In their article in the Harvard Business Review, Van Alstyne, Parker, and Choudary (2016) point to the need for new mindsets and models for value creation. They contend that many organizational leaders have a “pipeline” view of how value is created. The authors make the case that this pipeline approach results in organizations and programs designs that are focused on optimizing the activities of the organization’s value chains and that this way of creating value works well only when the majority of the value chain is within the organization’s control.
They contend that rapid technology development and shifting market dynamics has resulted in less and less of the value chain being within the control of any one organization. Sensing this, many organizations attempt to build bigger pipelines. They often, however, find that bigger pipelines don’t result in the increased value creation hoped for.
As an alternative, they encourage organizational leaders to consider a different model: the platform. Platforms bring together consumers and producers. They create “watering holes” that attract new assets (ideas, expertise, capital, etc.) – some expected; but some serendipitous surprises as well. So many of the assets required to create value are external to the platform builder, often unknown to them. The right sort of watering hole can bring them out, surfacing hidden assets. For platform-building organizations, their focus shifts from controlling resources to orchestrating them. Organizations win by creating environments in which new ecosystems can form and network effects can occur, increasing the value co-created by the inhabitants of the ecosystem.
The pipeline approach is evident in much of our thinking about organizational design and value creation. We think about pipelines of products, pipelines of employees, pipelines of customers. In many cases we are building bigger pipelines but are we seeing proportional gains in the strategic outcomes we hope for? If not, perhaps a platform-based approach is worthy of consideration.
For the last few weeks, we have been working with a group of organizational leaders to consider what a platform model might look like for them. Our work together draws on models and frameworks available from the Platform Designers Toolkit developed by Rome-based group called Boundaryless. You can learn more about them here.
The four phases we use to design a platform include the following:
- Exploration: what’s the existing ecosystem look like
- Selecting a Platform Strategy: Selecting which of the 4-6 different platform strategies is the best fit
- Validation & Prototyping: coming out of the garage to get user feedback, then revising the prototype
- Growth Hacking: Growing your consumer and producer community
Whether you are starting something new or attempting to create more value by transforming your existing organizational model, we would love to hear from you and together explore how we might be able to help. Connect with us!