The Business of Platforms

A trio of experts on high-tech business strategy and innovation reveal the principles that have made platform businesses the most valuable firms in the world and the first trillion-dollar companies. Managers and entrepreneurs in the digital era must learn to master digital competition and live in two worlds-the conventional economy and the platform economy. Platforms that operate for business purposes usually exist at the level of an industry or ecosystem, bringing together individuals and organizations so they can innovate and interact in ways not otherwise possible. Fueled by powerful network effects, platforms create economic value far beyond what we see in conventional companies. The Business of Platforms is an invaluable, in-depth look at modern business models, platform strategy and digital innovation. Cusumano, Gawer, and Yoffie address how a small number of companies have come to exert extraordinary influence over every dimension of our personal, professional, and political lives. They explain how these new entities differ from the powerful corporations of the past. They also question whether there are limits to the market dominance and expansion of these digital juggernauts. Finally, they discuss the role governments should play in rethinking data privacy laws, antitrust, and other regulations that could reign in abuses from these powerful businesses. Their goal is to help managers and entrepreneurs build platform businesses that can stand the test of time and win their share of battles with both digital and conventional competitors. As experts who have studied and worked with these firms for some thirty years, this book is the most authoritative and timely investigation yet of the powerful economic and technological forces that make platform businesses, from Amazon and Apple to Microsoft, Facebook, and Google-all dominant players in shaping the global economy, the future of work, and the political world we now face. This authoritative guide to the modern economy reveals: Innovation vs. Transaction Platforms: Learn the crucial strategic differences between platforms that enable third-party complements (like Apple's iOS) and those that facilitate exchanges (like Amazon Marketplace). Winner-Take-All Dynamics: Understand the market drivers beyond network effects that determine whether an industry will tip toward a single dominant player, and which factors allow niche competitors to thrive. Classic Platform Failures: Analyze the common mistakes-from mispricing and mistiming to hubris-that caused even first-movers with massive market share to lose their advantage. Strategies for Traditional Companies: Discover how conventional "old dog" firms can compete by choosing to build, buy, or belong to a platform ecosystem without sacrificing their core business. Platform Governance and Antitrust: Explore the role governments should play in data privacy, competition law, and regulating the immense power of today's digital juggernauts.