Seven platform Insights
Here are seven tips for platform management to help focus on the essential parts of the platform business. This list is not meant to be comprehensive and maybe not hold to be true at all times either. But it gives you a holistic understanding of success factors managing the platform business model.
1. Business model focus
The platform is, first and foremost, a business model that is about facilitating a network from 2 or more sides. Therefore, an multisided platform leader needs to have a transparent profit model related to the facilitation and a network model for creating a valuable network, with strategic plans for both sides of the network to create value in the interaction.
2. Value transaction focus
As a transaction facilitator, it is essential to know both sides of that transaction and their VP. A classic mistake is that companies lose focus on the transaction and focus on one of the sides. Instead of having a transaction focus, one goes back to the dominant line of thinking with user/customer focus.
3. Design around core transaction
An extension of the value transaction involves designing channels that are easy to "plug" into and filter solutions that ensure quality and relevance. One must have the right tools and services that enable, increase value, and support during the transaction (play).
What happens when the core transaction gets bypassed? Read more about platform leakage:
4. Network effects
If you know the value transaction well and the symmetry in your market, you must choose the side and a strategy that breaks the conceptual loop, build density (relevance) in the network, and a positive feedback loop. An extra focus on curation and tools related to this will be crucial for achieving network effects.
Read more about network effects:
5. Currency first, then capture
In every transaction, there is a currency to be exchanged and extracted. Therefore, it is essential to clarify which currencies to use in any interaction. You need to design the transaction process so that the correct currency is available to complete and increase the value of the transaction. This goes whether it is value capture when there is engagement with a currency in the form of rating and sharing with an external network, better reputation or “just monetary”.
6. Emergence management
It is the one who is most adaptable who survives. Dynamic capabilities with evolutionary fitness to seize, sense, and transform are crucial in this fast-changing business environment. Therefore, it is essential not to get caught up in a red queen dilemma or system thinking but to focus on what is vital to improving the core value transaction and its actors.
Read more about platform management:
7. Don’t fall in love with your MVP
When you want to realize your platform idea, be open and play with the frame and the delivery of this idea, make a minimum viable product (MVP), test, and ask for input. Even try it in your local market and network. This is often where it goes wrong with many great ideas that could be great. The testing of the product comes into the linear business model, with owners and stakeholders that only know the "old pipe business way" of doing business. Invest in assets, do manual tasks, hire people, build a sales corps and channels. Invest in dynamic marketing and so on...
Many startups already cripple their possibilities to scale and go global by limiting their options in the startup phase; building a high marginal cost, get owners with no knowledge of the platform business model, develop their network outside their platform and limit their possibility by building non-scalable legacy systems that often only are made for front end purposes, often by web designers.
You and your stakeholders need to get your priorities right to move upwards from the "proof of concept" phase. To be able to scale, you need to understand how to scale with the platform business model.