It is common knowledge that platform-based business models are being implemented by IT behemoths today. Another well-known reality is that several industry leaders who have grabbed a sizable piece of their total addressable market are building platforms to fuel their strategy and reap capital rewards.
There are several fundamental distinctions between building a platform and building an application or product. Platform product philosophy requires the platform product manager’s active participation.
It also necessitates concrete insights and understanding of the following:
- When does one build a platform?
- When does one make the decision to switch from a standalone product to a platform strategy?
- How does a platform product manager differ from a solutions product manager?
- How does a platform product manager establish a strategic plan and put it into action?
- Who are the key players in a platform strategy?
I will attempt to answer all of the following questions in a series of blogs.
But first, let us try to understand “WHAT IS A PLATFORM PRODUCT?” By definition, a platform product is a collection of tools that enable products to exchange data and experiences with one another. In other words, a platform is a solution that facilitates the resolution of problems for multiple businesses or products. The solution is extendable and scalable, allowing you to employ the same solution several times.
A platform usually permits other parties, partners, or suppliers to plug into your product and deliver platform level services, allowing them to leverage the basic features and build on top of it. In a nutshell, it creates an eco-system around the product, extending the benefits of the product to partners and, eventually, end consumers.
Facebook is a perfect example of a platform product. The user base and their interests are developed as a core asset on a platform that is used not just for social media applications but also for other product lines like gaming, ad networks, and third-party app developers. Another great example of a platform product is the Amazon marketplace, where approved third parties can list and sell their items via Amazon’s e-commerce site using the most friction-free checkout procedure.
Now that these two examples have established, “When should one make a transition to a platform product?” let me try and answer the question, “Why do you need to build a platform instead of a great standalone product?” To be frank there is no silver bullet to this query. But if you make a clear delineation of the following factors
- need to respond quickly to consumers
- market fitment of your product
- economies of scale
it can clarify the most crucial question in your business, “To transition or not to transition?”
Transitioning to a Platform mindset has a slew of advantages.
- Unlike traditional standalone products, platform business models have the potential to scale quickly and effectively
- It creates a win-win situation for buyers and sellers, partners, co-creators, customers, and platform owners, to name a few.
- The platform mentality fosters and encourages diversity, and it boosts risk appetite because the company isn’t reliant on a single product line for success.
- Robust and sustainable architecture that helps entrepreneurs in developing a long-term business strategy and roadmap
The various dimensions and intricacies of what it takes to be a Platform Product Manager and a Solutions Product Manager will be discussed in the upcoming blog. Keep an eye on this space for regular updates on “Platform Product Management.”
About the Author
Sarang is an aspiring writer, lifelong learner, and product management enthusiast who is passionate about making customers’ lives easier through exceptional ‘user experiences.’