The word platform defines the core elements around which the purpose of a business can be fulfilled. Once a business has defined its platform then suppliers, internal resources and buyers can create, add, distribute and consume value.
In the old days businesses defined themselves by their products and services which framed the brand. In the Social Era businesses are defined by the value created, added, distributed and consumed as a result of having a robust “platform”. A successful business platform does three things:
- Provides efficient and effective connectivity: how easily can suppliers, internal resources and buyers create, add, distribute and consume value.
- Attraction: Does your platform attract people; suppliers, resources, buyers and markets
- Purpose: The purpose of your platform is the ongoing exchange and co-creation of value
Mark Bonchek and Sangeet Paul Choudary HBR article titled “Three Elements of A Successful Platform Strategy” says: Successful platforms achieve these goals with three building blocks:
- The Toolbox creates connection by making it easy for others to plug into the platform. This infrastructure enables interactions between participants. For example, Apple provides developers with the OS and underlying code libraries; YouTube provides hosting infrastructure to creators; Wikipedia provides writers with the tools to collaborate on an article; and JC Penney provides stores to its boutique partners.
- The Magnet creates pull that attracts participants to the platform with a kind of social gravity. For transaction platforms, both producers and consumers must be present to achieve critical mass. Apple needed to attract both developers and users. Similarly, eBay needed both buyers and sellers. Platform builders must pay attention to the design of incentives, reputation systems, and pricing models. They must also leverage social media to harness the network effect for rapid growth.
- The Matchmaker fosters the flow of value by making connections between producers and consumers. Data is at the heart of successful matchmaking, and distinguishes platforms from other business models. The Matchmaker captures rich data about the participants and leverages that data to facilitate connections between producers and consumers. For example, Google matches the supply and demand of online content, while marketplaces like eBay match buyers to relevant products.
To succeed in the Social Era every business needs to think of itself as a platform. Thinking about business as a platform with three things the platform needs to do and the building blocks it needs to provide will change how and what you think about everyday.
Changing how and what you think about will change everything and that is a good thing for everyone.