Fearless Growth by Amanda Setili

Author:Amanda Setili
Language: eng
Format: epub
Publisher: Career Press
Published: 2017-04-07T04:00:00+00:00

Mistakes to Avoid

Although today’s network companies with large ecosystems, such as Uber and Airbnb, make building a powerful platform look easy, creating a growing, sustainable ecosystem is not necessarily an easy thing. Once an ecosystem is established, there’s no guarantee that it will keep growing, and customers, suppliers, developers, reviewers, content providers, and other stakeholders may move to more attractive offerings. In an article in Harvard Business Review, Marshall Van Alstyne, Geoffrey Parker, and Sangeet Paul Choudary pointed out six reasons why platforms, and the ecosystems they support, may fail.25

1. Failure to optimize “openness.” Having too much or too little control over your platform can both be bad outcomes. If there’s too much control, people will feel constrained and unwelcome, and they will seek other, more open platforms. If there’s too little control, the company can lose control of its product.

2. Failure to engage developers. If developers are an important part of the ecosystem you are cultivating, or one that you envision, you must create a platform compelling enough to attract developers’ attention and engagement, and you must support and nurture it. According to the authors, “Successful platforms engage in platform evangelism, providing developers with resources to innovate, feedback on design and performance, and rewards for participating.”26

3. Failure to share the surplus. Everyone who participates in the platform must receive value from their participation. If they don’t, then you can’t expect them to stick around. Although Amazon profits from the participation of its army of free product reviewers, for example, it provides value to them through Vine—its invitation-only program that rewards its best reviewers with free (often pre-launch) products to review—and by providing recognition to its top reviewers in a variety of different ways on Amazon.com.

4. Failure to launch the right side. When you’re a company building an ecosystem, and a platform on which to host it, you’ve got to decide which category of members is most important to grow first to attract the others. For example, suppliers and developers may not join your ecosystem unless there is a critical mass of customers. On the other hand, customers may not join until there is a critical mass of suppliers, or an enticing set of apps. Making the wrong choice about who to attract first may result in the failure of your platform.

5. Failure to put critical mass ahead of money. Before you start trying to make money from your platform, you first need to attract a large enough group of people or organizations to sustain and grow it over the long run. If you begin focusing on profits too soon, investing too little in attracting a critical mass of people and organizations, you may set up your platform for irrelevance and failure. Facebook, now extremely successful, invested $2.4 billion to grow its user base before beginning to make money.

6. Failure of imagination. Companies that focus only on building and selling products put themselves at a tremendous disadvantage against companies that also create platforms and ecosystems for developers, customers, and others.

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