Platform Innovation // Blog

What is a Platform?

A platform is a business model that creates value by facilitating exchanges between two or more interdependent groups, usually consumers and producers.

Exchange is one of the most fundamental parts of being human. Successful platforms facilitate exchanges by reducing transaction costs and/or by enabling externalized innovation. As a byproduct, platforms also create ecosystems and leverage their inherent network effects. With the advent of connected technology, these ecosystems enable platforms to scale in ways that traditional businesses cannot.

what is a platform applico

 In the Connected Revolution, platform businesses

built on technology will create the most value.

It’s important to remember that a platform is a business model, not just a piece of technology. A lot of people make the mistake of conflating a platform with a mobile app or a website, but a platform isn’t just a piece of software. It’s a holistic business model that creates value by bringing together consumers and producers.

Platform business models aren’t new. In fact, they’re as old as human civilization itself – all the way back to early marketplaces, bazaars and auction houses. Think of a bazaar in ancient Rome. The bazaar owner leases booths to merchants. The merchants put products in their booths. The bazaar owner then advertises to customers to come to the bazaar. The customers consume the goods that the merchants, the producers, are offering to sell. The platform, the bazaar, facilitates these exchanges by bringing together the consumers and producers.

In the 20th century, we saw platform business models in the shopping mall and auction house. Like their predecessors, these businesses have mostly used brick-and-mortar locations to facilitate exchanges. But thanks to connected technology, platforms can now facilitate the exchange of value produced by decentralized networks of individuals. The result is that platforms can now facilitate exchanges at an unprecedented scale.

That’s why in the Connected Revolution, platform business models built on technology will create the most value.

At society’s current pace, it’ll take multiple generations to adopt platform business models. But we believe that’s far too long given the value platforms create. Bloomberg has also recognized that this future is not far off in their review of our book Modern Monopolies. So we became the world’s first full-service Platform Innovation™ Company, focused on delivering upon our mission of organizing the world’s exchange of value through technology.

The core value being exchanged is (by platform type):

1. Services marketplace: a service
2. Product marketplace: a physical product
3. Payment platform: payment (P2P or B2C)
4. Investment platform: investment (money in exchange for a financial instrument, be it equity or a loan, etc.)
5. Social networks
a social network in which the core transaction is a double opt-in (friending) model of interaction
6. Communication platform: direct social communication (e.g., messaging)
7. Development platforms
Closed development platform: software built across access to data (usually via an API)
Controlled development platform: software built in a controlled, integrated development environment
Open development platform: open-source and free software
8: Content platforms
Social: a content platform in which the core transaction focuses on the discovery of and interaction with other people
Media: a content platform in which the core transaction focuses on discovery of and interaction with media

 

Additional platform definitions

Product and Services
Commoditized: a platform in which the good or service being exchanged has a few relevant characteristics that determine quality for consumers
Non-commoditized: a platform in which the good or service being exchanged has a large number of relevant characteristics that determine quality for consumers

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