review, share a 1300-word synopsis of the product strategy and branding concepts discussed. Choose three of these articles and add a NEW source too. Keep the the overarching theme, “Product Strategy and Branding,” in mind. This paper in Microsoft Word should be completed using APA formatting (in-text citations and references). Use subject headers that include Introduction and Conclusion of course – but the name of each of the three articles you are covering – for example – Article # 1 – The Elements of Value. With your short introduction & conclusion paragraphs, you will have over 750-words.
Your subject headers should be (based of course on what three articles that you choose, I am giving your three examples here):Introduction (minimum 50-words)Article # 1 – The Elements of Value (300-words minimum)Article # 2 – Finding the Platform in Your Product (300-words minimum)Article # 3 – Stress-Test Your Strategy (300-words minimum)Article # 4 – your NEW source (300-words)Conclusion (minimumt 50-words)
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Finding the platform in your product: four strategies that can reveal
hidden value
Hagiu, Andrei
Altman, Elizabeth J.
Harvard Business Review. July-August, 2017, Vol. 95 Issue 4, p94, 7 p.
Harvard Business School Press
2017
Direct market channel
Retail/reseller channel
Customer relationship management
Company business management
Distribution channels — Management
Organizational structure — Management
Customer relationship management — Methods
Developing multisided platforms enables companies to gain new
revenue sources and also prevent their competitors from drawing away
market share. The article presents four scenarios in which regular
services and products can become multisided platforms: by allowing
third parties to engage with customers, connecting customers through
products and services, connecting products in order to connect
customers, and becoming a supplier to a multisided platform. Included
are the advantages and challenges of each of the scenarios, as well as
the relationships, resources and organizational changes that would be
necessary.
English
0017-8012
Copyright 2017 Gale, Cengage Learning. All rights reserved.
edsgcl.498399091
Gale in Context: Biography
FEATURE
FINDING THE PLATFORM IN YOUR PRODUCT: FOUR STRATEGIES THAT CAN REVEAL
HIDDEN VALUE
Five of the 10 most valuable companies in the world today — Apple, Alphabet, Amazon, Facebook, and
Microsoft — derive much of their worth from their multisided platforms (MSPs), which facilitate
interactions or transactions between parties.
Many MSPs are more valuable than companies in the same industries that provide only products or services:
For instance, Airbnb is now worth more than Marriott, the world’s largest hotel chain.
However, companies that weren’t born as platform businesses rarely realize that they can — at least partially —
turn their products and services into an MSP. And even if they do realize it, they often wander in the dark
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searching for a strategy to achieve this transformation. Here we provide a framework for doing so. It lays out
four specific ways in which products and services can be turned into platforms and examines the strategic
advantages and pitfalls of each. These ideas are applicable to physical as well as online businesses.
Why seek to transform products and services into MSPs in the first place? As one Intuit executive told us, it
comes down to “fear and greed.” Greed, of course, refers to the potential for new revenue sources that could
speed growth and increase a company’s value. Fear refers to the danger that existing and incoming
competitors will steal market share from your product or service. Transforming an offering into a platform might
enhance your company’s competitive advantage and raise barriers to entry via network effects and higher
switching costs. We’re not suggesting that every company should try to emulate Airbnb, Alibaba, Facebook, or
Uber. But many companies would benefit from adding elements of a platform business to their offerings.
Our goal is to help managers discern how their products or services could become multisided platforms — and
what challenges and opportunities might arise — so that they can decide whether or not to make the change.
Our framework derives from our combined experience studying and advising more than a dozen companies
(including several mentioned below) during product-to-MSP transformations. Managers might want to use this
article as the basis for a corporate-strategy offsite at which everyone is given the task of articulating MSP
strategies around existing company offerings. That assignment should include answering questions such as: (
1) Are there benefits to turning some or all of our products and services into MSPs? ( 2) Are there risks
involved in doing so? ( 3) What key resources, relationships (including how we interact with customers), and
organizational changes would be required for such a transformation?
