Platforms have become one of the most important business models of the 21st century. In our newly-published book, we divide all platforms into two types: Innovation platforms enable third-party firms to add complementary products and services to a core product or technology. Prominent examples include Google Android and Apple iPhone operating systems as well as Amazon Web Services. The other type, transaction platforms, enable the exchange of information, goods, or services. Examples include Amazon Marketplace, Airbnb, or Uber.
A Study of More Than 250 Platforms Reveals Why Most Fail
It’s hard to succeed if you don’t earn users’ trust.
May 29, 2019
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Summary.
Platforms have become one of the most important business models of the 21st century. The problem is that platforms fail at an alarming rate. By identifying the sources of failure, managers can avoid the obvious mistakes. To understand why and how platforms fail, we tried to identify as many failed American platforms as possible over the last twenty years that competed with the 43 successful platforms. The 209 failures allowed us to extract some general lessons about why platforms struggle. In general, platforms fail for four reasons: (1) mispricing on one side of the market, (2) failure to develop trust with users and partners, (3) prematurely dismissing the competition, and (4) entering too late.