MIT Sloan Executive Education Blog

Join the platform revolution

It's no overstatement to say that the two-sided networked market--or platform--model is one of the most important economic and social developments of our time. The platform model powers many of today's biggest and most disruptive companies, like Amazon and Airbnb, with others, like Nike, coming on board. Platforms use technology to connect people, organizations, and resources in an interactive ecosystem in which enormous value is created and exchanged. And researchers believe that the transformation is soon to hit a range of other economic and social arenas, from health care and education to energy and government.

Surprisingly, many people--even savvy business executives--remain unaware of how the platform revolution happened, or what to do about it. In a new MIT Sloan Executive Education program, Platform Revolution: Making Networked Markets Work for You (online), Geoffrey Parker, Professor of Management Science at Tulane University and Visiting Scholar and Research Fellow at MIT's Initiative for the Digital Economy, explores the escalation of IT-driven platforms over established product leaders--such as iPhone's rapid domination of its industry at the expense of Nokia, Blackberry, Motorola, Sony Ericsson and others. The four-week, online course also provides technology leaders with ways to prepare for even more rapidly unfolding disruption.

Understanding the platform advantage

Platforms invert companies, transforming firms' traditional focus on internal value creation to an outward focus on external value creation. In previous posts we have touched on why platforms beat products every time--by harnessing resources they do not own and scaling at a pace traditional firms cannot match. Consider that Airbnb owns no real estate and Uber owns no cars yet each has grown faster than Marriott or Yellow Taxi has ever grown, or can hope to grow, using traditional methods of supply. Platforms leverage ecosystem partners for labor and capacity. By contrast, a pipeline business employs a step-by-step arrangement for creating and transferring value, with producers at one end and consumers at the other as in a traditional linear value chain.

"Platform businesses bring together producers and consumers in high-value exchanges," Parker and his colleagues write in a recent article in Harvard Business Review. "Their chief assets are information and interactions, which together are also the source of the value they create and their competitive advantage." Startups, as well as firms undergoing reinvention, must understand the new rules in order to take advantage of the huge benefits platform businesses can provide. Executives must also make smart choices about access and governance. They must understand the anti-trust implications of platform strategies and safe harbor defenses, for example, and realize how traditional pricing models break down in the context of platforms.

If you're interested in better understand this exciting market, we encourage you to enroll in Parker's upcoming course (starts June 20, 2016). Provided in collaboration with the MIT Initiative on the Digital Economy, the program includes weekly live webinars, pre-recorded video lectures, and learning module videos, making it a flexible learning option for busy executives. It is as applicable to entrepreneurs and executives in small and medium businesses as to executives in larger companies. Whether you are looking to create a platform revolution in your industry or secure a sustainable and profitable future within an existing platform ecosystem, this program provides the insights and practical advice to guide you.


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