In today’s tech-driven business world, the term “platform” gets used in several contexts. It can mean a tech platform, intended as the place where software is executed in conjunction with hardware, or perhaps the digital space where it gets embedded.
In the business context, instead, the platform is a company that runs a model where, rather than offering a specific product, it enables the interactions between two or more players on that. One of the distinctive elements of platform businesses is network effects. Or the ability of the platform to get better for the next user as the previous user joins it.
I argue, there is a third type of platform that we can call “business platform” that is the platform platforms’, or the container of both the tech platform and the several platform businesses formed on top of that, combined with a new monetization and distributionmodel.
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Proprietary and closed
Would you think your smartphone is as useful as it is if it didn’t have its apps inside? Apple was the first company to stumble on a “Mobile Business Platform” made of the encounter of the iPhone, plus its software, which enables also the development of applications.
The hardware, though, works as the “physical platform” or the foundation for the software side to develop. The hardware, in this case, is closed and proprietary.
Platforms and Policies
The software built on top of the hardware is the foundation of the tech platform. Usually, there is a part of it, which is closed (like the operating system) and another open part (like the store or marketplace, on top of which third-party developers can build applications).
On the open side, the company owning the tech platform will set the rules, and the policies for third-parties to respect to keep the tech platform in line with the core business while allowing it to grow as it adds functionalities via third-party applications.
Developer’s Community
On top of the partially-open side, third-party developers will be able to build their own applications, which will become the add-ons and tools to expand the hardware and built-in software. Just like the iPhone has apps that make it more useful, so the developer’s community expands the ability of the hardware and software built on it.
Distritbution and Monetization
As the tech platform develops, and the developers’ community grows, it will also bring with itself a few distribution and monetization strategies, which are intrinsic to the business platform.
For instance, on the App Store, developers know they can make money in a few ways (advertising, in-app purchases, premium products, and more). This sort of distribution and monetization creates the basis for an entrepreneurial ecosystem to become viable.
Entrepreneurial Ecosystem
As the entrepreneurial ecosystem becomes self-sustained, as a side effect will enable the solid growth of the tech platform and, with it, the whole distributionmodel associated with it. From there, the platform platforms’ will build up.
Platform Platforms’
Once the conditions above are met, the Business Platform (or the Platform Platforms’) will become the foundation of the business success.
As a conclusive example, when Apple launched the iPhone, that was just hardware and proprietary software. It was a great device, but still not as interesting. As Apple launched its App Store, the iPhone turned into a tech platform, where those apps could expand its functionalities many times over.
As the App Store grew, it also consolidated distribution and monetization models that enabled. That is when the iPhone turned, from hardware to “Mobile Business Platform” which after a decade is still alive and thriving.
Key Highlights of Business Platforms and Technological Modeling:
Definition of Tech Platform: A tech platform is the digital space or environment where software is executed in conjunction with hardware. It may also refer to the company that facilitates interactions between multiple players rather than offering a specific product.
Platform Businesses and Network Effects: Platform businesses rely on network effects, where the platform becomes more valuable as more users join. This is because each user contributes to the overall value and attracts more participants.
Business Platform Concept: The idea of a “business platform” is introduced, which combines the tech platform with several platform businesses formed on top of it. This concept involves a new monetization and distributionmodel.
Apple’s Mobile Business Platform: Apple’s iPhone is cited as an example of a mobile business platform. The iPhone’s hardware serves as the physical foundation for the software side, and the closed and proprietary operating system enables the development of applications.
Closed and Open Aspects of Tech Platforms: Tech platforms typically have both closed (e.g., operating system) and open (e.g., app store) components. The company owning the tech platform sets rules and policies for third-party developers, allowing the platform to grow with third-party applications.
Developer’s Community: Third-party developers play a crucial role in expanding the tech platform by creating applications and add-ons that enhance the hardware and built-in software.
Distribution and Monetization: As the tech platform grows and the developer’s community expands, distribution and monetization strategies emerge, such as advertising, in-app purchases, and premium products.
Entrepreneurial Ecosystem: The distribution and monetization strategies foster an entrepreneurial ecosystem, making the business platform viable and self-sustaining.
Platform Platforms’ Emergence: Once the conditions for a self-sustained entrepreneurial ecosystem are met, the business platform (or platform platforms’) becomes the foundation of the company’s success.
Apple’s iPhone Transformation: The example of Apple’s iPhone is used to illustrate how the introduction of the App Store turned it from a hardware and proprietary software device into a thriving mobile business platform.
The Blitzscaling business model canvas is a model based on the concept of Blitzscaling, which is a particular process of massive growth under uncertainty, and that prioritizes speed over efficiency and focuses on market domination to create a first-scaler advantage in a scenario of uncertainty.
Business analysis is a research discipline that helps driving change within an organization by identifying the key elements and processes that drive value. Business analysis can also be used in Identifying new business opportunities or how to take advantage of existing business opportunities to grow your business in the marketplace.
A digitalchannel is a marketingchannel, part of a distributionstrategy, helping an organization to reach its potential customers via electronic means. There are several digitalmarketing channels, usually divided into organic and paid channels. Some organic channels are SEO, SMO, email marketing. And some paid channels comprise SEM, SMM, and display advertising.
