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THE
PLATFORM
MANIFESTO
SANGEET PAUL
CHOUDARY
Copyright © 2015 Sangeet Paul Choudary, Geoffrey Parker and Marshall Van Alst...
The times they are a’changin’
Source: PLATFORM THINKING
Copyright © 2015
Sangeet Paul Choudary,
Geoffrey Parker and
Marsha...
used to work like
PIPES
Traditional business models
Source: PLATFORM THINKING
Value created upstream,

delivered downstream

PRODUCTION ASSEMBLY DISTRIBUTION
Copyright © 2015
Sangeet Paul Choudary,
Ge...
Emerging business
models work like
PLATFORMS
Source: PLATFORM THINKING
Copyright © 2015
Sangeet Paul Choudary,
Geoffrey Pa...
APPS
DEVELOPERS USERS
Copyright © 2015
Sangeet Paul Choudary,
Geoffrey Parker and
Marshall Van Alstyne
LISTINGS
HOSTS TRAVELERS
Copyright © 2015
Sangeet Paul Choudary,
Geoffrey Parker and
Marshall Van Alstyne
VIDEOS
VIDEO
CREATORS
VIDEO
VIEWERS
Copyright © 2015
Sangeet Paul Choudary,
Geoffrey Parker and
Marshall Van Alstyne
EBOOKS
WRITERS READERS
Copyright © 2015
Sangeet Paul Choudary,
Geoffrey Parker and
Marshall Van Alstyne
PRODUCERS CONSUMERS
VALUE
PLATFORM
Copyright © 2015
Sangeet Paul Choudary,
Geoffrey Parker and
Marshall Van Alstyne
“
Uber, the world’s largest taxi company, owns no
vehicles. Facebook, the world’s most popular media
owner, creates no con...
Pipe Scale (n):
Business scale powered by the ability to
coordinate internal labor and resources
toward efficient value cr...
Platform Scale (n):
Business scale powered by the ability to leverage and orchestrate a
global connected ecosystem of prod...
Business principles change in a
world of platform scale
Source: PLATFORM THINKING
We need
a new mental map
to navigate a changing world
Source: PLATFORM THINKING
Copyright © 2015
Sangeet Paul Choudary,
Ge...
The manifesto explains the shift
in business principles while acknowledging that
value creation and delivery are still cen...
1. The ecosystem is the new warehouse
2. The ecosystem is also the new supply chain
3. The network effect is the new drive...
Too busy to read all the slides?
Source: PLATFORM THINKING
Download the deck
Better still,
click here
to get the whole book
Source: PLATFORM THINKING
THE ECOSYSTEM IS
THE NEW WAREHOUSE
Source: PLATFORM THINKING
Copyright © 2015
Sangeet Paul Choudary,
Geoffrey Parker and
M...
Pipe Scale :
Traditionally, businesses relied
on internal labor and owned
resources to scale value
creation
Source: PLATFO...
Platform Scale :
Leverage an external ecosystem of
users and partners connected to the
business over the Internet
Source: ...
Amazon
From warehouse to ecosystem
Source: PLATFORM THINKING
Copyright © 2015
Sangeet Paul Choudary,
Geoffrey Parker and
M...
Started as a traditional online store
Moved to marketplace
Source: PLATFORM THINKING
Copyright © 2015
Sangeet Paul Choudar...
Leverages warehouses distributed across
an ecosystem of partner merchants
Source: PLATFORM THINKING
Copyright © 2015
Sange...
FROM: Warehouse-powered store
Liquidate inventory
TO: Ecosystem-powered marketplace
Govern ecosystem interactions
Source: ...
COMPETING WITH HOTELS
using an ecosystem
Source: PLATFORM THINKING
Copyright © 2015
Sangeet Paul Choudary,
Geoffrey Parker...
Traditional media
differentiates on
ownership of content
Source: PLATFORM THINKING
YouTube and Soundcloud unlock an
ecosystem of content creators
Source: PLATFORM THINKING
Copyright © 2015
Sangeet Paul Cho...
Huffington Post started in-
house content
Source: PLATFORM THINKING
Copyright © 2015
Sangeet Paul Choudary,
Geoffrey Parke...
Eventually
scaling on
an ecosystem model
Source: PLATFORM THINKING
Copyright © 2015
Sangeet Paul Choudary,
Geoffrey Parker...
THE ECOSYSTEM IS
THE NEW WAREHOUSE
Ecosystems, not resources, 

determine competitive advantage
Source: PLATFORM THINKING
...
THE ECOSYSTEM
IS ALSO THE NEW
SUPPLY CHAIN
Source: PLATFORM THINKING
Copyright © 2015
Sangeet Paul Choudary,
Geoffrey Park...
