Platform Enterprises

With the rise of the services economy and information technology fundamentally new forces are at play in the global economy and this is giving birth to a new form of business organization called the platform business that is adapted to this age of connectivity. A new form of business model that facilitates connections instead of selling products. Whereas within an industrial economy it was all about concentrating intelligence and expertise within centralized organizations, today organizations increasingly recognize that the greatest expertise and capabilities are really outside of their organization and the most successful are converting themselves into networks that enable them to aggregate the capabilities of others and work to connect buyers and sellers within fluid markets. Instead of creating tightly concentrated capabilities the aim now is to create ever more widely distributed networks, that can reach further, connect more people and access the potential capabilities of more.

The platform business model is one that effectively combines closed organizations and open networks, being a hybrid of part open network and part closed organization. It is only really in the past decade or two that we have seen the true rise and coherent formalization of this open model to organizations. More like ecosystems or markets than the traditional industrial age organization, these platforms form two-sided markets that connect and work to facilitate the exchange of value, accessing whole new value sources by creating a more complex form of user generated organization. No longer owning fixed resources and selling products these platforms really work to produce connections between producers and consumers. Platforms connect people peer-to-peer, unlike traditional organizations that create fixed rule sets for coordinating a limited number of members in well-defined roles in closed organizations, platforms are built for the mass of people to connect to the mass of people – the so-called long tail – connecting to each other so that they can access and utilize each other’s resources and capabilities. In so doing they blur the line between producers and consumers, between professionals and nonprofessionals.

In this paper, we look at the anatomy of these platform businesses and how the platform model works. We discuss the rise of the so-called collaborative economy and the access economy that platforms have enabled. Finally, we discuss the astronomical rise to fame that online platforms have made in just the past decade to become truly global players today, coordinating an ever larger section of the global economy.