The UX of Digital Platforms
5 Principles of Platforms and Implications for UX Strategy
Platforms are like marketplaces — their business model relies on being the place where others exchange things of value. From eBay to Uber to Facebook to Twitch, people use a platform to exchange goods, services, or content that the platform itself doesn’t produce.
Boiling this down, we can define a platform as a product that enables currency exchange and therefore easily scales, since the product’s inventory is essentially its users.
Recently, Harvard Business Review wrote about how a platform’s relative success is related to 5 factors — network effects, network clustering, multihoming, disintermediation, and network bridging.
As a student of product design, I’ve been exploring these factors and their implications for UX strategy. It’s important to remember that our job as designers is to create a product that is usable and useful in addition to supporting fundamental business objectives.
Here they are, the 5 principles of platform design, illustrated with doodles from my sketchbook. (Sidenote: see Go Back to the Sketchbook for my thoughts on sketching as a vital format for thought.)
1. Network Effects
The network effect describes the power that the platform’s users and agents have on the platform’s success. The network effect is strong when more users or agents beyond the critical mass continues to equate to greater value for the company.
For example, the more users Facebook has, the more advertisers it can attract and the more value the company can wring from its platform, ad infinitum. On the other hand, XBox’s users are drawn to its platform based on a few “hits,” making XBox’s network effect weak. In other words, XBox doesn’t gain more users proportional to more game titles and vice versa.
UX Considerations for Network Effects
Understanding the relative strength of a platform’s network effect can influence UX research and design work by revealing what, exactly, is most valuable to a platform’s users and/or agents.
Here’s an example from Airbnb, which exhibits strong network effects. This is true on the whole, since more users > more listed properties > more users > and so on. This is called cross-side, or indirect, network effect. The effect also shows up at the single-property level: the more users (i.e. reviews) a property has, the more users (i.e. bookings) it generally attracts. This is called same-side, or direct, network effect.
Airbnb leveraged this knowledge by introducing a reciprocal review user flow for renters and agents. This significantly increased the number of users who leave reviews, thus increasing the perceived number of users on the platform and strengthening the same-side network effect.
2. Network Clustering
Network clustering describes the constellation of markets, or clusters of connected users, within a platform. Some platforms lend themselves to geographical clustering — think Craigslist, where users mostly trade goods/services with others in their area, or Uber, where users seek rides from drivers in their proximity. Other platforms represent one giant cluster — think Twitter, where anyone can exchange content with anyone, regardless of their geographical location.
Here’s why it matters. The degree of a platform’s network clustering significantly impacts a platform’s vulnerability to disruption. Consider this: to disrupt Twitter, you would have to launch a worldwide product and convince millions of users to get on board in order to deliver an approximate value. To disrupt Uber, you would have to launch a local rideshare app in a single high-value city. And, in fact, that’s exactly what Uber’s been fighting in China recently (with little success).
UX Considerations for Network Clustering
We know that the more connected and global a product is, the harder it is to disrupt. From a product design perspective, this points to 2 strategies:
First, we can design features that diminish network clustering. A very theoretical example might be a shipping feature for Craigslist, which could encourage users to search outside their immediate vicinity.
Second, we can advocate to differentiate via the product experience. As designers, we’re obsessed with creating not only useful and usable products, but also delightful ones. It can be hard to sell this work sometimes, but if we tell the story in terms of capturing user’s loyalty even in the face of disruptive markets, we may find more open ears in our organizations.
Multihoming is the phenomenon where a person comparison shops or consults across multiple platforms to choose the best deal. This happens on both the user side (a traveler searches for a rental on Airbnb and VRBO) and the agent side (a rental is listed on both Airbnb and VRBO). Some platforms lend themselves to this — rideshare, travel booking — and some don’t.
UX Considerations for Multihoming
Platforms have tried to curb the impact of multihoming, in some cases, by requiring exclusivity contracts from their agents. This can backfire, though, by actually increasing the multihoming effect on the user side, because the availability or variety of options on a platform decreases and users broaden their search in other directions.
Like with network clustering, we can’t always eliminate multihoming. What we can do, as designers, is create a stellar user experience that adds enough value that users — despite the option to multihome — choose not to.
For platforms that deal in recurring transactions (i.e. the gig economy, like Thumbtack), platforms can be at risk of disintermediation, the phenomenon where users and agents find each other through the platform, but then conduct business off the platform.
UX Considerations for Disintermediation
By some reports, the risk of disintermediation is overhyped, but it’s still an important concept to understand, particularly from the product design perspective.
Carrots work better than sticks to curb disintermediation, meaning that creating value to keep users on platform works better than punishing detected instances of users taking a transaction off-platform. When designing a product, consider features that make it easier to stay in the product than to leave it. For example, Upwork processes payments across currencies with discounted fees, providing value and convenience for a transaction that would be a headache otherwise.
5. Network Bridging
Network bridging happens when a single company operates in multiple markets, thus harnessing the value of interaction data from its users across multiple areas. Think Amazon, which now knits together knowledge about its users’ behavior from grocery stores (Whole Foods), video streaming (Prime Video), live streaming (Twitch), and much much more. This not only benefits the company, which learns from user behavior, but it can also provide value for the user by centralizing or connecting a variety of services through a single access point.
UX Considerations for Network Bridging
So much of the UX process is about taking the messiness of a product ecosystem and presenting it in a logical, valuable way for the product’s users. From this perspective, the more users and the more interaction data about those users that a platform has, the more successful the UX can be. Hence the value of network bridging for designers.
While network bridging might not be a reality for many products, and thus not a consideration for many designers, the takeaway here is that it’s always worth thinking deeply about (a) what interaction data a product collects, and (b) how that data can be mined for insights about user behavior and perceptions of value.