The authors take into account the advantages and pitfalls of each and the resources, relationships, and organizational changes that would be required.įive of the 10 most valuable companies in the world today-Apple, Alphabet, Amazon, Facebook, and Microsoft-derive much of their worth from their multisided platforms (MSPs), which facilitate interactions or transactions between parties. Here are four scenarios whereby regular products or services can become MSPs. The Opportunityīy becoming a multisided platform (MSP) that facilitates interactions between parties, a company may be able to provide new revenue sources while also preventing competitors from stealing market share from its product or service. Many companies that sell products or services either don’t realize they could turn their offerings into a platform business or struggle to do so. These ideas can be used by physical as well as online businesses. They lay out four specific ways in which products and services can be turned into platforms and examine the strategic advantages and pitfalls of each: (1) opening the door to third parties (2) connecting customers (3) connecting products to connect customers and (4) becoming a supplier to a multisided platform. In this article, Hagiu and Altman provide a framework for doing so.
And even if they do realize it, they often wander in the dark searching for a strategy to achieve this transformation.
However, companies that weren’t born as platform businesses rarely realize that they can-at least partially-turn their offerings into one, say the authors.
Many MSPs are more valuable than companies in the same industries that provide only products or services: For instance, Airbnb is now worth more than Marriott, the world’s largest hotel chain. Five of the 10 most valuable companies in the world today-Apple, Alphabet, Amazon, Facebook, and Microsoft-derive much of their worth from their multisided platforms, which facilitate interactions or transactions between parties.