Modular architecture: Control vs. Openness
A firm seeks to attract different partners to design and develop new components outside a platform core.
These firm's innovation activities influence each other by being reciprocal and recursive. Thus, the innovation is the demand side based.
Firm needs to have the capability to create new uses of its services and platform. Just think of Amazon who was a bookstore in the beginning, but now sells basically everything.
Today's platform market has become a dynamic mashup of unforeseen dependencies among content, devices, networks, and partners. PayPal exemplifies this change. The payment service uses a sophisticated digital platform seamlessly to integrate with websites from which music, videos, movies, application, magazines and books can be purchased.
On one hand, the platform provider seeks to maximize innovation through open innovation and layer module architecture. But on the other hand, the platform provider seeks to keep some parts of the platform under strict control. So, every layer in the digital platform include designed rules, data control and govern the platform and its components.
Network effects tends to lead to concentrated markets
Consumers prefer credit cards accepted by more merchants, while merchants prefer credit cards carried by more consumers.
An additional customer on demand side of the market will add value to the other side of the same market. In another example, more gamers on Steam platform will increase the value of game content manufacturers. More merchants accepting American Express increases the value for American Express cardholders.
This eventually leads to concentrated markets. This is why network effects typically lead to giants – Wechat, Facebook, Twitter.
Productivity through outsourcing
Outsource outsource outsource. At your job, don't be the one who soaks up bullshit work from bosses
Many executives also spend too much time on operational details, such as the best flight to take or the seating plan at a corporate dinner. Such tasks should be delegated, if possible, to an executive assistant. Of course, the boss must be able to rely on this person to get the tasks done correctly, quickly, and politely. Once confidence is established, he or she should go to great lengths to support and retain such an assistant, who is crucial to being productive.
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Alex Lew, CFA
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