The reason regular products and services are not multisided platforms is that they do not serve multiple groups
or facilitate interactions between customers or groups. In this article we discuss four ways in which regular
products and services can bridge this gap and become MSPs.
1. OPENING THE DOOR TO THIRD PARTIES
In this scenario your product or service has a big customer base that third-party sellers of other offerings are
interested in reaching. You become an MSP by making it possible for those third parties to connect with your
customers. “Connect with” can mean advertise or sell (or both) to them. The third-party products may be
independent of your product or service or may be apps or modules that work in combination with your
offerings.
Consider three examples:
INTUIT IS THE leading seller of financial management, accounting, and tax software products for consumers
and small businesses in the United States. In the past six years or so it has taken significant steps to turn
QuickBooks, its flagship financial-accounting product for small businesses, into an MSP. It opened up
application-programming interfaces and introduced a developer program and an app store to allow third-party
developers to build and sell software products to QuickBooks’ customer base. Those products leverage data
about small-business finances provided by QuickBooks. Since 2013 QuickBooks has also enabled its
customers to apply directly to several third-party financial institutions for loans through a service called
QuickBooks Financing.
HEALTH CLUBS ARE increasingly renting space inside their gyms to specialty studios so that the latter can
serve health club members. This allows a club to offer a greater variety of classes, which helps it retain existing
members and attract new ones. For instance, the Forum Athletic Club, in Atlanta, recently reached an
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agreement with Cyc Fitness, a national cycling-studio chain, which now operates a self-contained studio inside
the Forum’s 22,000-square-foot gym.
THE LAWSON CHAIN of convenience stores in Japan started in the 1990s to turn its shops into MSPs that
facilitate transactions between its customers and third-party service providers. Today Lawson customers can
pay utility bills and insurance premiums, ship and pick up parcels through postal service providers, and claim
items ordered from e sites just by visiting their local convenience store.
For your product or service to become a true MSP in this scenario, at least some of the connection between
your customers and third parties must be made through your product. Intuit could simply have sold aggregated
(and anonymized) QuickBooks data to third-party developers and financial institutions. That would have added
a potentially profitable new offering for Intuit, but it would not have turned QuickBooks into an MSP that could
exploit network effects.
For this type of transition to make sense, your product or service must have an established brand and a large
customer base — but that alone won’t elicit interest from third parties. It must also meet one or both of the
following conditions:
It serves a baseline need for many customers, yet leaves a large number of heterogeneous customer needs
unserved. You can encourage and enable third parties to fill those gaps with products and services that are
typically complementary to yours. Most third-party apps in Intuit’s app store target market niches and customer
needs not served by QuickBooks on its own.
It generates frequent customer interactions. That makes it a good candidate to become a one-stop shop for
other, not necessarily complementary products and services. The third-party services that Lawson’s customers
can access are largely unrelated to its own products and services, but customers find it extremely convenient
to access all of them in the same location.
It’s important to be aware of several pitfalls associated with this approach to an MSP. One is that customers
who come to you primarily for a product or service may object to the advertising of third-party offerings,
especially if they are paying for yours. Intuit faced this when it started exploring services to offer through
QuickBooks. As a result, the company is very careful to allow only offerings that align well with the needs and
desires of QuickBooks customers and to obtain explicit consent to participate in tests for targeted third-party
offers. In addition, Intuit has rebranded QuickBooks as “the operating system for small business” precisely to
change customers’ perceptions and to minimize potential backlash.
Another possible pitfall is that because you have an existing provider relationship with your customers, they
may hold you responsible for the quality of their interactions with third parties. By enabling those parties to
interact with your customers, you are implicitly endorsing their offerings — to a greater extent than does a
company born as a multisided platform. For instance, a customer taking a spinning class offered by a third-
party studio in a health club’s gym is likely to blame the health club for a bad experience. As a result, you must
curate third-party products and services much more carefully than a company born as an MSP has to.
