I have long held a fascination with technology platforms. I think of them as a kind of “super-product”, that brings together people to meet coinciding needs.
Michael Cusumano of the MIT Sloan School of Management has been writing about technology platforms for many years now, and he, alongside a number of other original thinkers, are together building our understanding of the nature and potential for platforms.
I believe that the internet is moving into a new stage. Around 2005, we saw the rise of the Web 2.0 era: the internet served as a platform for connecting producers of content and services, with consumers. Shortly after this, we saw the rise of the social network: the internet increased the accessibility and efficiency of connecting people to one another.
The third and most recent stage in the evolution of the internet, is one where the distinction between producers and consumers continues to diminish. It’s an exciting new world where the opportunity to realise new levels of synergy is materialising, through matching complementary capability and need.
Beyond the most obvious examples of Stage 1 and Stage 2 platforms like Youtube and Facebook, we are witnessing an explosion in the number of platforms being created around this third stage of internet evolution. Collaborative consumption platforms like Airbnb and TaskRabbit are good examples.
The fundamental purpose of a platform is to enable an interaction to happen. It empowers a reciprocity, where the latent potential in connection is realised, in the creation and exchange of value between people. In order to build a successful platform, where complementary needs and capabilities may connect, a platform needs to execute on three key factors:
1. Critical mass: Platforms are fundamentally marketplaces. A critical mass of complementary people is essential, to create the momentum that generates self-sustainability. Platforms are vulnerable to the classic chicken-and-egg situation, whereby they don’t generate value until they have critical mass.
2. Matching: A platform needs to match complementary needs and capability. We live in an age where we are increasingly inundated with information vying for our attention. An effective platform helps to optimise the “signal-to-noise” ratio of the interactions within a platform, thereby ensuring we connect most directly with what is most relevant.
3. Trust and Reputation: Trust is an essential element of a platform. We need to be able to depend on the accuracy of the matching, information and reliability of those we are matched with. All information systems are prone to error, which is why reputation frameworks are important, to increase the quality and dependability of the platform.
Sangeet Paul Choudary has built a great website called Platform Thinking which contains a wealth of articles on this subject. And, if you are looking for a really accessible video overview, I recommend his lecture at MIT Media Labs.
In addition, I’ve just come across a couple of great articles by MEGA CEO, Vikram Kumar on The 3 Rs of a Share Economy platform and Collaborative Consumption and Reputation Capital which I’d also recommend as good reading.
I think the most exciting potential for platforms is still unrealised. I believe there is a genuine opportunity for a platform to raise the collaborative capacity of a country as a whole. What could that do for the level of innovation and prosperity in New Zealand?