On execution: Building platforms

I’m often asked what got me into platforms in the first place.

There are two ways of stumbling upon a concept/idea, and eventually, you’ll see both these paths intersect.

THE ACADEMIC MIND VS. THE ENTREPRENEUR MIND

The first way is what I think of as the academic’s way. You’ve got a ton of research that’s been done in the past and you want to build on that. You broadly know the theme that interests you, you don’t yet know the problem.

The second way is what I’d call the entrepreneur’s way. You start with a problem. You try to figure out a solution that applies to all instances of the problem.

In the first way, starting with research eventually leads to identifying a problem waiting to be solved. If it doesn’t, you simply regurgitate what’s already been done. But truly great work emerges once a problem is found and connections are made.

In the second way, unpacking the problem leads you to a point of research which subsequently leads you to making new connections building a model as a solution. Subsequently, you stress-test that model with different cases till a robust solution model is obtained.

THE HOW AND THE WHAT OF EXECUTION

My journey into platforms has followed the entrepreneur’s way. It started with an obsession with trying to understand why certain startups fail and why others don’t.

While a lot of failure may simply go back to the ‘how’ of execution, that itself isn’t sufficient to explain failure. Much of failure stems from the ‘what’ of execution.

The difference between the ‘how’ and the ‘what’ is a difference between ‘Doing things right’ and ‘Doing the right things’.

The lean startup and other similar ideas try to address the ‘How’ of execution. They focus on doing things right without telling you what to do.

My journey into platforms started with trying to figure out whether not ‘doing the right things’ was coming in the way of success despite ‘doing things right’. As I dug more into this, I realized that a lot of failure in not ‘doing the right things’ stemmed from the fact that business models were fundamentally changing and the choices that led to success of networked business models design were often not intuitive. A few repeated choices of this sort are the following:

1. Not charging all your users
2. Using one set of users to attract another set of users
3. Making users pay with data
4. Designing for opt-in behavior vs. lock-in behavior
5. Looking for levers of scarcity in a world where everything seems abundant

There are may other such choices unique to networks and platforms, and that’s what eventually captured my fancy: understanding these systems and the disparate counter-intuitive choices they present.

 

PLATFORM SCALE

I summarize a lot of these choices in Section 1 of my book Platform Scale. If you haven’t already, you can get the book here. Or download the first 3 chapters here, which highlight several of these choices.

As I’ve looked through all the counter-intuitive choices that networks and platforms involve and as I’ve implemented these across industries, both with mature firms and with startups, I’ve come to realize that almost all these choices stem from understanding one simple starting point: Platform business models are not built around a user or a process but around an interaction between users.

 

This insight is as powerful as it is simple. It may sound obvious, but it’s repeatedly forsaken in the favor of building technology and seeing what happens. Sometimes, the urgency to keep launching (doing things right) relegates the need for careful design considerations (doing the right things). As a result, I focus a lot of my book on this particular topic. The whole idea of business design is going to be much more important in the days ahead. Our traditional products and services used to inhabit systems and work within them. They would work within the defined roles of stakeholders in that system. Platforms often lead to the creation of entirely new systems and entirely new stakeholders who would never have existed in the past.

If you want to do the right things, you need to balance the constant innovation, iteration and testing with careful design centered around the core interaction.

If anything, that should be the main message you take from all my work on this subject. Every other thing I write about centers around this main message. A lot of complex decisions start becoming obvious once you understand this main message. This, of course, involves a lot of detail: the structure of the interaction, the goal of the platform, the balance of openness and governance. We can spiral off into decisions of ever-increasing complexity but all of them come back to the central simple principle:

Do what increases the quality and the quantity, the repeatability and the efficiency of the core interaction.

That is the central message of building platforms and achieving Platform Scale.

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