Platforms are the new gold rush for business today

western-colarado-gold-prospectingPlatforms presently are the new gold rush we in business need to exploit today. They are becoming an essential part in our needs to shift to the new creation of connected value.

What is absolutely necessary, is the need to stake out where you believe are your best prospecting chances and for that you need to have a clear vision and plan, as you think through any shift into platform management.

It is a significant transforming decision, full of risk but equally full of real promise.

Different forms of platforms have been around for years, even centuries, where people came together, traded in goods and knowledge. The significant transformation taking place around exploiting technology and digital management has made ecosystems and platforms a mainstream prospecting need in most of our businesses today.

To get at the new digital gold it is to know where the “mother lodes” of reach, efficacy, and convenience become the most value creating points for providing goods and services that customers engage with, really value and want. The platform becomes the “creation infrastructure” that leverages the network effect where you connect and coordinate objects and information exchanges across a growing ecosystem of providers and consumers.

The more we connect, to exchange knowledge, resources, insights, create new services and goods, along with constantly seeking to find better ways to collaborate, the more value it can potentially have to all involved. Connecting and building relationships, trust and engagement offer the potential for a greater, sustaining growth through a well designed and clear strategy for ecosystem and platform management. The difficulty is knowing where to ‘dig’ for your pot of gold.

Platform models are the new order of business need.

We have seen the incredible rise of Apple, Google, eBay, Amazon, Android, Facebook, Microsoft, Alibaba, Salesforce, Uber, Airbnb, PayPal all become some of the hottest companies in value as they have been built on powerful platforms for us to simply connect into and draw down what we value.

The big question for many companies that simply sell products is can they benefit from making changes onto these platform models and how do they go about it? Is the stand-alone product model breaking down? Do the more traditional approaches to customers , those that are more supply sided  built on mass economies of scale serving their needs today?

We are seeing a significant shift in consumer expectancies. When any form of digitization is introduced the expectations of the customer rise exponentially in the expectancies of service, engagement, response and support and this increasingly is becoming 24 x 7. The brand is increasingly determined by the service and how it fits within the individuals life and that has increasingly a more connected set of components coming from technology, built into the value proposition.

This rising expectation has come from our appreciating the connecting value of Facebook, Googles, Apple and Microsoft, as examples and where our ‘need’ for technology has grown in recognition that it can solve our personal problems and situations and is quickly becoming the norm of everyday life. Today the industrial company, selling traditional tangible goods is expected to engage, it is expected to listen, adapt and offer ever-increasing tailored services to our personal needs. The day of do-it-yourself has become do-it-with-us ,we will support your journey.

We are seeing platforms transforming the business landscape.

There is this real imperative to understand the whole meaning and implications of platforms. The business implications of platform management are significant, they have a transforming effect on all we do within companies. As technology continues to change the way we do business, we move from being internally directed to externally driven.

To understand where ecosystems and platforms fit within our corporate strategies there are some well-respected voices discussing and predicting the rapid rise of the platform and what it all means in its implications and changes. Notably for me, I have been referring back to a number of these experienced voices, as well as recognizing there are different books and thoughtful papers discussing the platform phenomena and how it is radically changing our business landscape.

The book “Platform Revolution: How Networked Markets Are Transforming the Economy – And How To Make Them Work for You is co-authored by three of the leading voices of platform management. These being Geoffrey Parker a professor of engineering at Dartmouth College,  Marshall W. Van Alstyne is one of the world’s foremost scholars of information business models, a visiting scholar at the MIT Initiative on the Digital Economy and Sangeet Paul Choudhary, Entrepreneur in Residence at INSEAD, who provides a great posting site from pipes to platforms. Each bring considerable weight of understanding and insights into Platform Management to gain a really sound grasp.

Then you have John Hagel, co-chairman of Deliottes Center for the Edge, who has with his colleagues provided valuable insights and thinking on ecosystems and platforms through Deliotte University Press. One of my favourite references is the paper “the power of ecosystems” part of a whole series discussing “Business ecosystems comes of age”, a must read for anyone wanting to work systematically through ecosystems and platform thinking. Here they quite rightly are suggesting that “Businesses are moving well beyond traditional industry silos and coalescing into richly networked ecosystems, creating new opportunities for innovation alongside new challenges for many incumbent enterprises”

Then I have valued Haydn Shaughnessy, along with Nick Vitalari. Different books like “the Elastic Enterprise”, on how enterprises scale and operate in a completely novel way as well as one written just by Haydn “Shift: A Leader’s Guild to the Platform Economy” and a range of posts to highlight different parts of the platform equation.

My last voice on all things ecosystems and platforms is Bala Iyer,a professor and chair of the Technology, Operations, and Information Management Division at Babson College in Wellesley, Massachusetts who wrote a recent paper “To Predict the Trajectory of the Internet of Things looking to the Software Industry” where he identified 34 platform providers although he identified 2,000 in total.

