Platforms: The Exponential Business Model Blueprint & The New Standard

Jason Tropf
Jul 24, 2017 · 4 min read

There’s a revolution happening in standard business models.

This article is explains & dissects how startups using this new business model have outpaced the leading corporate structure in their own industries by leveraging platforms. This happens so often now that it has become a new standard business model and expert advisors have surfaced.

Image Credit: Singularity University

Salim Ismail calls our current state of affairs the “Fourth Industrial Revolution” READ MORE HERE.

By employing 4 of the following 10 attributes you will successfully transition or build an exponential organization aka a platform business model:

Interface, Dashboard, Experimentation, Autonomy & Social: these are your internal mechanisms.

Staff on demand, Community & crowd, Algorithms, Leveraged assets, Engagement: these are your external attributes.

Lets break it down to a Top 10 List

Advice from two of the top thought leaders in this field who advise Fortune 500 corporations. They instruct us to focus on building or leveraging platforms.

Two Thought Leaders on platform business models:

1. Sangeet Paul Choudary — Author of Platform Scale “A global thought leader on the platform business model.” — Forbes

2. Salim Ismail — Author: Exponential Organizations, Founder: Singularity University at NASA Campus, Former VP Yahoo

Top 10 Tips On Building a Platform Business Model:

  1. The first step is to clarify that a platform as a business model is basically peer-to-peer interactions and autonomy on many levels within your corporate structure as well as outside. It’s two sided in the front facing view but 3 sided when you consider the backend employees.

2. Utalize platforms that already exist and give internal teams autonomous authority, rather than top down instruction. Team communication apps such as Slack can be exponentially efficient. Sales automation platforms such as Hubspot or Marketo can be leveraged. Salim Ismail’s explanation of internal and external models uses the acronym’s IDEAS & SCLAE to describe that 4 of these 10 attributes must be present to run a platform business model. Interface, Dashboard, Experimentation, Autonomy & Social: these are your internal mechanisms. Staff on demand, Community & crowd, Algorithms, Leveraged assets, Engagement: these are your external attributes.

3. Make the employee the CEO of their responsibility, not an order taker. Give them a goal outcome and have them do what it takes to get there. Think for themselves. Give tight parameters to avoid floundering. Assign the team sprints, like a class project, trust them to get it done efficiently.

4. The Network Effect. Build on existing networks until you reach the tipping point of momentum. Peter Thiel calls this Zero to One. The hard part is making it work in the first place. Once it works on small scale, scaling it reaches a tipping point where it’s widely adopted as the new way to do things.

5. Dont scale too early. The hard part once again is getting from 0 to 1. Know when you’re not ready to scale yet. Is it performing enough to ‘wow’ real users, normal people, not early adopters? If yes, then you’re ready to scale.

6. Remeber that A duel sided platform serves two sides of a marketplace. Producers and Consumers. You have a chicken egg problem to solve. This is where most platforms fail. Don’t take it lightly, work this problem until it’s right.

7. Monetization. This isn’t as straight forward as it used to be. Sometimes you’ll be monetizing the API use of other platforms. One or both sides of the marketplace may pay a cut of their transactions. You may have a monthly fee that starts out free.

8. Favor lifetime value over customer acquisition. Once you’ve gotten from 10 to 1 and you know it works very well once the user is engaged then getting a prospective client into the platform at any cost is the goal. You should have a concierge walk them through the process, hold their hand every step of the way to make them a regular, habitual user. You will recoup these costs over the lifetime of the customer and the network effect of them being successful with the tools and others witnessing that (referrals, word of mouth, always the best growth mechanism).

9. From linear to networked. This is a big difference from a traditional business model. Watch out for diluted efforts. Be tight on what gets in. The platform is as valuable as it’s participants. Decrease in quality of interactions. Build with this in mind and have a scoring mechanism to spend time on monetizing activities. Reward them. Clean the system regularly. Automate a scoring process that decays poor quality and improves high quality.

10. Scaling trust and authority. When you have the system working, scaling it will invite exponentially poor quality to it. Be diligent in this phase to keep your users trust and maintain authority. Don’t spread too thin.

Jason Tropf

Written by

Forbes Communications Council. May the fire inside you always stay lit, and should that light dim in another, lean in and brighten their torch.

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