Business Models: From Pipes to Platforms
Business models and business design is undergoing a transformative shift – from pipes to platforms.
Our existing business models resemble pipes, where value is created at one end (upstream) and consumed at the other end (downstream). Set up a factory, get people and capital and build cars – create value at the upstream. Create channels, do marketing, sell cars – consume value downstream. The same model works for consumer goods (make soap, sell soap), or media (create content, sell content), or even education (push knowledge from the teacher/school end of the pipe to the student end). Earlier digital models also followed the pipe model: Amazon’s e-tail store does that, so did Yahoo (publish content at one end, consumed at the other).
However, three forces are upending this model: – increasing connectivity, decentralized production, and the rise of AI. They are creating the platform business model: Google, Facebook, Apple, Uber, Airbnb, Oyo Rooms, Ola Cabs leverage this model. These businesses create a plug and play infrastructure that enables producers and consumer of value to connect and interact with each other. They allow participants to co-create and exchange value with each other, at all points.
Management guru Ram Charan says that : 'the platform is the strategy', all businesses will now need to 'platformise'...
How do we do that?