Inspired by the successes of Apple, Amazon (AWS), Google and Facebook there has been a rush by many companies to become a platform business too (some good examples in the making are: Klöckner, Hilti etc.). But what is a platform?
Marco Iansiti and Roy Levien define it as “a set of solutions to problems that is made available to the members of an ecosystem through a set of access points or interfaces.” They explain these interfaces by using the analogy of APIs (application programming interfaces) from the software world: “Although the API terminology is not usually used in other domains, the same basic approach is followed: Platforms serve as an embodiment of the functionality that forms the foundation of the ecosystem, packaged and presented to members of the ecosystem through a common set of interfaces. Ecosystem members then leverage these interfaces as a kind of toolkit for building their own products and think of them as the starting point for their own value creation […]” .
By way of a less well-known example than the ones given at the outset, let’s look at Intuit. The American software company that provides small and medium-sized companies with accounting and tax software was once a closed shop. If as a small shop owner you used Intuit software but your accountant, suppliers, or business partners preferred other incompatible solutions, you had a problem and the data exchange got complicated and expensive. Since 2017 Intuit has been following an open platform strategy and has opened up its services to all kinds of other (software) services — including those from its competition. Now competitors can connect their products (functionality) and become part of Intuit’s business ecosystem. The same applies to app developers or the IT vendors of Intuit’s customers, which can now create useful (mini) apps and automation scripts and become part of its innovation ecosystem. Even former Intuit employees who founded their own fintech, legaltech, or taxtech startups eventually contribute to their old employer, as they tend to integrate their offerings into the Intuit ecosystem and in doing so strengthen its resilience. It is this domino effect which makes platform strategies so powerful if you manage to become a ‘keystone actor’ just as Intuit, Apple, and all the other platform stars did.
In summary: Platforms provide services, tools, or technologies which other members of an ecosystem can use to valorize their own product and service performance by enabling functionality they couldn’t provide themselves. The platform is the ‘package’ through which keystone actors share value with their ecosystems and in turn make themselves stronger.
Iansiti, M., & Levien, R. (2004). The Keystone Advantage: What the New Dynamics of Business Ecosystems Mean for Strategy, Innovation, and Sustainability. Harvard Business Review Press.