Platform building

I am right now participating in BSG Alliance teleconference on business platform strategy – a business platform being not just an information technology system that the extended enterprise can use, but also a set of processes and people which allows creating a business playground, an area for doing business together. This has been around for a long time – SABRE, Retaillink, AHS, and other famous cases were information systems that became bases for transactions and coordination.

The difference now lies in how the technology has progressed. First, the functionality is much better – you can now do collaboration – even co-creation – around products and services. Secondly, the price, both in investments and in time and people, of establishing a platform is going down significantly, perhaps to the point of not being a platform at all, but a set of interfaces for information exchange.

Within the software and hardware industries, platform thinking has been around for a long time – witness Steve Ballmer famously dancing the point 7 years ago. The winners in the software industrye – and in hardware such as workstations, PDAs and mobile phones – are those that can get their users to also become developers, to share their uses of their offerings in a form reusable by others. The goal is to get your business partners to do business not just with you, but through you, trying to establish and exploit network externalities – virtuous cycles where the size and composition of your customer and supplier set matters for new customers and suppliers.

Strategy is about to change – to the point where you not only have product, price and distribution to play with, but also the interrelationships between those you do business with. Operating in this space is complicated and difficult (and that is good, otherwise everybody could do it), but potentially very rewarding.

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