Had the internet not come up, we would never have seen the emergence of platform business models. Unlike pipes, platforms do not just create and push stuff out. They allow users to create and consume value. At the technology layer, external developers can extend platform functionality using APIs. At the business layer, users (producers) can create value on the platform for other users (consumers) to consume. This is a massive shift from any form of business we have ever known in our industrial hangover.TV Channels work on a Pipe model but YouTube works on a Platform model. Encyclopaedia Britannica worked on a Pipe model but Wikipedia has flipped it and built value on a Platform model. Our classrooms still work on a Pipe model but projects like eduBuntu is turning on the Platform model for education.
Platforms face two key challenges:
1. Solving the chicken and egg problem of getting both content producers and consumers on board;
2. Ensuring that producers keep producing, and create value.
Without solving these two challenges, driving site traffic or app downloads will not help with user acquisition. A platform requires us to build with both producers and consumers in mind. It requires us to build tools for producers (e.g. video hosting on Popcorn-Cloud) as well as for consumers (e.g. video viewing, voting etc.). Keeping two separate lenses helps us build out the right features.
Without the advent of the internet, the world would still be dominated by pipe-businesses. The internet, being a participatory network, is a platform itself and allows any business, building on top of it, to leverage these platform properties. Every business on the internet has some Platform properties. E-commerce stores and single-user SAAS work on pipe models. However, by virtue of the fact that they are internet-enabled, even they have elements that make them platform-like. Blogs allow comments and discussions.
Readers co-create value.
The main interaction involves the blogger pushing content to the reader, but secondary interactions (like comments) lend a blog some of the characteristics of platforms. E-commerce sites have reviews created by users, again an ‘intelligent’ platform model.
So, in the future, every company will be a tech company. We already see this change around us as companies move to restructure their business models in a way that uses data to create value. We are moving from linear to networked business models, from dumb pipes to intelligent platforms. All businesses will need to move to this new model at some point, or risk being disrupted by platforms that do.
Better understanding your users’ needs will help you to create value for, and derive value from, your user.
As an extended function of proper UI design your platform can create a highly targeted and personalised user experience.
You can essentially steer user decisions to reach key performance indicators, directly translating into sustained growth.