Platforms & Openness

There is a rush currently underway in business to become a platform company – provider of an ecosystem. Platforms make intuitively good business sense. The openness of a platform attracts many more participants who either by their presence or their expertise (often both) enhance the base value of the platform. And the platform always gets paid for the facilitation. Consider the Kindle platform of Amazon for example – writers, publishers, readers using the platform pay Amazon for either end of the reading transaction (Kindle is not such an open platform really though writers can self publish on it – perhaps Salesforce is a better example. But you get the drift)

Primary and most significant cornerstone of a platform offering is its openness. That is what attracts participants and builds out the ecosystem at scale. Viewed differently, openness is also a culture. This unique intersection of culture and business model is what makes successful platform companies. If the internal culture of a company is that of opacity, parochialism and fights over turf it is very likely the company will bring the same behavior in the way they run the platform. This pisses off participants (like Facebook a few years back was alienating “partners” by building out on their core platform what the partners were bringing in to the ecosystem. This is – besides plagiarisation – a culture of turf build out, which leads to a culture where no one shares anything for the fear of the idea getting stolen). Once partners on a platform shy away, there is no way the firm can reap benefits of providing the platform at scale. The consequence is mostly a regression into becoming a product company earning one time license fees

Remember the saying – culture eats strategy for lunch? It is true. If you are aspire to becoming a platform company ensure the cultural revolution of being more open, collaborative and tolerant (even for disruptive ideas) starts happening closer home

 

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3 thoughts on “Platforms & Openness

  1. Interesting but when Strategies change with every passing year is that the case of fasting without dinner? Thats what is happening with most traditional companies transforming into slimmer yet strategic moves in becoming a Platform company!!!

  2. Good thoughts! Just trying to get myself bit clarity around the subject…when we bring the cultural aspect of sharing to business, there is bound to be misunderstandings..does that sharing is for further ‘profit sharing’? Else I would try to understand that all platform companies will adopt the community software business model path! A good world that I personally believe in!

  3. Very well said about platform thinking, “openness” starts at home. I am not sure if there are any studies already that correlate the success of a “platform” company to the cultural attributes of the people running the company.
    I was also wondering if the path to become a platform company is through building successful products or riding piggy back on product companies. In other words, it is not that a platform company regresses into a product company, but the product company progresses as a platform company. The software companies are late converts to the “platform” religion. Automobiles/textiles/retail and other industries pioneered this model and I think they built platforms after they built successful products . In any case I think being a product company is not bad as long as they realize it is a product and not a platform. And vice versa, the platform company should realize and behave like a platform company and not like a product company…each should follow its own “Dharma” (as they say..)

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