By facilitating direct transactions and interactions between parties, companies like Airbnb, Google and Facebook are some of the best known – and most profitable – multisided platforms (MSPs) around.
But what about traditional companies that simply provide products and services to customers? How are they supposed to compete on this relatively new and rapidly growing MSP playing field? Or should they even try?
To help answer those questions, Elizabeth Altman, an assistant professor of management in the Manning School of Business, co-authored an article in the Harvard Business Review called “Finding the Platform in Your Product.”
Originally published in 2017, the article was recently selected for the book “HBR's 10 Must Reads on Business Model Innovation.” It was also included in “HBR's 10 Must Reads 2019,” found exclusively at Hudson Booksellers at airports across the country
“The digital economy is enabling more and more companies to operate online, and many companies are founded around that,” says Altman, who co-authored the article with Andrei Hagiu, an associate professor of information systems at Boston University.
“But there are all these companies out there that aren’t. This paper provides a framework that helps those companies transition to more platform-based business models.”
“If you are going to operate in a platform-based ecosystem, the more you can understand about the dynamics of that ecosystem, the better off you will be.” -Asst. Prof. of Management Elizabeth Altman
Altman, who is using data from the project to write an academic paper with Hagiu, took a few moments to talk about MSPs, how the article is being received and how it led to her and Hagiu having their very own custom-made Transformer.
Q. Why do you think this paper was named a “must read”?
A. There are a lot of scholars these days writing about platform-based businesses like Uber, Facebook, Amazon and Airbnb. They are a very hot topic because they are becoming increasingly important not only in the U.S. economy, but in the global economy. Far fewer people are writing about existing companies that are transitioning all or part of their businesses to becoming platforms. We see all of these incumbent, non-platform-based businesses around the world, and many of them are grappling with the challenges associated with becoming platform-based. General Electric, for example, is adopting open innovation by allowing people to submit innovative ideas to them. And LEGO just celebrated 10 years of encouraging users to submit designs to their “LEGO Ideas” platform, from which LEGO then derives inspirations for new sets. Still, even 10 years into their journey, LEGO continues to face challenges as it balances engaging with user communities with managing its core business. These are very traditional, long-standing firms working to figure out how to operate most effectively in a more platform-based world.
Q. Should every business think about transitioning to a platform-based model?
A. It doesn’t make sense for all companies to transition, but all companies should think about it and know about it, because even if they choose not to do so, they need to think about their competitors. Businesses and managers and executives need to understand what platform-based businesses are. In many cases, they are interacting with platforms, whether it’s an accessory or app or complement of some sort. I would argue that if you are going to operate in a platform-based ecosystem, the more you can understand about the dynamics of that ecosystem, the better off you will be.
Q. How is the article being received in the academic and business communities?
A. It seems to be resonating well with managers and executives, and also with educators and scholars. Colleagues around the world are assigning it in business school classes, so that’s fun to know that other professors appreciate it and are using it as teaching material. And, because we have data to support the article’s framework, our colleagues who are writing academic articles are using it to support their research, which is great because it shows people are building on your work. Then, from the managerial or practitioner standpoint, the feedback has been fabulous. People tell us that the ideas in the article are helping them look at their business a little differently and that they would like to hear more. As a business school professor, that’s as good as it gets.
Q. How did you become involved in this research?
A. When I was a doctoral student at Harvard Business School, I started discussing the topic with Andrei, who was one of my advisors, around 2011. He had worked at Intuit for a short time, and we were able to use research that we were doing at Intuit to help us create the framework for the paper. After I graduated and started at UMass Lowell, we continued to collaborate.
Q. The article features an illustration of a Transformer with the Harvard Business Review logo on its chest. Was that your idea?
A. It wasn’t. The editors liked that the article was about transformation, and they found a freelance artist (Artur Hilger) who used to work for Hasbro creating Transformers. So, he created that custom Transformer for us. Andrei and I were psyched to get the article published, but when we heard we had our own Transformer, we were even more excited. They sent me an original print that I need to get framed and hang in my office.