Archiv der Kategorie: Management

Here you find topics like planning, organization and leadership.

The challenges of a platform

Platforms allow nowadays new business models. While in the past a business had to build the necessary infrastructure itself, today it is possible to use facilities and organizations to implement the own business idea.

  • Authors use services such as Print on Demand to publish their books without a publisher.
  • Freelancers find their orders through appropriate online platforms.
  • Small business owners can rent phone services that allow customers to access the small company or schedule appointments.
  • Repair meetings or repair cafés use platforms, as The Restart Project, to reach the users.

You can already use a Fab Lab, in order to produce the own product (without the need of creating the appropriate production facilities). The potential applications are limitless. What are the challenges for such platforms?

A platform behaves like a natural organism, which is constantly fighting for survival in its environment. For this purpose, the following challenges should be mastered.

  • Exploiting network effects
    Everyone is in contact with everyone through the internet. This allows exploiting network effects. That way all protagonists of the platform have a wealth of knowledge at their disposal: publications, events, contacts and market information. That reaches as far as to a broad-based investigation of the wisdom of the crowd via forums and virtual events. In order to get the full impact of the network effects, it is important that not only biased offers can be found, but also complementary product ranges, which pursue additional approaches. The more interesting and diverse the platform is prepared, the more providers and customers are attracted and trigger the network effects.
  • Activating protagonists
    The entry threshold of a platform should be as low as possible. This can be achieved with a free membership that, for example, allows getting to know the entire offer in the first month for free. In order to involve the protagonists, contributions should be rewarded with bonuses and other incentives. Regularly changing competitions and special offers pull interested users again and again into the platform. Once a protagonist mediates between different people, this can be rewarded by monetary or other benefits.
  • Offering choices
    As soon as the users understand the platform, the widest possible variety is an advantage: not just accommodations in Berlin, but all over the world. In addition, the platform becomes interesting through contact people in the various areas, as it makes the technical websites more personal. The structure of the platform is a collateral benefit, since it promotes an indirect influence on the creation of mental models among the users. Appropriate search engines, glossaries and wikis offer users professionally focused information that pulls them constantly onto the platform.
  • Mastering the Tipping Point
    The first platform users find only few other users and above all just a few offers. Over time the platform gets filled and then develops a life of its own. The point, at which the numbers of users exponentially grow, is the tipping point. Facebook had reached this point after three years. Until then, a lot of effort is needed from all people concerned, so that the platform does not collapse before it reaches fruitful user numbers. In order to avoid this, platform providers do everything they can to attract interested parties with as little hurdles as possible to enter the platform: free membership, great value at low cost, and an interesting start-up of content through the cooperation with content providers.
  • Developing continuously
    The efforts to expand the platform must be made by all three protagonists. The providers should continuously expand their existing offers and product range. Users contribute to the page’s attractiveness with their forum posts and content provision. The operators are in charge to continuously enhance the platform with additional functionality and the linking of existing contents. The more dynamic the platform evolves and grows, the more new protagonists are attracted.

Bottom line: Platforms do not automatically achieve the desired effect. The platform providers face the challenges of exploiting the network effects, activating the protagonists, offering a wide variety of choices, mastering the tipping point, and eventually enhancing the platform continuously. Only the proactive management increases the likelihood of coping with the tipping point and the other challenges.

What constitutes a platform

New business models become reality, due to the saturation of the economy with computers and networks. Uber, AirBnB, Alibaba, Youtube and many more have created platforms, where service providers can meet and agree with interested people. These services poach, up to now, in the traditional business fields of taxi companies, hotels, department stores and media corporations. Typically, these platforms do not feel in competition with traditional providers. No drivers are hired, no hotels are operated, no goods are moved and no content is generated. In fact, they are not subject of existing regulations, which, for example, taxi drivers have to meet: a clearance certificate free of traffic offenses and other criminal acts, a medical certificate, the technical standards of the vehicles, the provisions of the passenger transportation law. In this sense, today’s platform providers are not commercial service providers in the above sense, but they are simply offering a place, where the providers and users can get together. What constitutes such a platform?

In the first step, we look at various building blocks, which form together the platform.

  • Protagonists (roles)
    A platform connects three groups of people. 1) The producers, who offer certain products respectively services. 2) Consumers, who are looking for these products and services. 3) The brokers, who connect producers and consumers and operate for this purpose a platform.
  • Added value for the protagonists
    The unique selling proposition of a platform, the USP, is the added value that the providers and buyers of the services as well as the intermediaries draw from the platform. A common interest may be the business sector (e.g. passenger transportation, accommodation, consulting and coaching services for companies). The producers have direct access to individual consumers. They find similar services bundled under one umbrella. The mediators benefit from the network that evolves over time.
  • Marketplace (Point of Sales)
    Services become visible, comparable and accessible on one platform. For this purpose stands are built, just as in a marketplace, in which the providers present their deliverables. The platform operators have the task to prepare the marketplace in such a way that allows the providers to present themselves in an easy way and that provides the buyers at one place the desired deliverables. This includes measures that ensure the reliability of the providers, make the offers comparable, enable the exchange of information and even ensure trustworthy payment transactions.
  • Information hub
    A platform lives on the available content. These are e-books, brochures, white papers that are ultimately provided by all protagonists. In addition, information brokers can place here payable content. The appeal of the platform increases eventually through appropriate interaction functions: forums, surveys and the like.

Bottom line: The platform is the basis for many new business models and at the same time the hub for a wide variety of business areas. Producers, consumers and brokers exchange their contributions under one umbrella. Like traditional market places, every participant can meet its needs here: offering and buying services and exchanging information. The variety of possible uses and the satisfaction of the interests of all protagonists constitute the platform.