Kuliah 8-9

Building Interaction-First Platforms

Dodie Tricahyono, PhD
 Fakultas Ekonomi dan Bisnis
School Economics and Business The Platform Canvas
Channels + Channels +
Producer Access control Value Filters Consumers

Curation and
Creation Consumption
Customization
Platform
Tools and Services

Currency Capture

It is a plug-and-play business with participatory as a keyword. It must be design in a manner that encourages
desirable and relevance participation. Its about the economy of abundance (creating value with greater
abundance). However, beware of diminishing value as consumers hard to find what they are looking for and swim
around in a sea of irrelevance.
2 Creating the great business leaders
 Fakultas Ekonomi dan Bisnis
School Economics and Business Platform Execution
Telkom University
To achieve platform scale, a platform must be managed such that the core
interaction is repeated in a scalable and sustainable fashion.
Repeatable and efficient interactions hold the key to platform scale
Repeatability means:
all actions in the interaction are executed smoothly
The feedback loop in an interaction is executed so that it kick-starts the next interaction
organically
There are 6 elements of execution:
1. Choice of the overall interaction space (motivation to participate)
2. Production incentives
3. Building long-term cumulative value
4. Strong curation mechanisms and trust
5. Strong filters and relevance
6. Ownable interactions
3 Creating the great business leaders
 Fakultas Ekonomi dan Bisnis
School Economics and Business Interaction Drivers
Telkom
SixUniversity
interaction drivers:
Connection Participants in an interaction must have a pre-existing relationship before they can interact Facebook,
LinkedIn
Content Participants in an interaction interact through the creation of consumption of content, Medium,
without any prior relationship requirement Youtube, eBay
Clout The interaction space is structured such that certain participants - typically producers - Twitter, Udemy
drive interactions across multiple other participants because of their greater influence (a
reputation system exist)
Coordination Interactions arise from a set of instructed actions that coordinate participants toward an Wikipedia
outcome rather than deriving from existing relationship, influence, or shared interests
Competition Interactions may be dominated by competitive moves among participants (work best in 99Designs,
minimal invesment condition) crowdfunding
Culture & Certain interaction spaces may be structured entirely around a shared culture and code. Online gaming,
Code However, very few interaction spaces centered on culture alone (content + culture, Reddit,
content+clout+culture) HackerNews
Most platforms rely on multiple interaction drivers.
Understanding these 6 drivers helps entrepreneurs and managers give new strategic direction to the
platform.

