The preceding description is merely one sort of platform company, known as an aggregation platform, which focuses on facilitating short-term transactions among members. Other platform business types suggested by John Hagel, co-chairman of Deloitte LLP’s Center for the Edge, include social platforms, mobilisation platforms, and learning platforms (will be explained later).
The notion of a platform company is not a new one. Consider ancient antique marketplaces, large American commercial malls, or exhibition halls. To encourage contacts and ease value exchanges, companies have usually adopted a brick-and-mortar method. Global digital technology infrastructures are increasingly supporting platforms to expand participation and cooperation. However, this is a facilitator rather than a need for an outlet.
Consider the e-commerce business eBay as an example using the auction house. eBay promotes consumer-to-consumer and business-to-consumer purchases by facilitating interactions between 170 million consumers and 25 million merchants worldwide 24 hours a day, seven days a week through its platform.
So, what exactly is a platform company?
A platform business (rather than a technical infrastructure) is a company concept that focuses on facilitating interactions among a large number of participants. These interactions might be short-term transactions like linking buyers and sellers. They could be long-term social ties, long-term collaboration to achieve a common goal, or long-term attempts to assist participants in improving their performance by helping them learn quicker together. The platform business’s goal is to provide a governance framework and a set of standards and protocols that enable large-scale interactions so that network effects may be realised.
Traditional linear business models create value through products or services by taking raw material components as inputs and turning them into products or services that can be sold to customers. Instead of owning the means of production, the platform business model establishes and supports the means of connection.
What are the many types?
Platform firms are becoming increasingly important in the generation of commercial value. However, not all platforms are created equal, with some having considerably greater potential to trigger significant forms of escalating profits that will eventually push other media out of the market. It’s critical to comprehend the structure and the dynamics of various platforms. John Hagel1 has identified four distinct types of platforms that are gaining popularity in the corporate sector (and elsewhere).
Aggregation systems bring together a wide range of relevant information and assist users in finding the most relevant ones. These platforms are often transactional or task-oriented: express a request, receive an answer, complete the transaction, and move on. eBay and Etsy are well-known examples of marketplace and broker systems. Aggregation platforms often follow a hub-and-spoke approach, in which the platform owner and organiser act as a middleman for all transactions.
Social platforms are similar in that they bring together many individuals—Facebook and Twitter are two prominent examples—but instead of facilitating the completion of a transaction or activity, they encourage engagement among people who have shared interests. They also tend to build networks of connections rather than hub-and-spoke interactions. Users engage with one another over time in ways that are typically unrelated to the platform’s organiser or owner.
Platforms for mobilisation encourage individuals to work together to achieve something greater than any single participant’s capabilities. Rather than focusing on discrete and short-term transactions or activities, they want to establish long-term connections. The most frequent form of these platforms in a corporate setting brings together actors in extended business processes such as supplier networks or distribution operations.
Learning platforms make it easier to learn by bringing people together and allowing them to share their experiences across time. Because participants can realise more potential by working together, they tend to build meaningful, trust-based relationships. Business leaders who recognise this will likely seek out platforms that make work easier for their employees and help them grow their knowledge, improve their performance, and sharpen their skills.
Learning platforms, like social and mobilisation platforms, rely heavily on the capacity to develop long-term connections rather than focusing just on short-term transactions or activities. On the other hand, learning systems do not regard participants as “static resources.” Instead, they begin with the assumption that by working together in the correct atmosphere, all participants will be able to realise more and more of their potential.