Platform Economics
Platforms make services faster, better, cheaper, and more omnipresent. Platforms are based on modularity and are the antithesis to big, one-off, bespoke capital investments.
By Atif Ansar and Bent Flyvbjerg
Platforms start small but become big by growing incrementally, i.e., with no big leaps involved. It is not that platforms are less ambitious than quantum leaps. In fact, once a platform matures, it may easily get exponentially bigger than anything thought possible by a one-off quantum leap. Platforms, however, approach their ambition with a series of carefully thought through incremental moves. At each iterative juncture, a platform preserves the option to self-correct, change course (pivot), or abandon and start anew before sunk costs and time become psychologically prohibitive. Platforms are an architected set of parts, subsystems, interfaces, and processes that are shared among a set of applications (“apps”) — see, for example, Meyer and Lehnerd, 1997; Cennamo and Santalo, 2013; Zhu and Furr, 2016.† Platforms’ system architecture is designed to create orderly interactions with less transaction cost among multiple standard and non-standard elements and parties. Consider the example of containerized global shipping. Some of the elements interacting on the global…