Finally, some third-party products and services may cannibalize your offerings. The natural inclination would be
to allow only those that are either complementary or unrelated to yours. But that approach can be misguided.
In some cases it may make sense to coopt offerings that compete somewhat with yours and capture some of
the resulting value to your customers. The Forum Athletic Club has replaced its own cycling classes with the
Cyc Fitness classes offered at its gym. Cyc’s spinning classes have proved more popular with members and
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allow the Forum to focus its resources on other services while converting Cyc from a competitor to a
complementor.
The underlying logic is that if substitution from third parties is inevitable, bringing them onto your platform may
expand its overall appeal to your customers, resulting in more demand and opportunities to sell your own
services. It may also encourage you to reevaluate your offering’s core competitive advantages and focus on
them, which may mean ceding ground to third parties in some areas.
2. CONNECTING CUSTOMERS
In this scenario you are selling a product or service to two distinct customer segments that interact or transact
with each other outside your offering. You can become an MSP by modifying or expanding your offering so that
at least some element of those interactions or transactions occurs through your product or service.
QUICKBOOKS IS USED by both small businesses and accounting professionals. Intuit is in the process of
adding a matchmaking function within QuickBooks that would enable small businesses to find and contact
accountants with relevant expertise in their geographic area and would allow already-matched business-
accountant pairs to exchange documents through the product.
GARMIN AND OTHER fitness wearables are used by both consumers and personal trainers. Many companies
that offer these products also host online systems (Garmin Connect, for example) to store fitness-training and
health data. Garmin could enable users to share their data with personal trainers, thereby enhancing the
interactions between those two groups. To further capture value from this strategy, Garmin could charge
trainers for a “pro” subscription — software tools that would let them access clients’ data to oversee activities
and progress.
This scenario highlights how different customer segments of the same product or service can become
customer groups on an MSP. For example, men and women are customer segments for a hair salon (no
interaction between them is facilitated by the salon), but they are customer groups for a heterosexual dating
service. An entrepreneurial hair salon that started offering matchmaking services to its customer segments
could convert men and women into customer groups.
There are two pitfalls associated with this strategy.
First, you run the risk of wasting resources on a feature that ultimately creates little additional value for your
customers or your company. Worse, the MSP feature can be a detriment if customers perceive it as misaligned
with the value of your underlying product or service. Some customers of a hair salon that provides
matchmaking services might not want to risk encountering matches that didn’t work out. Others might worry
that offering a dating service means the salon isn’t focused on giving the highest-quality haircuts.
BLIZZARD ENTERTAINMENT’S ill-fated Auction House for its popular Diablo video game provides a
cautionary tale. Having noticed that Diablo players were routinely trading digital items on eBay and other
external platforms, Blizzard created the Auction House in 2012 to make those transactions easier. It allowed
players to buy and sell digital items in exchange for “gold” (digital currency in the Diablo game) as well as real
dollars — and Blizzard was able to charge a transaction fee. It quickly became clear, however, that this feature
created perverse incentives. Many players decided that buying items at the Auction House was an easier way
to reach the game’s advanced stages than devoting several hours to killing monsters and searching for loot
inside the game. Other players strove to accumulate game items for the sole purpose of selling them in the
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Auction House. Realizing that this behavior was undermining the value of the game itself, Blizzard shut down
the Auction House in 2014.
It is imperative that you conduct market research or run experiments to answer the following questions: Would
significant proportions of our offering’s various customer segments derive substantial benefits from interacting
or transacting with one another? If yes, can our product or service enhance those interactions in a significant
way? How will our customers react to the addition of an MSP feature, and how will that feature affect the way
they interact with the original offering?
The second pitfall, as in scenario number one, is that although your offering is now simply facilitating a
connection or a transaction between two parties, if one party is dissatisfied with the other, you may be held
partly responsible. That means you need to put governance mechanisms in place to minimize (if not eliminate)
the likelihood of unsatisfactory interactions. Intuit will have to carefully curate the accountants it recommends to
QuickBooks customers through its matchmaking feature.
