The rapid change of technology has facilitated the vast mutation of business models of companies around the globe. Business as a platform has always existed but companies like Uber, Facebook, AirBnb and Google have taken the business model to greater heights.
This morning I got an email from Sangeet Paul Choudary, author of the Amazon bestseller entitled Platform Scale. Whenever I get his email I am excited as I know that he will have lots of insights into Platform thinking business models. Sangeet is truly the world’s leading Platform Thinking strategist and has worked with leading minds and companies in all industries. I had the privilege of meeting him and the other two platform strategy gurus namely, Geoffrey Parker and Marshall Van Alstyne (co-authors of Platform Revolution) earlier on this year at the 2015 MIT Platform Strategy Summit.
The special thing about this morning’s email is that he delivered 16 principles for digital transformation adapted from his life’s work especially the book, Platform Scale. The Platform Manifesto is a collection of principles that succinctly defines how different aspects of business transform in a world of platforms. The principles as outlined by Sangeet are as follows:
- The ecosystem is the new warehouse.
- The ecosystem is the also the new supply chain.
- The network effect is the new driver for scale.
- Data is the new dollar.
- Community management is the new human resource management.
- Liquidity management is the new inventory control.
- Curation and repetition are the new quality control.
- User journeys are the new sales funnels.
- Distribution is the new destination.
- Behaviour design is the new loyalty program.
- Data science is the new business process optimisation.
- Social feedback is the new sales commission.
- Algorithms are the new decision makers.
- Real-time customisation is the new market research.
- Plug and play is the new business development.
- The invisible hand is the new iron fist.
Quotes by Sangeet:
“Pipes have long served as the dominant business design for the industrial economy. Firms build products or craft services, push them out, and sell them to customers. Value is produced upstream and consumed downstream, creating a linear flow of value, much like water flowing through a pipe. In effect, pipes were designed to enable the flow of value in a straight line.
Pipes appear in nearly every area of modern industry. The traditional manufacturing supply chain runs on a pipe model. Every consumer good that finds its way into our hands comes down a pipe that constantly adds value to the product. Our service organizations work like pipes; they aggregate the resources for service provision and deliver those services to clients. Traditional media – television, radio, and newspapers – are pipes pushing content to us. Our education system often works like a pipe where teachers push “knowledge” to receptive students. There is a linear movement of value from a producer to one or many consumers in all examples of pipe businesses.”
“We are in the midst of trans-formative shift in business design as business models move from pipes to platforms.
Three forces today – increasing connectedness, decentralized production, and the rise of artificial intelligence – are driving a whole new design for business.
The emerging design of business is that of a platform. Some of the fastest-scaling businesses of the last decade – Google, Face- book, Apple, Uber, and Airbnb – leverage the platform business model. These businesses create a plug-and-play infrastructure that enables producers and consumers of value to connect and interact with each other in a manner that wasn’t possible in the past. Facebook provides an infra- structure for users to connect with each other and enables interactions between them. Uber coordinates drivers and passengers toward economic exchanges. Many businesses today act as platforms enabling interactions among their participants.
Platforms allow participants to co-create and exchange value with each other. External developers can extend platform functionality using its APIs and contribute back to the very infrastructure of the business. Platform users who act as producers can create value on the platform for other users to consume.
This changes the very design of the business model. While pipes created and pushed value out to consumers, platforms allow external producers and consumers to exchange value with each other.”
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Edzai Conilias Zvobwo 
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