By Marshall W. Van Alstyne & Michael Schrage
PLATFORM innovators aren’t just market matchmakers between buyers and sellers. They boost value by investing in the capabilities, competence and creativity of their users. Here are steps for organizations to go beyond better matchmaking:
- See users as assets. Who are your “Pareto users,” that is, the 20 percent who generate 80 percent of the revenues or post most of the complaints, compliments and suggestions? Platforms should measure not only the volume of transactions but also the value that users create for each other.
- Target users for online education and training. Borrow best practices from Airbnb, Facebook and SAP. Could you create three 90-second sessions that could turn a typical user into a power user of your platform?
- Identify risks that the platform can absorb better than the user. Payment platforms, for example, are in a far better position to identify and mitigate fraud than individual users. More transactions occur on platforms where partners are protected.
- Think APIs and SDKs. Application Programming Interfaces (APIs) and Software Development Kits (SDKs)are tools for platform innovation. For example, early in its online presence, Netflix opened public APIs from which users created links to New York Times movie reviews and ways to discover niche content. An API can give your best users the chance to customize and personalize your platform to their needs. APIs and SDKs give users the power to create value for themselves.
- Identify buyer needs. Upwork, the freelance labor platform, hosts job boards of unanswered listings. By investing in online training tools, Upwork can increase the skill level and supply of the freelancers who can perform those jobs. Any user search on a platform that fails to find a target represents an opportunity to invest in a supply partner.
Marshall W. Van Alstyne is a professor and chairman of the information systems department at Boston University Questrom School of Business. Michael Schrage is a research fellow at MIT Sloan School’s Center for Digital Business.