Applico’s core service offering is platform design. Let’s walk through the concepts and what an engagement looks like.
What is a platform?
A platform business is one that creates value by facilitating exchanges between two or more interdependent groups, usually consumers and producers.
Platform businesses have four core functions:
- Matchmaking: How does the platform connect a producer and a consumer?
- Building Liquidity: How does the platform recruit and retain enough producers and consumers to create liquidity?
- Setting Rules and Standards: What rules will govern acceptable and unacceptable platform behavior?
- Providing Functionality: What features should be included in your product to continually enable producers and consumers to unlock value from your platform?
There is a variety of platform types and it’s absolutely necessary to identify what the platform opportunity is and pursue the right strategies.
Q: What is Platform Design?
A: Business model design for enterprises innovating with a platform approach.
Platform design is a multi-week discovery engagement in which Applico partners with client teams to identify the platform opportunity available and best suited to the client’s needs. Then, the platform is fleshed out using frameworks appropriate to the platform type and we address the specifics, such as go-to-market strategies, rules and standards, matchmaking protocols, to just to name a few.
We specialize in helping established enterprise companies avoid disruption from scrappy startups. The first step is to identify the opportunity and ideal platform type for the client. How should competitors be handled – acquired or crushed? Should the platform be a development platform or a product marketplace?
Next, we work through the four Cs of the platform: create, connect, consume, and compensate. Where does the value emerge and how does it get passed between the consumer and producer? Finally, we identify the right tools and features to make the platform work at an optimal level and build an incremental plan for building up the functionalities.
A number of industries are ripe for platform disruption, whether by a savvy startup or an established business such as Amazon or Facebook. Once a platform takes over an industry, it becomes a winner-take-all scenario, wherein one, maybe two, companies dominate the market and control the flow of value. Beating a platform monopoly is nearly impossible once it’s achieved critical mass, so the advantage almost always goes to the first mover. To understand what we mean, here are a few industries in peril:
- Automotive – self-driving cars will leave automakers as mere hardware suppliers in an industry they created when a software development platform takes over the market, just like Google and Apple did with smartphones
- Hotels/Hospitality – if Airbnb built or acquired a system like Opera to manage hotel room inventory, hotels would become reliant on the startup to do business, unless they act now with a platform collating rooms available across different hotels
- Wholesale distributors – Amazon’s B2B unit is raking in more than a billion in revenue after less than two years by offering marginally-priced goods from office supplies to industrial resources, moving to price its new competitors; only a marketplace platform can spare them from Amazon’s disruption
Q: Is platform design available for startups and small businesses, too?
A: Absolutely. Virtually anyone can benefit from platform design.
Glamsquad serves as a perfect example for startup platform design. Two Columbia Business School entrepreneurs came to us to help them develop their idea for a beauty on-demand platform. We used our Platform Frameworks to ensure the platform and product would enable matchmaking, build liquidity, have enforceable rules and standards in place and provide functionality. Platform Design ensured that the mobile app product we built would become a company. That business has gone on to raise $24mm and is currently servicing thousands of clients per week in cities like NYC, LA and Miami.
We design platform business models for companies that will crush it in the connected economy. Our clients don’t want the backseat; they want to dominate.
To read more about our Platform Design process, order our book Modern Monopolies.