Question
The value stick framework, as presented in Better, Simpler Strategy, emphasizes on creating and capturing value in a balanced way. Companies like Uber and DiDi have applied this framework by focusing on creating value through network effects and capturing value by establishing strong regional footholds. Uber, for instance, has created value by building a global network of drivers and riders. However, it has faced challenges in capturing value in new markets due to regional network effects, as seen in its competition with DiDi in China. DiDi, on the other hand, has successfully created and captured value in its home market by leveraging regional network effects and first-mover advantages.
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Network Effects can provide formidable advantages, and markets often tip in favor of a few companies. However, many network effects are bound by geography. Uber has 3 million drivers globally but still has to compete in every new market it enters. Regional network effects create powerful first-mover advantages. Once DiDi grew in China, Uber stood no chance even though it was a global behemoth.
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