The power of platforms [team]

posted in: Architecture | 0

In one sense, platforms are nothing new. If we define them as layers of infrastructure that impose standards on a system in which many separate entities can operate for their own gains, then clearly any nation’s railway system, once it standardizes on track gauge, counts as a platform. Likewise, its phone system, and its shipping system, having converged on global standards for pallets and shipping containers.

But platforms have grabbed unprecedented attention in the digital era.4 This is thanks partly to a gold rush mentality, since the advent of that ultimate platform of our age, the Internet, spawned opportunities for new, electronic platforms to be built in every realm of commerce.

The deeper reason that platforms have lately captured so many business leaders’ imaginations is that they enable the “pull-based” approaches which have long been seen as the future of serving customers profitably.5 In the past, sellers have been limited by the economics of production and distribution to “push-based approaches,” meaning that they simply made an efficient batch size of what they sold and foisted it onto the marketplace. This of course meant investing effort into anticipating what the customer demand might be, using that to create a sales forecast, and then procuring the right resources and people to produce the appropriate quantity of goods. A push-based approach is very efficient if the forecast is accurate—and can at least be profitable if, failing that, the marketer is able to alter demand with its pricing and advertising. But in today’s world, those have become much bigger “ifs.”

Leave a Reply