A stepwise strategy for achieving a critical mass: for a two-sided platform
Independent thesis Advanced level (degree of Master (Two Years)), 20 credits / 30 HE creditsStudent thesis
Individuals’ and companies’ ability to reach a vast majority of people through scalable solutions have never been more apparent. In addition, the traditional way of creating and capturing value has been challenged by the emergence of the new digital economy. In some industries, new actors that fully appreciate the new set of rules and opportunities have outperformed their traditional peers. Those actors, i.e. Uber and AirBnB, often leverages on a two-sided platform in order to create an appealing value proposition for their customers. Both these success stories also benefit from the sharing economy. Network effects are often closely tied to a two-sided platform. This implies that the perceived value of such a platform is shaped by the actions of the users. This will foster winner-take-all environments and the need to achieve a critical mass in order to be successful. Despite the endless possibilities of the new economy, there is a need to build up a skillset that enabling a structured way of addressing new business opportunities. To some extent, there has never been a more urgent need for understanding how success is accomplished and value captured in this new economy. The purpose of this research is to present a stepwise strategy for a two-sided platform in order to achieve a critical mass. In order to fulfil this purpose, a comprehensive literature review have been conducted, together with interviews with two distinct groups, the distribution of a questionnaire, and work-shops with a Case company with a typical two-sided platform. The first group constituted of experts within the field of two-sided platforms and network effects, situated in Stockholm. The second group constituted of potential users of the case company’s two-sided platform. This group also answered the questionnaire. The main findings from our research is a strategic framework that incorporates factors that are perceived by the experts and the literature as most important in order to achieve a critical mass. Furthermore, these factors could be divided into two dimensions; The phenomenon and Suggested actions. The phenomenon represents an issue that the user of the strategic framework determines as high or low in regards of the specific two-sided platform. Suggested actions provide a plausible solution if the issue need to be addressed. We also motivate why a critical approach in evaluating the platform is preferable. In addition, the strategic framework is developed to be used in an iterative manner, thus capturing the desire to propose a stepwise strategy. The experts in our population brings up a set of important factors that also are strengthened by the literature. These factors lay the foundation of the strategic framework. Although we are aware that the strategic framework is highly dependent on the results retrieved from the interviews, our final recommendation is that it should be used as support to the initial strategy, thus lowering the likelihood of unexpected pitfalls.
Place, publisher, year, edition, pages
2016. , 106 p.
two-sided platform, network effect, critical mass, strategy
Economics and Business
IdentifiersURN: urn:nbn:se:kth:diva-189514OAI: oai:DiVA.org:kth-189514DiVA: diva2:946454