3. CONNECTING PRODUCTS TO CONNECT CUSTOMERS
In this scenario you are selling two products or services, each to a different customer base, and the two
customer bases interact outside your offerings. You can become an MSP by modifying or expanding your
offerings so that at least part of those interactions occurs through one or both of your offerings.
CARDS AGAINST HUMANITY is a popular game in which players complete fill-in-the-blank statements with
humorous (and often tasteless) words or phrases printed on physical playing cards. Its creators continue to sell
the game and its numerous expansion packs to consumers, but they have also created Blackbox, a separate
website through which they sell back-end fulfillment services (credit-card processing, customer service,
shipping) to independent artists who want to sell their products — including third-party developers of other card
games. Currently these are separate offerings, but the company could create an MSP by linking them. For
instance, it could allow Blackbox customers to advertise their games to Cards Against Humanity’s users with
expansion packs. A more sophisticated implementation would allow Blackbox customers to test game
concepts on willing Cards Against Humanity users, who would provide feedback.
CREDIT BUREAUS SUCH as Equifax, Experian, and TransUnion offer a suite of services for consumers
(access to credit scores, identity theft protection, and so on) and a suite of services for financial institutions
(credit reports on consumers and businesses). These suites are based on the same data, but the two types of
customers interact outside the services (as when a consumer applies for a mortgage); the credit bureaus do
not directly facilitate those interactions.
Credit bureaus could create online MSPs where consumers could obtain their credit scores and receive
targeted offers from financial institutions. (This is the business model of start-ups such as Credit Karma and
Lendio.) These MSPs could go further and enable consumers to create and manage a digital data profile that
they could then use to apply directly for financial products at participating institutions (similar to the way Intuit
allows QuickBooks customers to apply for financial products through QuickBooks Financing).
NIELSEN OFFERS “WATCH” products to media companies (data on consumers’ viewing habits) and “buy”
products to consumer goods manufacturers (data on consumers’ purchasing habits). One could easily imagine
Nielsen’s adding the ability for a consumer-packaged- goods company to connect with relevant media
companies for advertising purposes.
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This scenario highlights how a multiproduct company can become a multisided platform that benefits from
network effects. For example, by increasing sales of credit and identity-theft-protection products to consumers,
credit bureaus can improve their offerings for financial institutions (which leverage consumer data), thereby
achieving greater cross-product economies of scope. While that alone might be valuable, credit bureaus could
create and capture even more value by linking the two kinds of products to facilitate interactions between
consumers and financial institutions (as described above). This would create an MSP and generate network
effects: If more consumers use the credit and identity-theft-protection products, that increases the value of the
offerings for financial institutions, which can then transact with more consumers more effectively and vice
versa.
Two risks are associated with this strategy. First, as with scenario number two, you may waste resources on a
feature that ultimately creates little value for your customers or your company relative to the underlying product
or service. Second, optimizing for interactions between customers of different products may lead to design
choices that limit the growth potential of one or the other product on its own. Once again, it is imperative to use
market research and experiments to answer a few questions: Would considerable proportions of your offerings’
respective customers derive significantly greater benefits from interacting or transacting through you? If yes,
can your offerings substantially enhance those interactions? How will the customers of your two offerings react
to the addition of an MSP feature? How will that feature affect the way customers interact with the original
products?
4. SUPPLYING TO A MULTISIDED PLATFORM
In this scenario you become an MSP by creating an offering for your customers’ customers that enhances the
value of the product or service they buy from your customers. (Although this strategy is logically possible, we
are not yet aware of examples of its successful implementation.)
It is important to emphasize that this strategy goes beyond the more traditional “ingredient brand” strategy,
which is also a “customers’ customers” approach. Indeed, some (essential) ingredient suppliers have created
brands in the eyes of their customers’ customers (for example, Intel’s “Intel Inside”) that allow them to extract
more value from their customers. But because these ingredient suppliers offer no products or services directly
to their customers’ customers, they are not MSPs.
