business-platform-theory

Business Platform Theory: The Platform Platforms’

Business / By / January 15, 2022

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 distribution model.

Proprietary and cloed

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 distribution model 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.

Connected Business Frameworks

Blitzscaling Canvas

blitzscaling-business-model-innovation-canvas
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 Framework

business-analysis
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.

Digital Marketing Circle

digital-marketing-channels
A digital channel is a marketing channel, part of a distribution strategy, helping an organization to reach its potential customers via electronic means. There are several digital marketing 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.

North Star Metric

north-star-metric
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 hacking strategy, 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.

ICE Scoring

ice-scoring-model
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.

Virtuous Cycle

virtuous-cycle
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.

Freemium Business Model

freemium-business-model
The freemium – unless the whole organization is aligned around it – is a growth strategy 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.

Growth Matrix

growth-strategies
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).

Read next:

I don't feel lucky
$200 Off Library
No prize
Next time
Almost!
$300 Off BMI Course
50% Off Flagship Book
No Prize
No luck today
Almost!
Unlucky :(
No prize
Unlucky
Get your chance to win a prize!
I have read and agree to the Privacy Policy
Scroll to Top
FourWeekMBA