Session 1 Flashcards
(38 cards)
Name 3 ways in which Netflix beat Blockbuster and Walmart?
Brand - built through customer experience. Scale - infrastructure to deliver in a day, long tail selection, first of it’s kind. Data - Collaborative Filtering
What is collaborative Filtering?
Collaborative Filtering: software that monitors trends among customers and makes personalized recommendations based on the data.
What is churn rate?
Churn rate: the rate at which customers leave a product or service.
Name 2 ways Netflix has changed their business?
Atoms to bits, digital delivery instead of physical. Digital has it’s own challenges. Netflix has made it’s software available to developers. Netflix has crowdsourced software improvements.
What are network effects?
Network effects - also known as “Metcalfe’s Law” or “network externalities” - when the value of a product or service increases as its number of users expands.
What is exchange with regards to network effects?
Exchange: Communication fostered by the network.
What are switching costs
Switching costs: costs a consumer incurs when moving from one product to another
What is staying power?
More users = more staying power
What are complemetary benefits?
“how-to” books, software, and feature add ons. Building a platform and APIs to enable others to use and thereby enhance your product.
What is a One-Sided market?
One-sided market: a markets that derives most of its value from 1 class of users.
What are same-side exchange benefits?
Same-side exchange benefits - benefits derived by interaction among members of a single class of participant.
What is a two sided market?
Two-sided market: Network markets comprised of two distinct categories of participants, both of which are needed), such as video game consoles (gamers and game makers)
What is a cross side exchange benefit?
Cross-side exchange benefit: When an increase in the number of users on one side creates a rise on the other side.
What typically happens in a network market?
Network markets feature fierce competition starting out and usually result with the winner taking all or most.
How might a newcomer beat an incumbent in a network market?
A newcomer has to basically perform “technological leapfrogging” to beat an incumbent, which means providing an alternative so superior that it beats the incumbent and all of its inherent network value.
What are 6 keys to providing positive network effects? (12 total)
- Move early:
- Subsidize adoption:
- Leverage viral promotion:
- Expand by redefining the market:
- Alliances and Partnerships:
- Leverage Distribution Channels
- Seed the Market
- Encourage the Development of Complementary Goods
- Leverage Backward Compatibility
- Rivals should be compativle with the leading network.
- Incumbents should try to close off rival access and constantly innovate.
- Large Well Known Followers: Preannouncements to help delay user purchase from a competitor
Describe the lessons learned from Kodak?
(1) Digital products need different business models (large investments early, suppliers are partners, Kodak - “Razor and blade” model. (2) Willingness to cannibalize - Kodak never willing to jeopardize film business. (3) Focused on wrong competitor.
Describe some of the lessons learned from professional services?
“(1) They Big 8 leaveraged customer relationships to move into adjacent higher value services. (2) Went with what customers needed and not just what they knew. (3) Organizational Flexibility to redefine core - “Share of wallet” strategy required the Big 8 to develop new but related capabilities
“
What are the key observations from Manheim?
(1) Manheim developed with technology. Started as a provider of auction services for the physical sale of cars. Developed online tools to connect wholesale vehicle buyers to sellers. (2) Designed in a way that the same customer can leverage the tech both online and offline synergistically.
Describe the retail timeline?
(1) Department stores opened and blossomed with railroads (2) Discount stores disrupted scene with low prices causing problems for department and category stores (3) Online only retailers emerged. Mortar stores have tried to transition with little success.
Describe lessons learned from Retail?
(1) Traditional players ignore new opportunity initially - For large retailers, their own online revenue was low, so easy to ignore. Online players gain a foothold as a result (2) Outsourced new growth opportunities, Temptation to outsource instead of building capability. Amazon acquires other companies to build capabilities
Describe the lessons learned from Blackberry, Nokia, & Samsung.
“(1) Enamored by product features when customer needs are shifting. Blackberry – security instead of usability. Nokia – device instead of software
(2) Using core competencies to win Blackberry – now focused on services. Samsung – leveraged Google’s Android and focused on device”
What is a traditional resource based view?
• Traditionally, unique resources provide a competitive advantage. Credible reason that you will win.
What are the driving metrics for resource based view?
o Valuable
o Rare
o Inimitable
o Non-sustainable