Scale is achieved through the
efficient organization of
ecosystems and processes
towards 

value creation
Pipe Scale :
Organize resources and labor
around internal and controlled
processes
Source: PLATFORM THINKING
Copyright © 2...
Platform Scale :
Organize ecosystem resources and
labor through a centralized platform
coordinating actions
Source: PLATFO...
Traditional software creation
model follows linear supply
chain
Source: PLATFORM THINKING
Copyright © 2015
Sangeet Paul Ch...
Open-source software
organizes an ecosystem towards
creation and updation of software
Encyclopedia
Britannica
Pipe scale
Source: PLATFORM THINKING
Copyright © 2015
Sangeet Paul Choudary,
Geoffrey Parker and
M...
Wikipedia
Ecosystem of contributors create and
manage a living encyclopedia
Source: PLATFORM THINKING
Copyright © 2015
San...
Viki
Ecosystem of enthusiasts
add subtitles to video content
Viki’s software
powers the subtitle creation,
editing, and confirmation process,
reminiscent
of the open-source tools
used...
Quirky briefly tried to move
manufacturing into the
ecosystem
Quirky briefly tried to move manufacturing into
the ecosyste...
THE ECOSYSTEM
IS ALSO THE NEW
SUPPLY CHAIN
New coordination platforms enable a distributed
ecosystem to work together
Sour...
THE NETWORK EFFECT
IS THE NEW DRIVER
FOR SCALE
Source: PLATFORM THINKING
Copyright © 2015
Sangeet Paul Choudary,
Geoffrey ...
Pipe Scale :
Businesses scale by scaling
internal resources and
optimizing operations
Source: PLATFORM THINKING
Copyright ...
Platform Scale :
Businesses scale by scaling and
optimizing external interactions
Source: PLATFORM THINKING
Copyright © 20...
Platform Scale
Businesses scale through
network effects
Feedback loops
Source: PLATFORM THINKING
Copyright © 2015
Sangeet Paul Choudary,
Geoffrey Parker and
Marshall Van Alstyne
...
THE NETWORK EFFECT
IS THE NEW DRIVER
FOR SCALE
Source: PLATFORM THINKING
Copyright © 2015
Sangeet Paul Choudary,
Geoffrey ...
Scale is achieved by
leveraging
interactions in the
ecosystem
Source: PLATFORM THINKING
Copyright © 2015
Sangeet Paul Chou...
DATA IS
THE NEW DOLLAR
Source: PLATFORM THINKING
Copyright © 2015
Sangeet Paul Choudary,
Geoffrey Parker and
Marshall Van ...
Pipe Scale :
Today’s organizations are
optimized to absorb dollars
Source: PLATFORM THINKING
Copyright © 2015
Sangeet Paul...
Pipe scale:
Sales professionals measured on
dollars absorbed
$
Source: PLATFORM THINKING
Copyright © 2015
Sangeet Paul Cho...
Platform Scale :
Tomorrow’s organizations should be
optimized to absorb data
Source: PLATFORM THINKING
Copyright © 2015
Sa...
Platform scale:
Measure monetizable data
absorbed, in addition to dollars
$
Source: PLATFORM THINKING
Copyright © 2015
San...
More data
absorbed lead to
more monetization
opportunities
Source: PLATFORM THINKING
Copyright © 2015
Sangeet Paul Choudar...
Helped it create a larger potential job market
Verifieduser absorbs more data
from its users than Monster ever did
Source: PLA...
Toyota, GM, and Ford moving to data-
absorbing business models
Car-as-a-platform
Source: PLATFORM THINKING
Copyright © 201...
Helps predict need
for after-sales service
Emerging cars stream
data about usage
Source: PLATFORM THINKING
Copyright © 201...
Helps insurance
companies personalize
their premiums
Emerging cars stream
data about usage
Source: PLATFORM THINKING
Copyr...
DATA IS
THE NEW DOLLAR
Organizations must shift from
a culture of dollar absorption to
a culture of data absorption
Source...
Like what you’re
reading?
click here to enter the
book giveaway
Source: PLATFORM THINKING
COMMUNITY MANAGEMENT IS
THE
NEW HUMAN RESOURCES
MANAGEMENT
Source: PLATFORM THINKING
Copyright © 2015
Sangeet Paul Choudar...
Community management isn’t
merely marketing 2.0
Source: PLATFORM THINKING
Copyright © 2015
Sangeet Paul Choudary,
Geoffrey...
Pipe Scale :
Communities need to be
managed like audiences
Source: PLATFORM THINKING
Copyright © 2015
Sangeet Paul Choudar...
Platform Scale :
Communities need to be managed like
distributed employees
Source: PLATFORM THINKING
Copyright © 2015
Sang...