4 Creating the great business leaders

 Fakultas Ekonomi dan Bisnis
School Economics and Business Producers Motivation to Create Value
Telkom University
Does the platform provide tools, access, or both?
Hipstamatic (access only) vs Instagram (access+tools); Flickr (hosting tools) vs Facebook (tools+access)
Does the platform simplify the production process?
The lower the skills level required, the more success a platform
Does the platform leverage a robust curation model to separate the best from the rest?
Algorithmic or social or editorial curation
Does the platform create a clear, democratic, equal access path to the top?
Producers should understand the mechanisms of the curation work in the platform
Does the platform use inorganic incentives to motivate producers?
Inorganic incentives (misal: top listed reputation) complement the organic incentives (monetary)
Does the platform convert consumers into producers?
The success of platform still hinges on its ability to maximize the percentage of producers
How does the platform communicate feedback from consumers back to producers?
Producers on Twitter: retweets, favorites; Seller on Marketplaces: ratings, reviews
5 Creating the great business leaders
 Fakultas Ekonomi dan Bisnis
School Economics and Business Removing Barrier for Producers
Telkom University
The skill barrier
Instagram lowers the skill barrier required to create beautiful photographs that once required Photoshop
expertise.
The time/effort barrier
Twitter lowers the barrier of time and effort by limiting to 140 characters only.
The investment barrier
Google allows users to rank high organically. Go-Jek offers smartphone to be paid in installment basis.
The resource barrier
Amazon Web Services lowers the amount of resources required at the outset to start up.
The access barrier
Kickstarter (crowdfunding platform) democratizes access to investment by allowing anyone to set up a project,
state funding requirements, and raise money online. So do Amazon Kindle Publishing, YouTube, and CDBaby
reintermediated the industry to varying degrees by giving producers direct access to a market of consumers.
Platforms must reduce friction in usage and lower the barriers to participation.
6 Creating the great business leaders
 Fakultas Ekonomi dan Bisnis
School Economics and Business Beyond The Network Effect
Telkom University
In the platforms, network effect isnt quite effective at retaining producers and consumers
as it once was. Today, platforms need additional mechanisms by creating cumulative
value (value that scales as the producer/consumer uses the platform more often).
Platforms leverage cumulative value to encourage repeat participation by the best
producers and consumers in four forms:
1. Reputation
Explicit reputation (based on ratings and reviews); and implicit reputation (based on platforms algorithms or
based on past actions)
2. Influence
One-sided follow model (Twitter), or participate more model (Wikipedia)
3. Collections
The more content a producer creates in his/her collection, the more social feedback he/she receives over time.
4. Learning filters
The Facebook newsfeed understands a consumer better over time and becomes more relevant.
7 Creating the great business leaders
 Fakultas Ekonomi dan Bisnis
School Economics and Business Sampling Costs: The Failure of Social Curation Systems
Telkom University
The ability of a platform to scale high-quality interactions is often determined by its ability
to implement a strong social curation mechanism.
Youtube & Quora: upvotes/downvotes & abuse report by community; Airbnb & Uber: determine the quality of
participants on he platform; Tripadvisors & Yelp: create industry-wide standards of quality by leveraging social
curation.
Consumers sample content, a physical good, or a service and make quality judgement on
the basis of sampling. However, if the sampling cost is high, consumers are refuse and/or
unable to judge quality well that leads to the fail of a platform.
Social curation creates: (1) social proof for new consumersto base their decision on; (2) qulity scores for ranking
algorithms; (3) Feedback loop for the producer.
Sampling costs example: finding new artists to listen to by sampling a random assortment of artists in
Youtube, choosing whom to follow on Instagram by sampling twenty photos in the feed in Instagram.
Interactions with high risk of participation (healthcare service vs plumbing service) tend to rely
more on editorial control than on social curation. Thus, social curation tends to be more
inefficient on platforms with higher sampling cost.
Who can curate determine the quality of feedback (Agoda allows only users who have already booked
and stayed at hotels to rate those particular hotels).

8 Creating the great business leaders

 Fakultas Ekonomi dan Bisnis
School Economics and Business Trust: The 7 C Framework
Telkom University
Trust is a critical factor in enabling interactions on platforms.
7C trust mechanisms:
1. Confirmed Identity: the higher the interaction risks are, the more important is it to confirm the
participants identity to encourage interactions. Lyft riders link their account ti their Facebook profiles.
2. Centralized Moderation: Instagram, Twitter, and other social content platforms have community
managers to help moderate the content.
3. Community Feedback: Comments, votes, ratings, reviews, or replies. It allows the community to
regulate itself while reducing overhead for the platform.
4. Codified Behavior: the implementation of implicit rules in the workings of the platform. These rules may
be back into the platform in the form of algorithme that implement checks and balances on user actions.
5. Culture: Culture directly influences community feedback and its quality.
6. Completeness: Users trust platforms that have complete user profiles and detailed informations.
7. Cover: or insurance, protects participants from extreme loss. If the interaction does not work as expected,
the platform covers the loss.

9 Creating the great business leaders

 Fakultas Ekonomi dan Bisnis
School Economics and Business Some important issues
Telkom University
1. Multihoming costs that leads to interaction failure
2. The Challenge of enabling non-standardized services: off-platform interaction. Inorder to
own the interaction, platform must create more value then they capture

10 Creating the great business leaders