Platform competencies

08 May 2016

This excellent article by Mark Thompson from 2015 sets out the definition of a ‘digital business’ as one that is specifically configured to exploit shared internet-based infrastructure’s unique ability to:

1. consolidate consumers into platforms of demand;
2. simplify supply and value chains; and
3. readily enable a much wider and plural supply base producing ecosystems of supply.

Sangeet Paul Choudary’s book Platform Scale explains the difference between ‘Pipe’ business models and ‘Platform’ business models:

• Pipes create value through processes that co-ordinate internal labour and resource towards efficient delivery of value to aggregated consumers.
• Platforms orchestrate value-exchanging interactions in their ecosystems using data about the participant.

The transition from pipes to platforms requires a shift in thinking:

1. Markets: Consumers to Producers
2. Competitive advantage: Resources to Ecosystems
3. Value creation: Processes to Interactions

And interestingly he argues that platforms need interaction-first thinking, above user-first thinking

A whole host of new skills and functions are needed to establish and grow a platform.

Market making

• Standards: Define services in common ways to enable the market to operate.
• Quality: Make the quality of each service transparent, whether that is determined centrally or through the community
• Personalisation: Tailor each participants’ experience to ensure they are served the most relevant services from a large market
• Matching: Match supply with demand using data and algorithms
• Ecosystem: Enable an ecosystem of ancillary services through plug and play architecture

Growth

• Marketing: Attract both producers and consumers to the platform
• Virality: Design the platform to enable organic sharing with others
• Lock in: Enable the build up of cumulative value such as reputation, influence, collections or learning filters

Behaviour and culture

• Governance: Establish rules and decision-making procedures
• Culture: Set community norms such as through moderation and curation
• Behaviour: Reward desirable behaviour such as through UX or using friction
• Feedback: Facilitate feedback from consumers to producers
• Empowerment: Train and support market participants and devolve governance roles to them

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