The major pitfall with this scenario is that your customers are likely to react negatively to any attempt to go
after their customers. Nevertheless, we believe this strategy could work under certain circumstances. The key
is to convince your customers that the product or service you provide to their customers is truly complementary
to — rather than competitive with — their own offerings.
SHOPIFY IS A leading provider of e-commerce tools to online and retail merchants. Currently the company
has no direct connection with its customers’ users. It could, however, start offering a common log-in or loyalty
program to users of its customers’ sites. Whether such an initiative would be successful would hinge on
whether Shopify could persuade its merchant customers that the offering was a valuable added service rather
than simply an attempt to take control of their customer relationships.
The decision whether and how to convert an offering into an MSP should be informed by who your current
customers are, how you currently interact with them, and how they interact with one another. The most
fundamental challenge associated with this endeavor is transitioning from a world in which you have 100%
control over what your customers are offered to one in which you can only influence the value that is created
for them (by third parties or by interactions among themselves).
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A final consideration is organizational and leadership challenges. If a company has a solid reputation that is
rooted in creating and offering products, shifting to an MSP-focused strategy might be difficult for employees
who deeply identify with those products. And companies that sell successful products or services often have
strong research and development operations and many engineers in leadership roles; shifting to an MSP
strategy that depends on the adept management of third-party relationships might require putting business-
development and marketing professionals in significant leadership roles, generating internal conflict.
Furthermore, as a company’s strategy moves from a product or service orientation to being more MSP-centric,
boards, CEOs, and senior management teams may find it difficult to deal with multiple or hybrid strategies,
adopt and track new performance metrics, and enforce some degree of technological or customer experience
consistency between previously separate products and services.
Nevertheless, if you decide that creating a platform will provide great opportunities for growth and increased
profitability and thwart potential competitive threats, the effort to make the transformation may well be
worthwhile.
HBR Reprint R1704G
IN BRIEF
THE PROBLEM
Many companies that sell products or services either don’t realize they could turn their offerings into a platform
business or struggle to do so.
THE OPPORTUNITY
By becoming a multisided platform (MSP) that facilitates interactions between parties, a company may be able
to provide new revenue sources while also preventing competitors from stealing market share from its product
or service.
THE SOLUTION
Here are four scenarios whereby regular products or services can become MSPs. The authors take into
account the advantages and pitfalls of each and the resources, relationships, and organizational changes that
would be required.
FURTHER READING
For more on multisided platforms, see these articles on HBR.org:
“Pipelines, Platforms, and the New Rules of Strategy”
Marshall W. Van Alstyne, Geoffrey G. Parker, and Sangeet Paul Choudary
APRIL 2016
“Network Effects Aren’t Enough”
Andrei Hagiu and Simon Rothman
APRIL 2016
“Products to Platforms: Making the Leap”
Feng Zhu and Nathan Furr
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APRIL 2016
“Spontaneous Deregulation”
Benjamin Edelman and Damien Geradin
APRIL 2016
“When Platforms Attack”
OCTOBER 2015
“How to Launch Your Digital Platform”
Benjamin Edelman
APRIL 2015
“Do You Really Want to Be an eBay?”
Andrei Hagiu and Julian Wright
MARCH 2013
“What’s Your Google Strategy?”
Andrei Hagiu and David B. Yoffie
APRIL 2009
“Strategies for Two-Sided Markets”
Thomas R. Eisenmann, Geoffrey G. Parker, and Marshall W. Van Alstyne
OCTOBER 2006
PHOTO (COLOR)
~~~~~~~~
By ANDREI HAGIU and ELIZABETH J. ALTMAN
ILLUSTRATION BY ARTUR HILGER
ANDREI HAGIU is a visiting associate professor of technological innovation, entrepreneurship, and strategic
management at the MIT Sloan School of Management. Follow him on Twitter: @theplatformguy.
