Think of water. Fresh, clean water. Once upon a time, one would have to dig a hole on ones land, and hope for the best. Over time, communities dug a common deep hole, called a well, and shared the water.
This was one of the first platforms, as it provided a shared resource to many people, and despite purity, taste and availability being highly variable, it made things better for more than one!
Today, the CWA operates a national scale platform to supply clean drinking water to the whole country. Without the CWA, every family and business would be extracting, purifying and filtering water all day. The CWA therefore makes water cheaper, faster and better (and safer too), saving people time, money and allowing a standard metered service, to businesses and families.
One might argue that every religion (making a way of life better), every political party (making representation and governance of the people better) and even every football club (making enjoyment of a sport better) is a platform too.
In this article, I’m going to talk about Digital Online Platforms, as that’s what you’re using right now, and- unless you’d like to start a new political party to do good- digital platforms can bring benefits pretty fast.
What’s a digital online platform?
A digital online platform, quite simply, allows an exchange to take place online.
Facebook is a social platform, as it allows people who want to share ideas and people who want to hear ideas and react to them, to exchange ideas.
Amazon allows people trying to buy things and people trying to sell things to exchange goods and services online. Such a platform is usually called a marketplace.
Note that Amazon allows not only buyers and sellers, but people who write reviews about products, and people who transport goods, to do their work more easily, to make the exchange of goods and services even faster, cheaper and better. Amazon is a true example of a multi-sided marketplace.
Why are platforms important for small businesses?
A platform is first of all a good tool. A good tool always provides this benefit: small amount of effort in, large amount of value out. That’s called leverage.
A platform allows multiple users to enjoy this leverage. A well-designed platform provides more leverage to each user, as the number of users grows. This is sometimes called a “network effect”. It might be the reason that you installed Whatsapp. As your friends and family are on Whatsapp, it’s worth installing, so you can communicate with them where they are already hanging out. And you joining Whatsapp made it more valuable to them.
There are many reasons to love platforms, but my favourite reason is that platforms allow smaller companies to enjoy cost savings, market opportunities and other things that are usually enjoyed by larger companies.
As a small business, how do I get started with platforms?
To get started, you could either make use of an existing platform, to enjoy benefits for your business, or even build your own platform!
You could use someone else’s platform
An existing digital online platform could be as simple as Accounting software in the cloud, that you might pay a monthly fee to use, or even an account on a marketplace, allowing you to sell your goods to a ready audience.
But here’s where you could get very creative. Could you repurpose a “traditional” existing platform to achieve leverage, at very low cost but with enormous benefit to your business?
A platform doesn’t have to be beautiful. It just has to deliver consistent benefits!
You could build your own platform
Do you do something better, faster or cheaper than anyone else? If so, could you make this available online to serve your customers even better? Or maybe your suppliers? How about your competitors? You get the idea. As a platform owner, you have access to incredible power.
In my next article, I’ll dig deeper into this, and share a framework to get started, and some inspiring stories.
Homework (for those who want to get started)
Until we meet again, here are some of my favourite readings, that I hope you might like.
- Derek Sivers is a personal acquaintance. A musician who simply wanted to sell his CDs online. Except that there were no platforms that did that, at the time. Here’s the story of how he built CD Baby, that allowed anyone anywhere to order a music CD (and not just his music CD) and have it delivered to their door.
- If you’re in the mood to go in deep, Platform Scale by Sangeet Paul Choudary explains how small businesses can compete with large ones, through platforms
- If you want to know about how platforms make money, check out Matchmakers by David S Evans.
By Alam Kasenally
Co-Founder and Chief Product Officer, Red Dot