We can be certain about one thing in the digital age: platforms make the web go ‘round. Knockout platforms create legitimate value for users.
Value stems from innovation, by reducing friction in the process of building new platform solutions. Before standardised platform tech was developed, anybody looking to build a mobile application would have to create everything from scratch; from the app, to the software that guides interaction.
Once the platform is in place, innovators can set out to build products and services that are capable of changing the world – without recreating the foundation.
This much, at least, is clear. What’s less clear is what exactly makes a platform interesting as a business. Which platforms will hit the ground running, and which will struggle to even get off the ground?
Platforms that monopolise the market
For many organisations, scale can be a powerful tool to protect business. Businesses can be built when platforms require enough scale to deliver value to users. This scale can provide the efficiency to win over new customers and keep the wheel turning.
Monopoly platforms tend to make for good businesses. But, it’s important to remember that these platforms don’t last indefinitely. As we’ve seen with the transition from on-site computing to the cloud, major technology or architectural changes can undermine provider position.
Platforms with network effects
Platforms that build network effects over time are powerful and hard to displace.
This strength can be seen in organisations like Apple and Google, with almost every developer turning to their smart platforms for development purposes. Users derive value from platforms as numbers grow – increasing the likelihood that they will stick around.
Platforms with proprietary assets
Whilst some organisations differentiate their positioning through strategy, others offer proprietary assets. This is less frequent in the world of open source innovation, but still there.
In the world of technology, IP isn’t the only proprietary asset. In fact, in a world with increasing levels of open source infrastructure, IP tends to be less of an advantage than you’d imagine.
Therefore, it’s critical that innovators trying to build platforms deliver value in ways others can’t emulate.
For platforms that monopolise markets, certain organisations win because the market can’t support multiple platforms. For platforms with network effects, certain organisations win because customer value compounds exponentially. For platforms with proprietary assets, platforms win because they offer something no one else can – because they’re the only ones that have access to it.
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