If you want to compete on the playing field with the most successful companies of today, then you might need to consider a platform strategy. Any business, particularly start-ups and small businesses, but even businesses with a more traditional business model can and should think how and where they could apply a platform business model.

What is a platform?

In its simplest form, a platform is a mechanism or network—physical or digital—that creates value for individuals because it facilitates connections and exchanges between people for products, services and information. When you think about it, platforms have existed for years: shopping malls are a platform to link buyers to the clothing, shoes, home goods and other products being sold by merchants and a television station or newspaper is the platform to connect advertisers to viewers or readers. Today, some of the biggest names in business found success by creating platforms for their niche—Amazon, Facebook, Airbnb—just to name a few.

Even the Ford Motor Co. had the foresight to test out a shift in business models—from an asset company to a platform company—with its pilot car sharing program. Ridesharing platforms such as Lyft and Uber have changed the way people use cars, and instead of sticking with the status quo, Ford is trying to adjust its business model.

Benefits of a platform

Platforms have allowed small businesses and start-ups to disrupt major business segments even though the more established businesses had more resources (physical assets, raw materials, etc.), that had traditionally been the predictors of success, than the new businesses. Facebook doesn’t create most of the content on its site, but it attracts 1.3 billion users who regularly consume the news, videos and photos shared on the platform. Uber doesn’t really own any cars, but it’s overtaking the taxi business across the United States. Alibaba doesn’t own a piece of inventory, but it’s a global marketplace.

The platform approach is all about figuring out a way that an external ecosystem can be leveraged to do the work and create value. Today, many of the problems that can be automated already have been, so the next way to gain a competitive advantage is to leverage the ecosystem you create on a platform. The better your ecosystem is at creating value, the more successful your business will be.

Platforms have tremendous power because they can unlock new supply and demand streams, eliminate gatekeepers and provide valuable connections to a community to gain insight. Whereas in the 20^th century an organisation’s ability to leverage production efficiencies via economies of scale propelled success, in the 21^st century it is creating “demand economies of scale” that use technological improvements to create bigger networks and more value for users. The more valuable a network/platform to the end user, the more successful it becomes.

These are just a few of the reasons more traditional or “pipeline” companies, those who create a product or service and channel it to consumers, are working to develop their own platforms in addition to their traditional ways of doing business.

How to develop a platform strategy

First, while there have been many businesses that succeed with the pitch, “We’re Uber for. . . {insert your product here}, it’s important to develop a platform strategy that highlights your unique value proposition and avoid mimicking what’s out there if what’s out there won’t lead to your own business success.

To create a solid platform strategy, you must consider:                   

1. How will our platform support the exchange of value?

2. How will you attract and drive users to your platform?

3. How will your platform encourage interactions to become the core of a community that connects people and adds value?

Exchange of value

How will participants in your platform benefit from others in the platform? Essential to a successful platform is determining how your platform will create and capture value.

Attract and drive users to your platform

Users won’t come to a platform if it doesn’t have value, and if you don’t have people coming to your platform it will fail. Just imagine what Uber would be without multiple drivers available to respond to many people’s needs for rides. To overcome the “chicken and the egg problem,” you should focus your mindset on “seeding” users to a platform, as this is the most critical step to platform success.

Encourage interactions

A successful platform needs to encourage interactions between participants on the platform—consumers and those who can provide the goods, services or information those consumers want and need. Your goal is to make it THE place where consumers meet and commerce happens. In order to preserve value and an exemplary experience, you will ultimately need to develop some governance policies.

Whether you’re a start-up or have been in business for decades, it’s time to start considering your platform strategy to leverage a community to drive your future success.