From footpath to Facebook: Building a platform

I’ve been interested in what constitutes a “platform” and how platforms spawn and nurture ecosystems for quite some time.  We’ve been exploring these ideas in this blog over the last few months.

In this post I’d like to start identifying some of the key factors that anyone thinking about innovating or building a platform must consider.  To do that, I’d like to start, as the title suggests, by reviewing the first platforms.

The first platforms were paths, rivers and other means of improving human interaction and communication.  As interactions were improved and information flowed more easily, civilization, which is just a form of an ecosystem on a platform, developed.  Roads, canals and other forms of improved transportation simply became a better platform, and allowed the Romans to create financial and trade mechanisms not equaled until the 19th century. Continue reading

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Moving beyond the “ten types” of innovation

Many innovators are familiar with the concept of the “ten types” of innovation developed by Doblin.  If you aren’t familiar with the model, it describes different potential outcomes for innovation, beyond “product” innovation.

Doblin’s ten types includes innovation outcomes based on channels, business models, services, customer experiences and other factors.

As a fan of the model, I return to it and reference it constantly, because far too many innovators narrow their focus and only create new product innovations, when markets and customers are clearly interested in much broader and more diverse innovations.

But as a fan of the ten types model I can also see some of its shortcomings, and one of those is its lack of “depth”.  The ten types model expands the perspective of innovation in terms of breadth – from a single outcome called “product” to a range or spectrum of offering types.  But the model lacks definition around “depth” – building a description of a platform or ecosystem of innovation.  Continue reading

Amazon and Whole Foods expose an ecosystem gap – the last mile

In case you were hibernating or out of range of cell cover or WiFi during the last few days, you know that Amazon has made an offer to acquire Whole Foods.

This places the largest online merchant in direct competition with some of the largest retailers in the US – grocery stores – and continues Amazon’s move into “bricks and mortar” businesses.

On this blog Paul and I have been writing about the importance of innovation in platforms and ecosystems.

With this acquisition, Amazon is attempting to extend its platforms into the “real” world and link up its power in the online world with physical stores.  Amazon understand a lot about attracting customers to its site, and does a reasonably good job at distribution.  Amazon gains a trusted “bricks and mortar” company that is respected (or sneered at) by consumers.  Whole Foods isn’t nicknamed “Whole Paycheck” for nothing, and there are some interesting dynamics between a company that isn’t concerned with profits and a company well-known for top of the line products and good customer service.  But we aren’t here to evaluate the integration of these companies, as much as to identify an ecosystem gap.

Amazon and the last mile problem

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Blockchain and distributed ledgers as innovative platforms

It had to come to this eventually.  The emergence of Blockchain and distributed ledger systems illustrates how innovation is moving from focus on products and services, which are interesting but don’t provide a long-lasting competitive advantage, to a focus on platforms and ecosystems.

Over the last few weeks this need for a lasting competitive shift in focus was emphasized as Ford pushed out its CEO because he wasn’t changing the company fast enough. As discussed in this blog previously, the automotive sector must rethink its competitive position.  Increasingly, people want flexible transportation – from cabs, Uber, public transportation and/or their cars.

The automotive manufacturers (Ford, GM, Fiat, Mercedes, etc) must shift their focus from building physical cars to providing transportation – a shift in thinking and strategy.

In a very similar manner we can see that banking and financial services are moving from offering discrete services (mortgages, loans, checking/savings accounts, etc) and are considering how to either own or integrate with larger platforms and ecosystems, because the older conventions are less attractive to emerging customers and technology is advancing so quickly that soon many different companies and industries can offer banking-like services.

Distributed ledgers and Blockchain may point out a new competitive platform that some firm is going to capitalize on.  For example, we can imagine a time in the not too distant future where a large company that supports and relies on an extended supply chain – the automotive industry for example – could dictate that all of its supply chain participants must interact using Blockchain.  Then we’d have a company spanning, industry wide ERP like platform.  If this sounds crazy, don’t laugh.  The government of Dubai just announced that within five years every entity that interacts with the government must do so using Blockchain.

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No walled gardens in B2B platforms

Walled Garden Illustration by David Simonds

Paul and I have noted throughout our writings on platforms and ecosystems the key differences between companies that interact primarily with consumers (B2C) and companies that interact primarily with other corporations (B2B).  This difference is especially important when we begin to think about platform dominance.

You see, Facebook interacts primarily, almost exclusively, with customers (B2C) as such it’s platform serves to provide almost the entire interaction between Facebook and its customers.  We could almost return to the days of old, when AOL was your conduit to the internet, when we talked about “walled gardens”, because that’s what many of the pure play B2C platforms are – walled gardens, meant to provide as much of the platform as possible.  Their goal is “stickiness”, attracting you and keeping you plugged into their platform, consuming their content.

On the other hand, industrial companies are definitely as engaged in platform development, but their solutions require more than one platform. Continue reading

Recapping our ecosystem and platform thoughts

For those of you following our posts about ecosystems and platforms and their importance to innovation, this is the 30th post. We thought it made sense to take a breather before pushing on to other ideas, to stop and recap what we’ve been writing about, and perhaps to place some of these ideas in context.

Paul Hobcraft and I first began talking about ecosystems and platforms several years ago, as it became more evident that innovation is often focused too narrowly, considering only a discrete product or service as its end result.

Increasingly, we believe, innovators must become first more aware of the platforms and ecosystems that exist in their markets or segments, and secondly must become more willing to innovate with regard to the platform or ecosystem, and eventually must innovate to change or disrupt the platforms and ecosystems.

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When a platform becomes an operating system

In the last post Paul wrote about Bosch, and its focus on the industrial internet of things (IIoT).  Bosch, GE and other industrial companies are attempting to create industry leading or at a minimum industry standard platforms to link industrial organizations and create standards, with the hope that new ecosystems and new solutions are built on top of those platforms.

Each of their goals is to capture, manage and exploit information generated from thousands of activities and sensors throughout the industrial platform.

Here we can the see opportunity and the challenges associated with an IIoT play:  building a platform and managing the data of an industrial giant means managing (and harvesting) a tremendous amount of data.

But it also means plugging into or interfacing with other systems and platforms, as none of these companies can create a holistic platform or replace all of the platforms and systems in a large company.  Bosch, GE and others can create really powerful and important platforms in sections or functions, but must integrate and share data with other platforms.  While they can create really powerful and compelling platforms, these platforms are by necessity limited to specific capabilities or functions.

Now for something completely different

Let’s examine then, the power and flexibility that an Amazon, for example has in its quest to build platforms through its AWS offerings.  First, it is focusing on business to consumer (b2c) or in many cases a category that Paul has coined:  consumer to consumer (c2c). Continue reading