In this paper of Professor Iyer provides a terrific graphic laying out the IoT ecosystem, one that is broadly distributed network of these providers where mostly they are providing application programming interfaces, many offering infrastructure, devices and platforms as their core, looking for others to connect and build their solutions on these platforms without the high levels of infrastructure investment cost. I’m presently looking to read more on Professor Iyer’s work.

Each of these expert voices are great sources of knowledge although they tend to revert to the software and technology centric companies far more, although this has been the source of platform understanding. I want to hear more voices on the Innovation Ecosystems & Platforms, more for those in traditional manufacturing and service industries such as the GE Predix emerging story provides. More on that one is coming in a later post.

So we are in the middle of this Platform Revolution

I read this recently and I it is well worth partly reproducing here as it does a good job for me on explaining platforms in a fairly concise way. It is by ING, Office for Experience Design 2016 and as this is under a Creative Commons Attribution 4.0 International License.  The full set of their insights does a good job of discussing not just platforms, the network effect but ties these back into ecosystem thinking – again a good read and reference.

“The role of the platform is the creation of these connections. To this end, the platform facilitates an accessible, scalable and efficient network of users, services, devices and intermediaries to make the value exchanges happen. It is over this network that value is created, distributed, discovered and consumed. The complementary aspects of platform and network are key to any platform ecosystem business model.

Users of the platform may be consumers, producers or a combination of both at times. Whatever their role, they connect and interact with each other over the network using the facilities provided by the platform. Depending on the nature of the business model, participants may or may not be required to connect explicitly. Social networks often require explicit connections, whereas market places do not but match buyers and sellers on case by case basis. Users of a personal finances platform may not connect at all but still benefit by being benchmarked against comparable users.

The platform consists of core technologies, shared tools and services, and rules and standards that enable producers to create and share at scale with sufficiently low costs of distribution and transaction. It provides a set of interfaces for the participants of the network to communicate, interact and interoperate within the ecosystem.

This definition sits well with the generally accepted notion of “platform” as a product or technology that allows complementary, modular components be built on top of it. Well-known cases are product platforms (like VW’s MQB), industry platforms (like Intel’s x86 architecture) and cloud computing platforms (like Amazon Web Services).

Platform ecosystems often use the latter kind of platform. The platform’s job is to support the network comparably efficiently. This is not an unimportant task, but it just does not differentiate ecosystems in their evolutionary battles to the same degree as the networks does”

So to summarize where platforms sit in our present and future thinking, or should .

What I wanted to do here in this post is to introduce platforms as I see them and provide a growing source of references that I can only encourage those of you interested to explore.

Each platform does have unique characteristics with a central effect being the presence and need for building the network effect. The more users engaged makes it increasingly dynamic, offering a self-reinforcing cycle of growth. Today platforms as they are digital in nature, capture, transmit and monitize data and connect this into the physical world. Many platforms are transactional ones (Uber, Google, Ebay) but the ones that hold my growing interest are Innovation Platforms that provide the technological building blocks for collaborators to come together and use this as the foundation to exchange and build increasingly value  as they form the Innovation Ecosystem, that expands our innovation potential in new ways.

It is building these complementary technologies, services and products that need to appeal to the Customer. They connect and then provide the potential for greater seamless customer experiences. The push is combining transactional platforms with innovation platforms to give a more integrated platform.

The key takeaway is the huge implications for Managers when making the strategic and operating decisions is fully recognizing that technology is central, it changes everything on how you plan and organize yourself. It forms many of the decisions on a platform strategy, its design and eventual business success. It changes organization design, work flow and how it has this increasing need to be orientated out into a connected world.

To understand the implications of the magnitude of the changes technology will bring and any decision to move towards a platform strategy needs a deep understanding of all the consequences, risks and investment cost, let alone in the different resources this will require.

This requires knowing what is cutting edge, what works for you and then working through aligning often complex IT systems, seeking higher levels of machine learning and investing increasingly in the future around advanced artificial intelligence. It is about exploiting technology that is appropriate to your strategic needs. Platform management have formidable tasks in orchestrating; in designing and developing clear and sound governance systems, along with clearly require significant organizational capital to have the best chance to succeed.

The key is the need for each business to “invert”. As Geoffrey Parker points out, Porters Five Forces are all negative in today’s world. We are not defending ourselves as insular entities anymore, as this is not where competitive advantage resides, we need to reverse these forces and find the strategic design that embraces these forces and opens all of us up to collaboration and external engagement. Now that has something to really ponder over.


One thought on “Platforms are the new gold rush for business today

  1. Pingback: The Dynamism in Chinese Ecosystems and Platforms | Ecosystems4innovators

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