Sophisticated marketing brands are beginning to create platforms in order to gain a larger proportion of category share of voice. In this post I’ll go through what a platform is, some of the marketplace trends and the key elements to building a brand platform.
What is a platform
When applied in a business context a platform has two key characteristics:
- It removes the need for a set of expensive resources (putting a mobile phone in the hand of x million people globally).
- It enables the creation of completely new products/features (mobile applications).
Coupling these two characteristics is powerful as it creates multi-faceted value:
- The platform builds on value as the network effect takes place
- The platform manager gains value through transactions and attention
- The platform community gains value by being able to create, distribute and monetise a product more quickly with less resources
- The platform consumer gains value in the abundance of low-priced innovation on the platform
The Apple app store and Google Play combined have had over 100 billion new apps downloaded since their inception they have reached this seminal number in just 5 years. The reason Apple and Google have been able to create such an active marketplace so quickly is that they have had a lot of help from the community of developers building on top of their platform and driving people to use their apps/the platform.
Given their first mover advantage, Apple and Google now have a serious advantage over new entrants into the mobile platform game – just ask Blackberry and Microsoft about their struggles in creating an active app store.
The new platform players
A platform play makes sense between technology giants like Apple and Google but what about other industries?
- Nike has been developing its Nike + health platform and has even teamed up with startup incubator Techstars to build businesses on the Nike + platform
- Ford’s Ford Sync platform launched in 2007, a factory installed Ford computing interface and platform came about from a partnership between Microsoft and Ford. More recently ford has opened a lab in Sillicon Valley to partner directly with early stage startups building on the Ford Sync platform
- MIT and Harvard University have committed $30M each (quoted at 5:15 m) to create edx, a platform for Universities to publish and manage the education on a global scale
There are many markets to be disrupted through these platforms. Through long-term strategic investment, companies within these markets could gain strong competitive positions.
- Retail tying a customer’s in-store activity with an online personality and potentially rewards system. The best execution of this I’ve seen by US (only) startup Shopkick
- Drug discovery early stage drug discovery involves a great deal of specialised internal team collaboration, physician and patient recruitment/management and data collection/management
- Home automation the programmable house has to be around the corner. Any brown or white goods company could seriously disrupt their category with a home automation platform
- Tourism creating a platform for the development of tourism guides, tips and tricks is difficult but fertile territory
Building a platform
Platforms are inherently complicated to create. They consist of a multitude of resources, technologies and often legalities that need to be woven together in a way that benefits a multi-faceted community. Some lessons that can be gleaned from successful platform developers include:
- Initial focus you can’t get developers to engage with your platform without initial users. It’s not worth investing in developing an API unless you’ve validated that people will engage. The first step therefore is to develop the initial platform products. Nike + started their platform journey with their partnership with Apple to develop the shoe toggle, the original iPhone only had apps that had been developed by Apple.
- First mover advantage: it critical you are the first in your category to develop any platform. It’s nigh-impossible to build up developer relations and consumer traction when someone has already gained momentum. Microsoft has been late to the mobile app platform game and is now incentivising developers with cash to create apps on their platform.
- Partnerships: your need business partnerships (in the examples above: Nike and Techstars, Ford and Microsoft, MIT and Harvard), developer partnerships (or else the platform’s worthless) and user partnerships (or the platform’s useless).
- Gasoline: if you gain traction with your platform across your user groups (business, developer, user) you want to be able to quickly accelerate growth in order to maintain and ensure large-scale market dominance. Clearly outlining validation metrics, an execution plan and having access to additional funding based on performance is critical to larger-scale platform success. You don’t want your hard work outdone by a competitor who’s willing to spend money at the right time.