Last month, BearingPoint brought 25 clients to the MIT Platform Strategy Summit that we sponsored in Boston. This insightful event brought together the world’s brightest minds to share experiences on platform-based business models. Many major developments in the field of platform strategy are taking place in Boston, and we were delighted to be part of it.
Over the course of the day we heard from digital start-ups and corporate who had transformed from a traditional pipes business to a platform. Their views mirror our own experience, that there is an enormous untapped opportunity. Research presented at the MIT Summit demonstrates that platforms beat pipeline businesses nearly every time. Here’s why:
In terms of key takeaways, here are two points that, for me, stand out from the rest:
This is the re-telling of Michael Porter’s Competitive Strategy (note 1). In a model where there are fixed roles, the advantage comes from raising barriers to entry and controlling markets. Platform roles are constantly in flux; barriers to entry are levered up by removing friction, network effect, lowering transaction costs and innovation. Most platforms start with one service but then move quickly into adjacent markets or adjacent interaction types to drive network effect, new forms of value and exponential growth.
As a two-sided market, platforms must constantly balance the interests of the community it supports
In short, this means encouraging consumers by offering competitive prices but still taking into account the needs of producers (sharing value and encouraging participation), and governing this to remove those that would have a negative impact.
BearingPoint will be hosting its own event, Digital Ecosystem Management - Global Summit. Geoff Parker, a research fellow at MIT’s Initiative for the Digital Economy will be presenting, alongside 30+ other expert speakers. See the full line-up here.