Managing in the Platform Age

By Phil Simon

Lots of people are talking about what it takes to build a mighty platform in the digital age.

What exactly is a platform? It’s an integrated set of features, products, or services—what I call "planks" in my new book on the subject. Sound abstract? Think about it this way: In 1998, Google wasn't a platform; it was a search engine. It became a platform by adding Gmail, YouTube, Docs, Maps, and a bevy of other planks. The four most powerful platforms today belong to Amazon, Apple, Facebook, and Google. These companies, collectively known as the Gang of Four, have shown how a platform can underpin an entire business model.

The required technology is readily available, but to succeed, platform-building requires a radically different management mindset. If it were easy, every company would be doing it. These wildly successful platform companies came about because of smart, original management practices. Managers and even solopreneurs who want to create their own platform companies need to learn these practices. Those who don’t evolve in their management approach may soon find themselves surpassed by competitors who have developed and expanded their own platforms better and faster.

Here are five mindset changes that can help managers adapt and thrive in a platform-driven company:

• Become more nimble. Managers in platform companies have to work in a state of constant motion and embrace "dynamic stability." In the words of systems and risk management expert Dr. Robert Charette, companies need to “service a wide range of customers with changing demands (the dynamic element) while continuously building on internal processes that are general purpose, flexible, and reusable (the stable element).”
• Encourage experimentation. Look at some of the innovations the Gang of Four in the past three years (an eternity in the Age of the Platform): cloud computing services, free productivity tools, tablets, smart phones, and so forth. What do these products and services have in common? Someone was willing to bet on them. Bets may start small or they may represent radical departures from current offerings, but they are essential in the Age of the Platform. Why else would Amazon and Google allow employees to work on projects that are completely unrelated to their lines of business? To be successful today, managers need to take on risk with and adopt emerging technologies.
• Embrace “co-opetition.” Powerful platforms constantly expand. They grow, enveloping new users, customers, partners, and communities. This requires managers to shift, when mutually beneficial, from competition to "co-opetition"—a mix of cooperation and competition. Apple allows its customers to read books on their iPhones and iPads via Amazon's Kindle app. Facebook makes it easy for users to find friends en masse by importing e-mail addresses, including those from Google's Gmail. User-created apps often access different application programming interfaces (APIs) from Twitter and Google. Amazon users can link to their author pages on Facebook, posting the information with one click. In each case, a platform company made the smart decision that cooperating with a potential competitor made sense.
• Treat customers like employees. Traditional marketing is so 1980s. In the Age of the Platform, businesses can't merely sell to customers; they have to curate them. Think of customers and users as potential partners. Your brand is now their brand. Your innovations may well depend on their feedback. Think crowdsourcing and collaborative commerce. Think virality. Their participation can cause your business to sink or swim.
• Don’t think exclusively about the long term. Until relatively recently, smart managers and executives kept their eyes on the future. They developed business plans to carry their companies well into the next decade and beyond. Say goodbye to that. In the Age of the Platform, rapid-fire changes in consumer demand fueled by technology have created a completely different environment. Today, long-term planning is often irresponsible and unwise. Amazon, Apple, Facebook, and Google thrive because their managers focus just as much on short-term plans as long-term ones. These leaders are prepared for change when it arrives. They do not stick to five-year plans—or even three-year plans.

In general, leaders at the Gang of Four are doing what top management gurus have advocated for years: embracing intelligent risk. They aren't afraid of failure, experimentation, or change. To varying extents, Amazon, Apple, Facebook, and Google have moved away from their original and core business models—often multiple times and in unexpected directions. Each company has entered new markets, and sometimes created markets where none previously existed.

The bottom line? In the Age of the Platform, business as usual ceases to exist. Managers must change their behavior, management style, and core philosophy if they hope to meet the challenges of this new age.

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