ELIZABETH J. ALTMAN is an assistant professor of strategic management at the Manning School of Business
at the University of Massachusetts Lowell and a visiting scholar at Harvard Business School. She was formerly
a vice president of strategy and business development at Motorola. Follow her on Twitter: @lizaltman.
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Stress-test your strategy: the 7 questions to ask
Simons, Robert
Harvard Business Review. Nov, 2010, Vol. 88 Issue 11, p92, 9 p.
Harvard Business School Press
2010
Company business management
Organizational effectiveness — Management
Crisis management — Methods
Corporate governance — Management
Corporate governance — Methods
United States
The seven questions organizations should use to assess crisis
management capabilities are: who is the primary customer, how do core
values prioritize all parties, what performance variables are being
tracked, what strategic boundaries have been set, how is creative
tension being produced, how committed are workers to assisting each
other, and what uncertainties are causing worry?
English
0017-8012
Copyright 2010 Gale, Cengage Learning. All rights reserved.
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Gale in Context: Biography
Stress-Test Your Strategy
The 7 Questions to Ask
AN ECONOMIC DOWNTURN can quickly expose the shortcomings of your business strategy. But can you
identify its weak points in good times as well? And can you focus on those weak points that really matter?
A stress test–an assessment of how a system functions under severe or unexpected pressure–can help you
home in on the most important issues to address, whatever the economic climate. By asking tough questions
about your business, you can identify confusion, inefficiency, and weaknesses in your strategy and its
implementation.
As Peter Drucker once warned, “The most serious mistakes are not being made as a result of wrong answers.
The truly dangerous thing is asking the wrong questions.” For the past 25 years I have researched the drivers
of successful strategy execution in a variety of companies and industries. Through this work I have identified
seven questions that all executives should ask–and be able to answer. Master this list, and you will keep the
fundamentals of your strategy execution on track.
The questions may seem obvious, but the choices they represent can be tough, and their full implications are
not always immediately clear. The first two questions compel you to set strict priorities. The next two assess
your ability to focus on those priorities by designating critical performance variables and constraints. Questions
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five and six investigate whether you are using techniques that will enhance creative tension and commitment.
The final question deals with your ability to adapt your strategy over time.
Let’s take a look at each question, so that you can see how you–and your strategy–measure up.
1. Who Is Your Primary Customer?
Choosing a primary customer is a make-or-break decision. Why? Because it should determine how you
allocate resources. The idea is simple: Allocate all possible resources to meet and exceed your primary
customer’s needs.
Consider McDonald’s, whose 32,000 restaurants feed more than 58 million customers each day. The
company’s growth over its 50-year history has been described as the greatest retail expansion in the history of
the world.
What was the fast-food chain’s key to success? A clear choice of a primary customer and an understanding of
when that choice needed to change. In the 1980s and 1990s, McDonald’s considered its primary customers to
be not the people who ate in its restaurants but multi-site real estate developers and franchise owners. By
focusing most of its resources on those customers through centralized real estate development, franchising,
and procurement functions, it opened as many as 1,700 new stores a year.
But by 2003 same-store sales were declining. Worldwide markets were saturated, and people were tiring of the
chain’s standardized fare. This crisis prompted the new CEO at the time, Jim Cantalupo, to make a tough
decision: “The new boss at McDonald’s is the consumer,” he announced.
The company’s subsequent changes in resource allocation reveal the profound implications of this decision.
Consumers’ tastes differ widely by region and throughout the many countries in which McDonald’s operates. To
satisfy these varying tastes, McDonald’s reallocated resources from centralized corporate functions to regional
managers, who were encouraged to customize local menus and store amenities. In the United Kingdom,
McDonald’s now serves porridge for breakfast; in Portugal, it offers soup; in France, it sells burgers topped with
French cheese. The Paris design center provides franchisees with nine different design options, allowing them
to customize the decor
