What We Can Learn From Platform Disruptors

Major platform companies like Alibaba or Airbnb are devouring the world as we speak, which is only a logical evolution from Marc Andreessen’s' prediction that ‘software is eating the world’...

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June 6, 2017
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The Network Disrupter’s Secret Sauce

But what is their magic? What’s the secret sauce that makes them grow at an exponential speed? Here again, I believe there are 4 essential factors that are shaping their success. Their guidebook would read something like this: a healthy disrespect for rules, removal of friction, a fantastic customer experience and a full leverage of the network.

1. Bypass Rules And Conventions

First of all, the network disruptors excel at bypassing rules and conventions. That’s because the existing market rules were created for the traditional businesses of the past. The regulators that developed the governance for the current markets developed their ideas in the 20th century, and the network players operate in the 21st century. That's why many platform businesses are illegal when they start. Uber is illegal in many countries, but gradually it is convincing — or should I say forcing — city by city to legalize it.

2. Remove Friction

Network disruptors also try to remove every single service friction. They excel at 'customers first, without compromise' and want to make their customers’ experiences as smooth as possible. The killer argument where Uber won over the hearts of their customers, was to remove the number one source of friction for taking a taxi: paying. Not that people don't want to pay. It's more the horror of paying in taxis all around the world. In many countries you can't use a credit card, or the machine to take your card is not working. In Switzerland, one of the most developed countries in the world, very few taxis accept credit cards. Instead, they will drive you to an ATM so you can get Swiss francs out of the wall. Uber removed that friction completely. You step out of the car, while paying automatically. Frictionless.

3. Pimp The Customer Experience

Network Disruptors aim to pimp the customer experience to unparalleled heights. Take the Uber example again when finding a ride is reduced to swiping your finger on a piece of glass. I heard a colleague recently talk about a city where Uber did not operate and where he felt the 'adrenaline' again of trying to hail down a cab in the middle of the street. Network disruptors replace this anxiety with flawless customer experiences.

4. Leverage The Network

Last but not least, this type of disruptors obviously also leverage the network, and allow people to build on top of their network. Often, they will open up their infrastructure, and allow others to connect, and build new businesses. Network disruptors know that if they open up their APIs (Application Programming Interfaces), more users will find their way to the network, more traffic will flow on their platform, and more value will be created on the ecosystem. Again, it’s all about the positive feedback loops.

The Uber platform has been used to allow other markets to take advantage of the new infrastructure. Look at ‘Uber Flu’ where — at the start of the flu season — you can ‘order’ a nurse to give you a flu-shot. Or the rise of ‘Uber Eats’ where you can have meals delivered via the Uber platform.

The platforms keep rising in popularity. They stop being invisible — like the old platforms like were — and are business models in themselves. My advice: use their strengths to shape your own after tomorrow.

This article is adapted from my forthcoming book, The Day After Tomorrow (www.dayaftertomorrow.com). Out on June 22 2017.

Peter Hinssen
Peter Hinssen
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June 6, 2017
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