Extra-condensed knowledge

Conventional wisdom says digital platform businesses should scale quickly, but that’s a mistake in some markets.

Rapid scaling, as exemplified by Uber, is a core element of platform strategy, with speed considered the decisive factor in the race to succeed in winner-takes-all and winner-takes-most markets.
But we’ve found that rapid scaling may not be the best strategy for all platforms. In some cases, a more careful, incremental, and thus slower approach to scaling is more beneficial.
In studying platform businesses, including Airbnb, Amazon, Apple, Expedia, Facebook (particularly its e-payment project, Libra), Google, Grindr, LinkedIn, Netflix, PayPal, and Uber, we found that regulatory complexity and regulatory risk are two significant but often neglected factors in platform scaling decisions.
Moreover, they are likely to become increasingly important in the years ahead as efforts to regulate tech companies gain momentum and as more companies in a greater variety of sectors and markets seek to capture the benefits of platforms.

Genioux knowledge fact condensed as an image

Category 2: The Big Picture of the Digital Age

[genioux fact produced, deduced or extracted from MIT SMR]

Type of essential knowledge of this “genioux fact”: Essential Deduced and Extracted Knowledge (EDEK).

Type of validity of the "genioux fact".

Inherited from sources + Supported by the knowledge of one or more experts + Supported by research.

Authors of the genioux fact

Fernando Machuca

References

Platform Scaling, Fast and Slow, Max Büge and Pinar Ozcan, March 9, 2021, MIT Sloan Management Review, MIT SMR.

ABOUT THE AUTHORS

Max Büge is a visiting scholar at Saïd Business School at the University of Oxford. Pinar Ozcan (@profpinar) is a professor of entrepreneurship and innovation at Saïd Business School.