Delivering consistent experiences for ecosystem stakeholders through a single view of the ecosystem

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Most platforms starting from scratch have little value in and of themselves. Producers of value will not come on board unless there are consumers, and consumers will not find the platform useful without any production. Most platform firms face this chicken-and-egg challenge. Who does one get on board first: the producers or the consumers? And why will one side come on board, when the other side is not there?

Broadly, platform firms may employ one of two types of strategies: sequential strategies and simultaneous strategies. Using sequential strategies, the platform gets either producers first or consumers first on board. Using simultaneous strategies, as the name suggests, the platform gets both producers and consumers on board at the same time.

OpenTable employed a producer-first sequential strategy to get restaurants on board by providing restaurant management software as an initial hook before any consumers signed up. Conversely, Megaupload seeded pirated content on its site as an initial hook to attract consumers on board in a consumer-first sequential strategy, and subsequently, converted some consumers to producers of content.

Another way to employ sequential strategies is to empower producers to bring consumers on board. Project creators host their projects on Kickstarter and subsequently spread the word about their project among their followers and friends. This act of spreading the word fuels the feedback loop and the producers themselves participate in the act of getting consumers on board. Some of these consumers then become producers – and the virtuous cycle is set into motion.

The platform firm may also kickstart adoption by acting as the first producer at scale. Amazon started out as a retailer before moving to a marketplace model. The education marketplace Udemy also applied this strategy by initially producing its own courses. On B2B platforms, a large business customer can act as the first consumer to kickstart platform adoption. Procter & Gamble started its Connect + Develop innovation platform by acting as the first consumer on the platform.

Platforms may also be seeded by acquiring both producer and consumer roles at the same time – through employing simultaneous strategies. In order to get both sides on board simultaneously, the platform must leverage or integrate with a high concentration of existing activity between these two producer and consumer roles. There are various approaches to executing this strategy.

The first approach involves launching the platform in concentrated geographic hubs of activity. Facebook, for instance, first launched as a closed network within Harvard  University to harness existing activity among students.

The second approach leverages unusually high concentration of activity during specific periods or events. For example, Twitter launched at industry conferences and Tinder launched at fraternity parties. In both cases, event participants were already interacting at the event and the platform facilitated these interactions better.

A third strategy involves integrating with – or piggybacking – another digital network which already has a high degree of activity. LinkedIn gained much of its initial traction by integrating with Microsoft Outlook as users’ business connections already existed on Outlook. WhatsApp was one of the earliest platforms to piggyback the phone contacts list. It would automatically compare all of the phone numbers of a new user’s phone contact list to the existing WhatsApp user database. This allowed it to scrape the address book and pre-seed the WhatsApp network for the user, without the user having to manually add connections. When Airbnb launched, it initially piggybacked activity on Craigslist through a reverse integration, to attract Craigslist hosts and travelers who were already interacting with each other. Airbnb provided superior trust through a rating system and an improved search and navigation experience, combined with an integrated payments platform, all of which helped it attract hosts and travelers away from Craigslist. Finally, Instagram gained traction by piggybacking Facebook, allowing users to share pictures with their Facebook network and gain more users.

 

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B2B platform adoption often requires more than piggybacking. It requires integration and backward compatibility with existing systems, simplification of workflow transitions, and creating incentives for change. Launching a healthcare platform, for instance, requires myriad integrations as patient data sits across a range of siloed systems. Platforms that simplify such integrations and workflow transitions find it easier to gain B2B adoption.

Beyond solving the chicken-and-egg problem, mobilizing the ecosystem also involves activating users on the platform for continued engagement. Platform firms must conduct data analysis to determine actions that separate activated users from deactivated ones. For instance, Dropbox determined that users who added at least one file within a day of signing up were more likely to get activated. Similarly, Facebook determined that users who connected with 10 friends within the first seven days were more likely to stay active. As a result, the marketing department completely shifted its focus on achieving this goal.

Incumbents looking to solve the chicken-and-egg problem should also look at leveraging their assets. For instance, the pharmacy giant Walgreens gained adoption on its loyalty platform by leveraging its retail store network. Sephora, as shared above, on boards user data profiles through quick tests at its retail locations.

Whether solving the chicken-and-egg problem or activating users, platform adoption remains more complex than driving product usage. Platform organizations need to keenly understand incentives that will drive usage and structure strategies that will help build multi-sided adoption.

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Frequently Asked Questions

How do platform companies gauge strategy success in driving adoption and engagement among producers and consumers?

Platform firms typically measure the success of their strategies in driving adoption and engagement through various metrics such as user growth, retention rates, user activity levels, and the conversion rates between producers and consumers. These metrics help them assess the effectiveness of their sequential or simultaneous strategies in attracting both sides of the ecosystem. For instance, Dropbox identified that users who added at least one file within a day of signing up were more likely to become activated, while Facebook found that users who connected with 10 friends within the first seven days were more likely to stay active. By analyzing such data, platform firms can refine their strategies to optimize user activation and retention.

What challenges do platform firms face in mobilizing their ecosystems despite employing various strategies mentioned in the article?

Despite employing various strategies to mobilize their ecosystems, some platform firms may face significant challenges in achieving adoption. These challenges could stem from factors such as competition, regulatory issues, or mismatches between the platform’s value proposition and user needs. For example, platforms attempting to launch in highly regulated industries like healthcare may encounter hurdles related to compliance and data privacy. Additionally, platforms that fail to adequately address concerns about trust and security may struggle to attract users, especially in industries where these factors are paramount.

What potential risks accompany concurrent strategies for platform adoption, especially in integrating with current digital networks?

While simultaneous strategies for platform adoption offer the advantage of onboarding both producers and consumers concurrently, there are potential risks and drawbacks to consider, particularly in terms of integration with existing digital networks. For instance, integrating with established platforms or piggybacking on existing networks may entail dependencies that limit the platform’s flexibility and autonomy. Moreover, platforms must navigate challenges related to compatibility, data sharing, and user experience when integrating with external networks. Additionally, relying too heavily on piggybacking strategies may expose platforms to risks if the external network undergoes changes or disruptions. Therefore, platform firms must carefully weigh the benefits and drawbacks of simultaneous strategies to ensure sustainable growth and resilience in their ecosystems.