Platforming | Pulling The Business Inside Out
The first step is the hardest step
One of the themes used to characterize the transition to platform ecosystems is ‘inverted firms’, as in this recent piece, The Four Biggest Challenges Digital Platforms Need to Address, by Geoffrey Parker, Marshall Van Alstyne, and Peter Evans. In the following excerpt, the authors are discussing the difficulty for traditional, ‘incumbent’ organizations to interact with or negotiate with platform businesses, and even more difficult: to go horizontal, and to reorganize their operations around the principles of platform economics. They identify three gaps in the incumbents’ understanding:
One is the ability to anticipate which markets will transform. Most executives struggle to fully grasp the nature of “inverted firms,” those that move production from inside the organization to outside. They also have yet to learn how to make the transformation happen.
In this essay, I will expand on the concept of the inverted firm. Since launching this publication we’ve used the term platforming to denote the transition from conventional organization and operations to a platform ecosystem-based model. I have somewhat poetically referred to the transition as ‘pulling the business inside out’, which I don’t think is an exaggeration.
