To build successful platforms that will stand the test of time, businesses must harness power without abusing it.
It’s not difficult to see how digital technology and innovation have rapidly transformed our world over the last three decades. If the industrial revolution was built by the factory system, the changes we see today are organized around digital platforms.
Indeed, the most valuable companies in the world — Microsoft, Apple, Amazon, and Google — have harnessed platform power to achieve rapid growth and market dominance as their products and services permeate our daily life. And just as these platforms have grown in size and scale, the opportunity for abusing their power has also become very real.
How should regulators and competitors respond? What are the emerging platform battlegrounds that will shape our future? In a time when platforms have become double-edged swords — capable of being used in both positive and negative ways — how do entrepreneurs and managers pursue growth responsibly?
These are the kinds of questions authors Michael A. Cusumano, Annabelle Gawer, and David B. Yoffie contend with in their most recent book, The Business of Platforms. The book builds on their body of research drawn from studying and working with platform companies for the last 30 years, and the authors use new data to critically examine the impact platforms have on the economy and society.
MIT Sloan Management Review digital editor Ally MacDonald spoke with the authors about their research, and what follows is an edited and condensed version of their conversation.
MIT Sloan Management Review: You’ve been studying platforms for a long time. What keeps you interested?
Michael Cusumano: There is a lot of confusion and hype over exactly what platforms are, how they function as businesses, and what contributions they make. We wanted to dispel some of the platform mania using real data. How do companies create and run platforms so that they make money? How do you make sure [the platforms are] positive rather than negative for both the economy and society? Those were the kinds of questions we were thinking about as we set out to research and write the book.
What are the key distinctions between platform types that leaders need to understand today?
Michael Cusumano: We find platforms in nearly all industries.