Which companies come to mind when you think of a platform model? In business today, we often associate the term “platform” with big tech companies like Amazon, Uber, and Airbnb. However, on the Outthinkers Podcast, innovation expert Daniel Trabucchi explained, platforms are much broader than just the usual Silicon Valley darlings.
At its core, a platform refers to any business that enables multiple groups of customers to create value together. This includes everything from ancient marketplaces to product systems like the Sony Walkman. With platform thinking, businesses can look beyond linear supplier-customer value chains and begin to see ecosystems everywhere.
According to Trabucchi, there are four main types of platforms:
Product Platforms: These leverage a common core architecture or components, but allow for numerous customized offerings built on top. The Sony Walkman generated massive innovation through hundreds of products based on a standard cassette player platform.
Innovation Platforms:Â These offer a core product, but also enable others to develop complementary innovations on top of it. Apple’s iPhone became exponentially more valuable as outside developers created apps.
Transaction Platforms:Â These facilitate direct exchanges or transactions between different groups. Uber connects riders and drivers for ride-sharing transactions.
Orthogonal Platforms:Â These match two unrelated customer segments, with one side subsidizing the other. Newspapers connect readers and advertisers, for example.
The key is ecosystem innovation
A key advantage of platforms is that they allow ecosystem innovation, rather than just internal innovation. By encouraging outside partners to build on top of your offering, platforms tap into much greater creativity, specialization and scale. Value is co-created with others rather than completely internally controlled.
As your platform grows, network effects take hold. The more riders on Uber, the more attractive it is for drivers, and vice versa. Positive feedback loops help platforms scale rapidly.
Identifying your idle assets
To harness the power of platforms, Trabucchi suggests looking inside your existing business for underutilized assets, capabilities or relationships. How could these become the seeds of an ecosystem platform? Strong brands, distribution networks, technology infrastructure and access to customers are all potential idle assets than could attract partners.
For example, Telepass leveraged its network of highway tolling customers and infrastructure in Italy to quickly roll out a parking payment platform. An established brand and asset base can catalyze ecosystem innovation.
Adopt platform thinking
Traditional linear business models will remain relevant, but executives need to expand their thinking. Trabucchi suggests stepping back and looking at your business model with fresh eyes.
Rethink your various customer, supplier and partner relationships as a network of agents who could potentially create value together in new ways. Let go of tight control, and imagine how your business could spawn an entire ecosystem.
Start smallÂ
You don’t need massive disruption or investment to start exploring platforms. Begin by asking some simple questions:
- What other relationships could we enable?
- Who else could join our ecosystem?
- How might we co-create value with partners vs. doing it all ourselves?
Look for small experiments, quick wins and demonstration projects to plant seeds of platform thinking in your organization.
In today’s world, no company can innovate fast enough or meet every customer need on its own. Platforms present an opportunity to harness partners and customers as co-creators to drive mutual growth. With some creative thinking and an ecosystem mindset, your business can tap into the power of platforms too.