Community management requires:
Structuring and managing incentives for
participants
1
Enabling the learning and developmen...
Managing community incentives and
governance is as important as managing
internal employee conduct and
compliance
Source: ...
Josh Riedel
(Employee #1 at Instagram)
Engineer Designer Community 

Manager
Source: PLATFORM THINKING
Copyright © 2015
Sa...
Hotels invest heavily in training and managing
incentives for their staff
Source: PLATFORM THINKING
Copyright © 2015
Sange...
Platforms like Airbnb must invest
in community management and
development
Source: PLATFORM THINKING
Copyright © 2015
Sange...
For on-demand
labor platforms,
Community
Management
is the new HR
management
COMMUNITY MANAGEMENT IS
THE NEW HUMAN RESOURCES
MANAGEMENT
A community must be scaled in a platform
business, in much the ...
LIQUIDITY MANAGEMENT IS
THE NEW INVENTORY
CONTROL
Source: PLATFORM THINKING
Copyright © 2015
Sangeet Paul Choudary,
Geoffr...
Pipe Scale :
Idle supply and unfulfilled
demand are undesirable
scenarios
Source: PLATFORM THINKING
Copyright © 2015
Sange...
Platform Scale :
Interaction failure is
an undesirable scenario
Source: PLATFORM THINKING
Copyright © 2015
Sangeet Paul Ch...
Producers create value but
do not see relevant demand
Interaction Failure
Source: PLATFORM THINKING
Copyright © 2015
Sange...
Consumers are not matched with
relevant supply
Interaction Failure
Source: PLATFORM THINKING
Copyright © 2015
Sangeet Paul...
Matching supply and demand efficiently is the
only way that a platform
can hold the two sides together
Source: PLATFORM TH...
Liquidity
Demand is reliably served with
supply
Supply is liquidated with demand
efficiently
Source: PLATFORM THINKING
Facebook created a social network within
closed college campuses
High Liquidity
Source: PLATFORM THINKING
Copyright © 2015...
High overlap of users who already knew
each other within a campus
High Liquidity
Source: PLATFORM THINKING
Copyright © 201...
Liquidity
Enhancing
Techniques
Uber’s surge pricing
Source: PLATFORM THINKING
Copyright © 2015
Sangeet Paul Choudary,
Geof...
LIQUIDITY MANAGEMENT IS
THE NEW INVENTORY
CONTROL
Ensure enough overlap between supply and demand to
guarantee fulfilled d...
CURATION AND REPUTATION
ARE THE
NEW QUALITY CONTROL
Source: PLATFORM THINKING
Copyright © 2015
Sangeet Paul Choudary,
Geof...
Pipe Scale :
Control quality through
hierarchies, gatekeepers, and
contracts
Source: PLATFORM THINKING
Copyright © 2015
Sa...
Platform Scale :
Control quality through curation and
reputation management
Source: PLATFORM THINKING
Copyright © 2015
San...
The Platform Challenge:
Controlling quality in an open and
participative environment
Source: PLATFORM THINKING
Copyright ©...
The Platform Challenge:
Controlling quality
with minimum friction
Source: PLATFORM THINKING
Copyright © 2015
Sangeet Paul ...
The Platform Challenge:
Controlling quality through processes
that scale non-linearly
Source: PLATFORM THINKING
Copyright ...
Platform Curation Mechanisms
Initial screening of producers to ensure a
minimum quality threshold
Uber, Sittercity
Determine producers (‘or consumers’) reputation
through social signals
Airbnb ratings Amazon ratingsYelp ratings
Determine quality of
production
Voting on Quora
Voting on YouTube
Source: PLATFORM THINKING
Copyright © 2015
Sangeet Paul ...
Quality = (Editorial moderation, Algorithmic
judgment, Social signals)
Source: PLATFORM THINKING
CURATION AND REPUTATION
ARE THE
NEW QUALITY CONTROL
Balance open participation with curation
and reputation management
Sou...
USER JOURNEYS ARE THE NEW
SALES FUNNELS
Source: PLATFORM THINKING
Copyright © 2015
Sangeet Paul Choudary,
Geoffrey Parker ...
Pipe Scale :
Lead customers
through sales funnels.
Source: PLATFORM THINKING
Copyright © 2015
Sangeet Paul Choudary,
Geoff...
Pipe scale:
AARRR framework
AARRR!
Source: PLATFORM THINKING
Copyright © 2015
Sangeet Paul Choudary,
Geoffrey Parker and
M...
Platform Scale :
Nudge users along journeys
Source: PLATFORM THINKING
Copyright © 2015
Sangeet Paul Choudary,
Geoffrey Par...
