Thursday, July 20, 2017

Platform Strategy Primer

This month I was invited by a partner to attend the 2017 Platform Strategy Summit at MIT Media Lab (Cambridge, MA) organized by the “MIT Initiative on the Digital Economy”.

This blog is the short synopsis of proceedings, with some judgemental inputs from my side. Therefore, nothing here is my IP. I am, however, writing a separate book – “Platform or Pipe-Dream” plans to be publish in Q4 2017.

What are Platforms?
Platforms are Interactions enabled by Infrastructure. They are environments, computing or otherwise, that connect different groups and derive benefits from others participating in the platform. Platforms externalize the value creation.

Platform Strategy - Primer
A platform strategy is an approach to entering a market which revolves around the task of allowing platform participants to benefit from the presence of others. It is not about creating technology infrastructure, rather about creating beautiful interaction between producers and consumers
Interaction design should be first… this is something eveeryone today knows... use “Interaction Design” to enable the “design of Infrastructure”. Goal is reducing friction on the way of Interaction. Frictionaless interaction yields Networking Effect. A positive Networking Effect is the mantra and key to success. 
  • Competition will occur at any level. The Business model must be prepared accordingly. 
  • Prepare for Viral-ity. (This is different from Word of mouth).
  • Strtaegy must be targeted towards selling the "Reduction in Transaction cost".
Platform Strategy Mission Statement should be: Dynamic, borderless and collaborative; Universal source of information; Global ecosystem of contributors; Increases access and usability; offers users choices

Connect with Business Model
Business Model is not around creating Software and selling them… rather it is now about Data that gets created when software is used. Business model should be centered about monetizing those data.

"Level Strategy" is key. Competition will occur at any level. The Business model must be prepared accordingly. Model should be prepared for creation of new behavior, becuase Platform creates new market, and new opportunities.

Cost of expansion is virtualy Zero. Can be predicted easily... most of the time it is going to be linear. Understanding and guessing Inflection Point is key for modeling. 
Another notable feature - Marketing cost not required, once the inflection point is reached

Model for Multisided Platform. Not only 2-sided platform

Build the Platform for Success
Platform features alone is not sufficient. Reducing the friction to connect is most important
Remember that the boundaries are alterable (Consumers can become producer and vice versa)

Possibly the single most important feature you will need  is I call - "Learning filters" - similar (but not same) to personalization 

Platform components - Toolbox, Magnet (attract), Flow (Matchmaker), Governance & Security

Seeding users is the most critical step to platform success. Goal is to reach inflection point
Platform gap happens when we say… Let us build the infrastructure… instead of saying lets us build interaction.   Ensuring Consumer and Producer success. How to distribute focus on Stakeholders not only Shareholders.

Beware of the risk of building a monolithic system

Pipe vs Platform Strategy difference
Value Creation using “Platform Strategy”. Earlier it used to be through “Product or Pipe Strategy”
Pipe – A linear model, uses resources to compete for efficiency… At the other end is the Consumer for whom value is created. Pays using currency. Pipe enables processes. Process was created and made more efficient. Goal was to improve pipe process through efficiency and repeatability (for scaling)… increase quantity and quality for higher productivity.
Platform – No longer competes for resources rather provides an ecosystem through which others also (including us) can create value. Platform enables Interaction. Goal should be to increase Quality and Quantity of Interaction that is happening on the platform. Scalability is achieved using “Network effect”
Pipe to Platform Shift: a) Resource competition is not required. Rather an Ecosystem is needed b) Processes to Interaction

Also to note:
  1. Ecosystem is the new warehouse. You do not need to own everything, but we need to have everything in our ecosystem
  2. Liquidity is the new inventory
  3. Community management is new HR/employee
  4. Curation & Reputation is new Quality Control
  5. Customer journey is new Sales funnel
  6. Data is new Dollar