[Executive Edge] 4 things entrepreneurs need to know about platform thinking
Platform thinking is not a hollow catchphrase. It gives business the leverage, a true advantage in their industry.
A platform is any business that enables two sides of a marketplace to get value from one another.
Platform thinking, then, is any attempt to maximize the value that the stakeholders get from one another, so that they are more likely to remain with it and others are more likely to join.
Speaking at Rappler’s #ThinkPH The Next Big Idea: Platform Thinking held April 30, Sangeet Paul Choudary, the founder and CEO of Platform Thinking Labs, said businesses can better practice platform thinking.
He believes that the way businesses operate has fundamentally changed because of the shift toward platforms, and even traditional industries, like mining, are not immune.
To Choudary, any industry that deals with information can potentially be disrupted by platform thinking.
Platforms, in his view, are fundamentally good. They have several key benefits. For one, platforms remove gatekeepers. The best example of this is the publishing industry. Whereas before the aspiring writer might have had to send in his work to an agent or publisher, he now only needs to post his work on Wattpad, a platform for sharing stories, to reach an audience.
Choudary added that platforms unlock new sources of value. The prime example of this is AirBNB, a platform where travelers can find short-term accommodations offered by hosts around the world. These spare rooms and homes were largely unused prior to AirBNB, so the company is creating and generating value where none had existed before.
Third, platforms also aggregate fragmented, inefficient markets. As such, here are 4 key ways that businesses can use platform thinking to further drive their businesses.
1. Do not start with technology when building your platform.
This advice may seem counter-intuitive given that most platforms are digital. However, Choudary instead called on entrepreneurs to build their platforms around the interaction that you aim to enable.
With Uber, for example, the interaction is passengers getting rides on demand from drivers who drive on their own schedules. The technology should only come second to this interaction — it allows the interaction to scale on a global level.
2. Companies need to grow both ends of a platform.
Every platform is two-sided, so companies need to focus on growing both sides, the consumers and the producers. Choudary admitted that this can be a chicken-and-egg problem at times, but it must nonetheless be addressed. If the two sides of a platform do not grow somewhat in lockstep with one another — say, a marketplace that only has people offering services but no one availing of them — it is doomed to failure.
3. Platforms need to moderate how users can interact with one another.
According to Choudary, the prime example of a platform that failed to do this was the social network, Myspace, which allowed users to modify their profiles at the HTML level. As the average person was not a designer, the result were poorly designed pages that were an eyesore for the people who visited them. Additionally, Myspace allowed any user to contact any other user — it did not, at least at the outset, have the privacy filters that other social networks, Facebook included, have.
Well-managed platforms, in contrast, really think about what they should permit their users to do as well as how they can interact with one another. Choudary called this the rules of governance.
4. Platforms need to capture data.
Though there are always privacy concerns surrounding the collection of data on digital platforms, Choudary said it is necessary. Utilized properly, data helps companies better match consumers and users.
The nearest and perhaps most ubiquitous example is Facebook’s Newsfeed. It learns which type of content that you, the content consumer, enjoys the most and continually tailors the posts it pushes to you based on this knowledge. Such customization keeps you on the Facebook longer and more likely to engage with the platform on a regular basis.
In this same way, companies must not only collect data, but determine what kind of data it is important to collect, before making corresponding adjustments to their platforms. – Rappler.com
Rappler Business columnist Ezra Ferraz brings you Philippine business leaders, their insights, and their secrets via Executive Edge. Connect with him on Twitter: @EzraFerraz