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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.

Game rules – the ideal metaphor for the elements of Governance

All team sports have the playing field, the types of player, and the rules of the game in common. From the beginnings of football in China, 4000 years ago, rules are not passed on. However, it is believed that it was initially a training program for soldiers. From less than 1800 years ago, rules are known, which had to get control on the physical powers of the players’. Then, for over a thousand years, the game was forgotten in Europe. The restart in 1848 began immediately with the establishment of football rules, which are refined until today. They include a specific culture, the distribution of the playing field, general parameters and possibilities for sanctioning, as well as clear roles. The actual game is developing within this framework in thrilling variants – the same way as the business in the framework of the governance. This text also expands the purpose of the Governance!

The governance provides the following elements: the principles, the business alignment, various definitions and above all defined roles.

  • Principles
    In soccer the fair play, the compliance, as well as the aggressive and defensive strategies are common principles. In business they define the culture and the self-understanding of a company. They should answer the following questions: Where are we within 10 years? What are our characteristics? Where are we from? What is our history? Why do we exist? What’s our purpose? What makes us successful? What’s our USP? How do we see ourselves? What are our values and beliefs? What are the attributes of our products? The principles behave like cement that stabilizes the mortar in a way that it holds together.
  • Business alignment
    The teams agree on which half of the playing field is assigned to which team. The objective is to score a goal. Also in business the areas come to an agreement – endorsed by the leading team. The following aspects are important: What is the purpose of the unit? How do we exchange our ideas? How do we cooperate? Which roles (TAR) are available? How to find an agreement? The business alignment works like the mixture ratio of sand, lime and water that depend on the usage.
  • Glossary
    The different sports have comprehensive, special jargons, which one has to learn. The business also uses a special vocabulary. The glossary determines this terminology of the company. Therefore the following questions are important: Which terms are crucial for the cooperation? How do we get clear formulations? How do we guarantee completeness? When is a term described correctly? Also mortar consists of a set of terminology that describes the variants (e.g. masonry mortar, plaster mortar) as well as the components (e.g. sand, lime).
  • Critical success factors (CSF)
    The game is determined by factors that the coach wants to improve through intensive preparation, e.g. passes, goal accomplishment and other standard situations. In business the CSFs are the key figures of the success that are crucial for surviving and which improve the competitive ability. In the following areas the threatening aspects can be found: within the processes, in the market, at the customer side, within the applied technologies, within the information, within leadership etc. You also have to take care of certain CSFs, when you use mortar, e.g. the temperature or the mixing ratio.
  • Metrics
    In team competitions the scored points, i.e. goals or baskets, are the ultimate measure. The more comprehensive metrics in business provide generic metrics. Based on a Balanced Scorecard the growth, customer and financial perspectives as well the internal perspectives such as status of the life cycle, the processes, the quality and the governance are described. The relevant metrics are for example the individual mixings of the mortar.
  • Guidelines
    The rules of the game in football are globally valid and evolve continuously, as one can see in the video replay referee. The guidelines in the company are more extensive, cover all fundamental regulations and are reachable to all members of the unit. The older the enterprises, the more rules have been accumulated concerning organization, personnel, report system, laws, values, and the management of IT, risks and changes. The same way various use cases determine the composition of the mortar.
  • Roles
    Striker, goalkeeper, referee and linesman are an extract of the roles in soccer. In business, the roles provide a generic approach to individual job descriptions. They consist of tasks, authority and responsibility. Tasks are well defined, if the functions, goals, processes and available resources are clear. The authority regulates the powers concerning decision, control, information etc. The responsibility determines the qualities that should be fulfilled, like completeness, correctness or timeliness. There are also various roles when you use mortar: brick layer, master of concrete, foreman, etc.

Bottom line: Governance, with its principles, business alignment, general determinations and roles, provides a simple basis for the interaction of the different areas. Game rules, as in football, provide similar definitions like e.g. the marked out playing field and the roles of the different participants. For that reason, the game rule is an ideal metaphor for the components of governance.