the platform playbook

We think the shift from pipes to platforms is the most important business shift so far this century for one very simple reason: platform businesses disrupt and dominate vast industries within a few years of launch. 

Last century, in order to scale a business had to owns the means of production: to get bigger they had to scale internally. In the 21st century, that’s changed. The fastest growing and most valuable companies in the word today scale externally.
 
The difference between pipes and platforms is that instead of creating the supply and selling it downstream to consumers, platforms don’t own the means of production. Instead they are like marketplaces: they provide the infrastructure, the space, the place for producers to sell to consumers. The pioneers of this platform model are:
 

• Airbnb — world’s largest hotel company, owns no hotels
• Alibaba — world’s largest retailer, owns no inventory
• Uber — world’s largest taxi company, owns no taxis

 
Rather than to produce, these companies are platforms for other producers to sell to consumers.
 
New ways to create and capture value
Platforms capture value in a new way: they’re the mechanism making the exchange of value between the producers and consumers (of value) as friction-free as possible. Why is this happening today? The trends driving the adoption of platforms are:
 

• We’re all connected 
• De-centralized production: it’s easy for the small guys to be producers (and platforms mean they can compete with the big guys) 
• The incredible power of artificial intelligence and algorithms — which makes matching possible (just think how hard a cab company’s telephone operator would have had to work to match up all those people wanting cabs with the cabs on Uber) 

 
Interactions first
Successful platform businesses are interaction-first businesses: the most important thing they do is make the interaction between the producer and consumer as frictionless as possible.
 
Designing the Platform around The Core Interaction
The Core Interaction is the most important aspect of a platform and all design decisions should ensure the repeatability and sustainability of the core interaction. 
 
The idea is to design for the core interaction first then lay out the other interactions, or edge interactions. Then think about the Core Value Unit (Who, what, where, when, how good (and who says how good it is). In the uber example that would be the following: 
 
The Ride contains the key data to make the interaction happen:

1. supplier listing (note: screened, checked for quality) 
2. geography 
3. availability

The platform’s role is to match that with the consumer, whose data is similar (if opposite):

1. consumer listing (note: screened, checked for ability to pay)
2. geography
3. availability (or, in their case, desire, as in “I want a cab now”)

 
Questions to ask while designing The Core Interaction

• What is the core interaction that your platform enables? 
• What is the unit of supply created on the platform? What is the supply or inventory created on your platform? 
• Who are the producers of value? What motivates them to produce? 
• Who are the consumers of value? What motivates them to consume? 
• What channels are used by producers to create value on the platform? 
• How does the platform manage access control for producers on these channels? 
• What channels are used by consumers to consume on the platform? 
• What filters? 
• What tools and services should you provide to enable the core interaction? 
• What tools and services should you provide to enable creation? 
• What tools and services should you provide to enable curation? 
• What tools and services should you provide to enable customization? 
• What tools and services should you provide to enable consumers to consume? 
• How do the tools help your platform to pull, facilitate, match? 
• What currency does the consumer provide to the producer in exchange for value? 
• How does the platform capture some portion of his currency? 

 
Questions to ask while designing The Core Value Unit

• What is the core value unit? What is the unit of supply on your platform that defines value for a user? 
• Who is the producer? 
• How does the producer create the core value unit? 
• Who is the consumer? 
• How does the consumer consume the unit? 
• How is the quality of the unit determined? 
• What is the filter used to serve the unit to the customer? 
• What consumer actions help create the filter? 
• How does the consumer consume the relevant units? 

 
Supply-side relationship is key
Platforms Open, Participatory, they’re built for Plug & Play: it’s key that it’s easy for suppliers to plug-in to them. And they need to keep Pulling in the suppliers. So, how can you design “pull”? How can you get suppliers to willingly, regularly produce core value units? Supplier relationship management — you could call it community management — becomes key.

(To be continued)

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​My name's phil mora and I blog about the things I love: fitness, hacking work, tech and anything holistic. 
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Head of Digital Product
thinker, doer, designer, coder, leader