Gartner makes the point that the first example of a platform business was not conceived in Jeff Bezos’ garage in 1998. Rather, it dates back to the Roman Forum of 500 BC.
The common starting point was that the Forum and any digital platform are both there to connect buyers and sellers in a location where commerce can take place for mutual benefit.
The big difference is the location of that marketplace. It has gone from the physical to the virtual and is now being integrated at the edge.
Imagine what the Romans could have done if they had the same digital infrastructure as we have today.
They had an amazing network of highways, which were the infrastructure marvels of the classical world, but imagine the commercial potential of olive oil wholesalers in Rome using platform business to buy and sell from growers in North Africa and Spain. The Roman legions? What an opportunity for a procurement platform!
In our era, platforms have developed out of early ecommerce to become the dominant business model. Better and more widespread connectivity, APIs, geolocation technology and the cloud have all been significant enablers to turbo charge the platform concept.
The fastest growing businesses in the world are all platform based, from Amazon to Uber to Airbnb to Apple, although the latter uses a “walled garden” approach to keep participants inside its platform.
Platforms enable collaboration—potentially turning competitors into partners—and can take the friction out of supply chains.
A bank, for example, can create an API marketplace where third parties can build new services. A car maker can create a platform where its suppliers can connect better with end customers, the buyers, and give them better service.
The most exciting platforms are the most disruptive ones and it is this which keeps people up at night, searching for the next big idea to transform their business and disrupt their industry before someone else does.
It might be smart and efficient to sell products online rather than in-store, but what businesses are really looking for is for the light bulb of transformation to be switched on and for the next business model to emerge.
There’s nothing wrong with enhancing an existing business ecosystem with a better platform, but the search for disruption is now a constant.
There is a roll call of disruptive platforms which is always quoted, and they are names checked above. But there are a few others out there that are smaller ecosystems that disrupt in innovative ways.
Hello Tractor, for example, aggregates financing, contractors and technology providers into a single platform, and adds a tractor-as-a service business for farmers who can’t afford their own machines.
The Nigerian start up is now in a partnership with John Deere and aims to bring 10,000 tractors to the African continent. That will not only be transformational for the platform, but for many farmers working in the agricultural sector.
The platform concept can extend to commodities like water. Xylem manufactures water infrastructure, but has acquired analytics and solution providers in the internet of things (IoT) space. Its platform combines uses such as smarter water use and smart control.
The sharing economy has driven many of the new platforms, from the biggest and most famous to a slew of startups sharing time in commercial kitchens.
Other startups, such as Sydney-based Benchon, are in the human services area. Benchon aims to unlock value for a diverse number of stakeholders through allowing businesses to earn extra revenue by loaning their employees to other businesses in need.
To work successfully, platforms need to offer something to everyone in the ecosystem.
So, in Benchon, the employees can maintain continuous employment, rather than being engaged on stop-start contracts, and also gain valuable experience in other organizations.
So if there is a key feature of successful platforms, it is that everyone in the ecosystem can benefit. If it is all one way, then there is no incentive at all. So, the more stakeholders you incentivize, the more successful the platform is likely to be.
With Airbnb, for example, a whole sub-industry of property management has developed besides the original transactors, which began with a triangle between the homeowners, the renters and the platform.
Another reason for platform success is that it unlocks value, or creates new value.
Homeowners and car owners can now monetize their assets in a way they never could before, but this has come at the expense of hotels and taxi drivers, whose business models have been forever disrupted.
That is progress, and should be welcomed because the economy needs to transform to stay healthy.
Platforms have been with us, in one form or another, for over 2,000 years.
They aren’t going anywhere, but in 2020 they are on the cusp of a next stage of development which will transform many aspects of commerce and stakeholder interactions in ways we are yet to conceive.
This article is part of a CDOTrends eGuide. You can download the entire copy here.
Photo credit: iStockphoto/patrick8484