A north star metric (NSM) is any metric a company focuses on to achieve growth. A north star metric is usually a key component of an effective growth hackingstrategy, as it simplifies the whole strategy, making it simpler to execute at high speed. Usually, when picking up a North Start Metric, it’s critical to avoid vanity metrics (those who do not really impact the business) and instead find a metric that really matters for the business growth.
The ICE Scoring Model is an agile methodology that prioritizes features using data according to three components: impact, confidence, and ease of implementation. The ICE Scoring Model was initially created by author and growth expert Sean Ellis to help companies expand. Today, the model is broadly used to prioritize projects, features, initiatives, and rollouts. It is ideally suited for early-stage product development where there is a continuous flow of ideas and momentum must be maintained.
The virtuous cycle is a positive loop or a set of positive loops that trigger a non-linear growth. Indeed, in the context of digital platforms, virtuous cycles – also defined as flywheel models – help companies capture more market shares by accelerating growth. The classic example is Amazon’s lower prices driving more consumers, driving more sellers, thus improving variety and convenience, thus accelerating growth.
The freemium – unless the whole organization is aligned around it – is a growthstrategy rather than a business model. A free service is provided to a majority of users, while a small percentage of those users convert into paying customers through the sales funnel. Free users will help spread the brand through word of mouth.
In the FourWeekMBA growth matrix, you can apply growth for existing customers by tackling the same problems (gain mode). Or by tackling existing problems, for new customers (expand mode). Or by tackling new problems for existing customers (extend mode). Or perhaps by tackling whole new problems for new customers (reinvent mode).
A Blockchain Business Model according to the FourWeekMBA framework is made of four main components: Value Model (Core Philosophy, Core Values and Value Propositions for the key stakeholders), Blockchain Model (Protocol Rules, Network Shape and Applications Layer/Ecosystem), Distribution Model (the key channels amplifying the protocol and its communities), and the Economic Model (the dynamics/incentives through which protocol players make money). Those elements coming together can serve as the basis to build and analyze a solid Blockchain Business Model.
In an asymmetric business model, the organization doesn’t monetize the user directly, but it leverages the data users provide coupled with technology, thus have a key customer pay to sustain the core asset. For example, Google makes money by leveraging users’ data, combined with its algorithms sold to advertisers for visibility.
In a business world driven by technology and digitalization, competition is much more fluid, as innovation becomes a bottom-up approach that can come from anywhere. Thus, making it much harder to define the boundaries of existing markets. Therefore, a proper business competition analysis looks at customer, technology, distribution, and financial model overlaps. While at the same time looking at future potential intersections among industries that in the short-term seem unrelated.
Technological modeling is a discipline to provide the basis for companies to sustain innovation, thus developing incremental products. While also looking at breakthrough innovative products that can pave the way for long-term success. In a sort of Barbell Strategy, technological modeling suggests having a two-sided approach, on the one hand, to keep sustaining continuous innovation as a core part of the business model. On the other hand, it places bets on future developments that have the potential to break through and take a leap forward.
A transitional business model is used by companies to enter a market (usually a niche) to gain initial traction and prove the idea is sound. The transitional business model helps the company secure the needed capital while having a reality check. It helps shape the long-term vision and a scalable business model.
The minimum viable audience (MVA) represents the smallest possible audience that can sustain your business as you get it started from a microniche (the smallest subset of a market). The main aspect of the MVA is to zoom into existing markets to find those people which needs are unmet by existing players.
Business scaling is the process of transformation of a business as the product is validated by wider and wider market segments. Business scaling is about creating traction for a product that fits a small market segment. As the product is validated it becomes critical to build a viable business model. And as the product is offered at wider and wider market segments, it’s important to align product, business model, and organizational design, to enable wider and wider scale.
The market expansion consists in providing a product or service to a broader portion of an existing market or perhaps expanding that market. Or yet, market expansions can be about creating a whole new market. At each step, as a result, a company scales together with the market covered.
In the FourWeekMBA growth matrix, you can apply growth for existing customers by tackling the same problems (gain mode). Or by tackling existing problems, for new customers (expand mode). Or by tackling new problems for existing customers (extend mode). Or perhaps by tackling whole new problems for new customers (reinvent mode).
In the FourWeekMBA Revenue Streams Matrix, revenue streams are classified according to the kind of interactions the business has with its key customers. The first dimension is the “Frequency” of interaction with the key customer. As the second dimension, there is the “Ownership” of the interaction with the key customer.
Revenue model patterns are a way for companies to monetize their business models. A revenue model pattern is a crucial building block of a business model because it informs how the company will generate short-term financial resources to invest back into the business. Thus, the way a company makes money will also influence its overall business model.
A pricing strategy or model helps companies find the pricing formula in fit with their business models. Thus aligning the customer needs with the product type while trying to enable profitability for the company. A good pricing strategy aligns the customer with the company’s long term financial sustainability to build a solid business model.
Gennaro is the creator of FourWeekMBA, which reached about four million business people, comprising C-level executives, investors, analysts, product managers, and aspiring digital entrepreneurs in 2022 alone | He is also Director of Sales for a high-tech scaleup in the AI Industry | In 2012, Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy.
