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In 2004, Walt DuLaney and I conducted a longitudinal examination of business growth and
cumulative revenue performance. Among the success factors, we found that companies
with powerful business platforms outperformed peers in cumulative revenue growth over a
15 year period. Our conclusion: business platforms can be a means for organizational
renewal, continuous innovation, and sustainable success.
Since then, the sophistication of business platforms and their related ecosystems has
expanded and other companies have found succ ess. In the case of Apple, competitors were
forced to launch competitive platforms in response ( Google͛s Android, Symbian Foundation,
and RIM) while Apple collected competitive profits. A growing body of experience indicates
that business platforms coupled with an ecosystem of partners can produce superior
economic value. As those partners cooperate and work together they collectively learn,
innovate and expand their options for new product features, additional partnerships, and
new platform components. The platform plus the ecosystem becomes a sustainable
economic engine for growth and development.
Here are twelve success factors for business platforms based on our work at nGenera
Insight. The first seven are business-related success factors. The second five are
technology-success factors. The list reflects current understanding and is far from
comprehensive. Nonetheless, it provides a starting point for companies interested in
sustainable growth.

 

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& ʹ No surprise. All successful platforms begin with
leadership, vision and a clear persistent purpose. Wal-Mart͛s logistic system
implemented in 1993, now over 16 years old establ ished the foundation to manage
an increasingly complex distribution model, provide a basis to involve partners in
category management and drive sustainable efficiencies in the retail industry. GE͛s
aircraft engine maintenance platform supported the collection of real-time in-flight
engine telemetry data that in turn provided information to customers and ultimately
supported concurrent design of their next generation engines.
2. 

' ʹ An ecosystem is an economic community. An ecosystem
thrives when all parties experience mutual economic benefit. Apple͛s iPhone
ecosystem has produced 100,000 apps. In an ecosystem, motivated, persistent
participation and contribution is driven by enlightened self -interest which benefits
the whole. The business platform provides the architecture, policies, rules,
transactional frameworks, and the information necessary for the ecosystem to
operate.
3.  &
' ʹ How does a company outcompete its rivals and grow? Move
faster. Salesforce.com revolutionized the CRM business, not only providing a better
deal, but also delivering more new functionality per unit time than their competitors
like Siebel, Oracle and SAP. IBM got platform and ecosystem fever with Linux. By
investing in the Linux platform, its world-wide development community, and its
 related ecosystem, IBM was able to grow a new operating system faster than it could
do by itself and enlist more developers than it could possibly afford.
4.  (


%
 Ͷ Business platforms must be conceived, from the
outset, as an unfinished masterpiece. Extensibility means learning. The difference
between an applications project and a business platform is that a business platform
is never finished. When a platform is finished it is at the end of its life. Learning
creates new directions and options. New options create new opportunities for
growth, alternative futures and other avenues for competitive action. Amazon͛s
original on-line retail platform evolved into other businesses such as Marketplace,
Web Services, and most recently cloud computing with their Elastic Compute Cloud
offering.
5.  !&' Ͷ Transparency fosters beneficial contagion and excitement among
the ecosystem members and interested parties. An examination of any successful
business platform reveals alternative futures. Alternative future means options.
Options can be valued and hence the investment community can estimate the
expected value of such potential futures and model a resulting perpetuity
calculation. Transparency attracts new partners and helps existing ecosystem
partners to co-create the future of business platform. As momentum builds,
transparency also strikes fear in the competitors.
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 Ͷ Policies and rules are essential otherwise chaos reig ns and the
platform and related ecosystem dies. The business platform becomes the repository
and the enforcer of policies and rules. The business platform also communicates
changes in rules. Consider the rules propagated and enforced in the iPhone
ecosystem, or the Android ecosystem through the hardware architecture, operating
system architecture, the business architecture and the rules and policies for these
respective ecosystems.
7.  ' Ͷ Business platforms generate prodigious amount of data continuously.
One of the most powerful advantages of a business platform stems from the
collection and analysis of strategic, situational, transactional and detailed usage
data. As the data is collected powerful visualization and analytic tools can provide a
combination of real-time and longitudinal analyses. The closed-loop nature of the
data collection process inherent in the business platform enable the platform
leaders and ecosystem partners to run experiments, continuously improve products
and rapidly evaluate potential business strategies and directions. It is very difficult
to duplicate this type of analytic capability in a non -platform business model.

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 ʹ Open architectures provide the basis for future
options and business platform extensibility. Open means that other technological
standards can interface with the business platform, even technologies that have yet
to be invented. Remember, business value is ultimately determined by the market͛s
assessment of future viability and the promise of future value. If the business
platform is based only on a few proprietary or close technology architectures, future
business options will be limited.
2.  &
$ ʹ ͞assembly required.͟ Most business platforms consist of a
collection of open, custom and proprietary application engines. From a
technological perspective, it is cheaper and more effective for a platform to be
 assembled from the evolving marketplace of technological components. A
component based approach in an open source, open architecture and cloud
computing environment also means that companies can enter the business platform
space for less cost and minimal proprietary software development.
3.   ʹ Google has scaled from it beginnings. At the outset the Googleplex
consisted of hundreds of servers. Today the Googleplex is estimated to consist of
over a million servers. Google͛s business platform and technology platform was
designed from the outset to scale.
4.  ,
&' ʹ Sensors in products (e.g. aircraft engines, cell phones, elevators)
and sensing capabilities in key aspect of the business platform͛s infrastructure
provides a level of detailed data not possible in standard business models. Almost all
successful business platforms, whether product based, or service -based have a
sophisticated network of sensors that collects real -time data.
5.  
, ʹ Business platforms operate to deliver their product or services to
the customer at the right place, at the right time in the best possible way. Successful
business platforms eliminate the constraint of place. Dion Hinchcliffe notes in a
recent post that the popularity of mobile apps is transforming the Internet and
replacing the web because they provide the right type of interaction for the user at
the right time. Whether it is a mobile app or another delivery vehicle, smart business
platforms live by being location agnostic.
Taken together these twelve factors provide a basis to begin a quest for sustainable growth.
What is your view? Are business platforms a new basis for business growth and success?
Will all companies need to be a part of a platform or a platform leader?
Do you have plans for a business platform in your future?