There is a lot being written about Platforms and I try to read all I can on the subject. You should too. A Platform, properly implemented and in the right context, provides a classic (see Porter, Competitive Advantage, a must read) foundation for a sustainable competitive advantage.
What is disconcerting about all that is written about Platforms is that, very rarely, is the term defined and when it is, it becomes clear that the writer is only talking about a limited number of the dimensions that define a Platform.
So, I am going to attempt to provide a complete and (pretty) well defined definition for the term Platform as it relates to a technology enabled product offering. I say attempt, because I am sure that my definition will be incomplete as my definition will be biased by my knowledge and experience. I therefore welcome comments on this post and will revise it as necessary.
All of that said, I believe that there are 5 dimensions to a product platform that is enabled by technology:
- Function—A Platform is made up of Components and a Component is made up of Functions. In some cases, a Component is an application (like eBay) and in others it is a physical entity (like an iPhone). Most people are familiar with the Platform that surrounds both eBay (like PayPal and Marketplaces) and the iPhone (like App Store or iTunes). But, the entire hierarchy begins with a function. On the iPhone, it might be dialing a phone number (on the phone) or entering an entry (in the calendar) or more generally providing an environment that can host a variety of applications. Nonetheless Function define the Components and Components define the Platform.
- Members (supply-side and demand-side)—A Platform is not meaningful unless it has users and a key attribute of a successful platform is that it has many users who use the platform frequently and (ideally) for high value activities, i.e. ones that they will pay for. And, it is important to remember that there are two sides to a transaction on a platform and a successful platform extracts rents from each party that derives value from participating in the transactions. More on the role of all the participants in the Platform experience in a later post.
- Data—Data is both: 1) a byproduct of processing transactions on a Component and through the Platform; and 2) a valuable resource to be leveraged by the Platform’s owner/operator. A good platform has components that complement each other not just from a functional point of view, but leverage data (across the Platform) in ways that increase the value of the data for the Platform’s members and the Platform’s operator/owner. Credentials (for single sign-on) are a good example of data that can be productively leveraged across a Platform making it both more secure and easier (across Components) to use. Credentials provides demand-side members with a single unified identity across the platform making it easy to use the Components which generates more opportunities for the Platform’s owner/operator to extract rent for their Platform related services by their customers who are more likely to use multiple complementary components if they both are valuable and easy to use.
- Interfaces—Integration between a Platform’s components and external systems is accomplished through interfaces (usually and API). The interface facilitates a secure and well defined interoperation between the platform and outside parties who provide extensions to the platform that the platform’s owners do not care to offer. The best-known examples of this are the services provided to app developers for Apples IOS platform which not only provides for an API, but also a rigorous certification process and marketplace (the App Store) where third parties can sell their extensions to Apple’s iPhone platform.
- Technology—The rolling chassis (to use an automobile analogy– https://en.wikipedia.org/wiki/Rolling_chassis ) for a technology enabled Platform is the technology that facilitates the interactions (through Functions) between members both generating and consuming Data and supporting Interfacing between the Platform and third party applications that extend the capability of the Platform. Examples of technology include:
- iOS, Android, Windows, and Mac OS, i.e. operating system;
- TCP/IP, APIs, i.e. communication protocols; and
- Application development, database, UI, analytics, i.e. tools and utilities. And, these can be packaged and delivered (and often are) as IaaS (Infrastructure as a Service) and PaaS (Platform as a Service) when these services are cloud-based.
While not all Platforms fully exploit all five dimensions outlined above, one cannot plan to implement a (or even evaluate an existing) Platform without considering all five facets as outlined above.
In my next post, I am going to talk about how Function, Members and Data come together (or not) to make a Platform a success or failure.