(71) Why platform businesses need a business model canvas of their own?

I have written a couple of posts before on business canvases. In one post, I had collated and compared all the business canvases available in the community today.

https://www.linkedin.com/pulse/making-sense-all-product-canvases-under-sun-ravi-kumar-sapata/

I had covered Alex Ostwerwalder’s Business Model Canvas, Ash Maurya’s Lean Canvas, Shardul Mehta’s Product Canvas, Roman Pichler’s Canvas and few others.

However, the business canvases I had listed on the post were all relevant for piped businesses. (Read my post to understand the difference between piped businesses and platform businesses: https://www.linkedin.com/pulse/why-should-product-managers-wear-platform-thinking-ravi-kumar/ )

The value chain in a regular piped business is linear. In platform though, value creation happens in networks.

Sangeet Paul Chaudhary, author of Platform Scale, told me this in our podcast interview:

“Companies have to move away from the thinking of „my“ product or „my“ service. In a platform world you become the orchestrator of multiple parties. Your job is no longer to develop new products, your job is to facilitate the transaction between the participants.”

Now, even though I had a conceptual understanding of piped and platforms, I had never worked on a platform product myself before and it was only now that I am getting an opportunity to work in a platform.

While doing research on putting across a business canvas for platforms, I chanced upon Platform Innovation Kit, which provided a business canvas meant for platform businesses, which made so much sense. Platform Innovation Kit was put together by the folks from Lean Platform Innovation and the canvasses are licensed under Creative Commons to be shared and improved by anyone who is willing to contribute.

I got a chance to interview Matthias Walter (@digitalahead), Founder, Platform Innovation Kit, on why platform products need a business canvas of their own.

Here’s how platform businesses differ from linear (pipe) businesses.

Linear Business — — — — — — — — — — — — — — — — — Platform Business

(Image: courtesy, Platform Innovation Kit)

The multi/sided market model

According to the folks from Platform Innovation Kit, successful platforms are based on more than two sides — they are multi-sided. They bring together different roles in action — consumers, producers and partners. They facilitate a healthy transaction between these players and help forge a long lasting relationships.

Understanding the platform stakeholders

  • Consumers: Consuming and utilizing the core value from the platform ecosystem. Can transform into the role of Prosumer when acting as consumer and producer. Example: AirBnB travellers, Uber riders, Youtube viewers etc.
  • Producers: Providing the core value to the platform ecosystem, looking to enlarge their customer base and lowering the efforts for marketing.
  • Owner: Owns the vision of the platform and its ecosystem. They are responsible to lower the friction of the core platform processes and to enhance the experience of the platform for all stakeholders.
  • Partners: They are additional service providers looking for a better and broader market access. The biggest difference compared to the producers are that they are only indirectly involved into the exchange of the core values. Example: Wordpress theme developers, Salesforce Forge developers, Payment providers, Advertisers.

This is how a platform business model canvas looks like:

The multi/sided market model

According to the folks from Platform Innovation Kit, successful platforms are based on more than two sides — they are multi-sided. They bring together different roles in action — consumers, producers and partners. They facilitate a healthy transaction between these players and help forge a long lasting relationships.

Understanding the platform stakeholders

  • Consumers: Consuming and utilizing the core value from the platform ecosystem. Can transform into the role of Prosumer when acting as consumer and producer. Example: AirBnB travellers, Uber riders, Youtube viewers etc.
  • Producers: Providing the core value to the platform ecosystem, looking to enlarge their customer base and lowering the efforts for marketing.
  • Owner: Owns the vision of the platform and its ecosystem. They are responsible to lower the friction of the core platform processes and to enhance the experience of the platform for all stakeholders.
  • Partners: They are additional service providers looking for a better and broader market access. The biggest difference compared to the producers are that they are only indirectly involved into the exchange of the core values. Example: Wordpress theme developers, Salesforce Forge developers, Payment providers, Advertisers.

This is how a platform business model canvas looks like:

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Ravi Kumar.

Ravi Kumar.

Building nextgen real estate platform at PriceHubble & podcaster at productlessons.com. I blog about products, business around products, and growth strategies.