The power of platforms

Posted on by Brandon Klein

Your best platform strategy: Occupy an influence point

Platforms can be effective vehicles to create new value. The risk is that they might also undermine the ability of individual companies to capture their fair share of the value being created, especially if they do not own the platform. By creating far more visibility into options and facilitating the ability of participants to switch from one resource or provider to another, platforms can commoditize business and squeeze the margins of participants.

The greatest opportunities for value capture on platforms require an understanding of influence points that can create and sustain sources of advantage and make it feasible to capture a disproportionate share of the value created on the platform.19 Influence points tend to emerge whenever and wherever relationships begin to concentrate on platforms. By having privileged access to a larger and more diverse array of knowledge flows, the company occupying an influence point has an opportunity to anticipate what’s going to happen by seeing signals before anyone else does. That company is also better positioned to shape these flows in ways that can strengthen its position and provide greater leverage. When you’re in the center of flows, small moves, smartly made, can indeed set very big things into motion.

Where would these influence points tend to emerge on platforms? These points often provide significant and sustainable functionality to the broader platform or ecosystem—for example, the broker position in a market platform. It’s even better if the functionality of these influence points evolves rapidly over time because it creates incentives for other participants to stay in close contact with the occupier of the influence point.