The new, new retail
From tracking in-store footfalls
To measuring engagement across
multiple touch points
In a world of multi-device,
multi-channel journeys, the browse
and buy experiences are decoupled
Source: PLATFORM THINKING...
A data platform serves as an integration layer
that connects multiple touch points with the
user
Unify view of the user
So...
Data-enabled connectivity binds users’ immediate
experience with their overall journey with the
business.
Source: PLATFORM...
USER JOURNEYS ARE THE NEW
SALES FUNNELS
In a networked world,
purchase paths are no longer linear
Source: PLATFORM THINKIN...
DISTRIBUTION IS
THE NEW DESTINATION
Source: PLATFORM THINKING
Copyright © 2015
Sangeet Paul Choudary,
Geoffrey Parker and
...
Pipe Scale :
Define destinations for
consumers to meet your
business
Source: PLATFORM THINKING
Copyright © 2015
Sangeet Pa...
Platform Scale :
Meet consumers by distributing your
business across their journey
Source: PLATFORM THINKING
Copyright © 2...
Retail outlets
enabled pipe scale
Source: PLATFORM THINKING
Copyright © 2015
Sangeet Paul Choudary,
Geoffrey Parker and
Ma...
Mass media
enabled pipe scale
Source: PLATFORM THINKING
Copyright © 2015
Sangeet Paul Choudary,
Geoffrey Parker and
Marsha...
Always-on connectivity
enables platform scale
Source: PLATFORM THINKING
Copyright © 2015
Sangeet Paul Choudary,
Geoffrey P...
Multi-point connectivity,
Sometimes simultaneously
Rise of the second screen
Source: PLATFORM THINKING
Copyright © 2015
Sa...
DISTRIBUTION IS
THE NEW DESTINATION
Identify new ways to distribute
your experience into the context of the user
Source: P...
BEHAVIOR DESIGN IS THE NEW
LOYALTY PROGRAM
Source: PLATFORM THINKING
Copyright © 2015
Sangeet Paul Choudary,
Geoffrey Park...
Pipe Scale :
Achieve customer retention
and stickiness through loyalty
programs and lock-ins
Source: PLATFORM THINKING
Cop...
Platform Scale :
Invest in behavior design to create
lasting customer relationships
Source: PLATFORM THINKING
Copyright © ...
In a world of pipes, predatory lock-ins lured
customers into long-term relationships
Source: PLATFORM THINKING
Copyright ©...
In a world of platforms, creating
habits ensures users stick around of
their own accord
Source: PLATFORM THINKING
Copyrigh...
Show me what’s new from my network
Facebook’s news feed
creates a daily habit:
Show me the latest deals
Groupon turns
marketplaces
into daily habits:
To create new behaviors, reward desirable actions
and discourage undesirable ones
Source: PLATFORM THINKING
Copyright © 20...
Airbnb creates
a desirable new
behavior through
community and
data-driven governance
Source: PLATFORM THINKING
Along with behavior design,
network effects also create stickiness
Both sides constantly attract each other back to the pl...
BEHAVIOR DESIGN IS THE NEW
LOYALTY PROGRAM
Achieving lock-in in an opt-in world
Source: PLATFORM THINKING
Copyright © 2015...
DATA SCIENCE IS
THE NEW BUSINESS PROCESS
OPTIMIZATION
Source: PLATFORM THINKING
Copyright © 2015
Sangeet Paul Choudary,
Ge...
Pipe Scale :
Improve the repeatability and
efficiency of internal processes
Source: PLATFORM THINKING
Copyright © 2015
San...
Platform Scale :
Improve the repeatability and
efficiency of ecosystem interactions
Source: PLATFORM THINKING
Copyright © ...
Pipe scale:
Scale through process re-engineering and
optimization
Source: PLATFORM THINKING
Copyright © 2015
Sangeet Paul ...
Platform scale:
Scale interaction efficiency through
data science
Source: PLATFORM THINKING
Copyright © 2015
Sangeet Paul ...
Process engineers and managers helped improve
internal processes and make them more efficient
Source: PLATFORM THINKING
Co...
As value creation moves to ecosystem
interactions, the focus of efficiency shifts to
orchestrating efficient interactions ...
DATA SCIENCE IS
THE NEW BUSINESS PROCESS
OPTIMIZATION
Data science improves the platform’s ability to
orchestrate interact...
SOCIAL FEEDBACK IS THE NEW
SALES COMMISSION
Source: PLATFORM THINKING
Copyright © 2015
Sangeet Paul Choudary,
Geoffrey Par...
Pipe Scale :
Design inorganic incentives like
sales commissions to encourage
employees toward specific actions
Source: PLA...
Platform Scale :
Design social feedback to encourage
producers on a platform
Source: PLATFORM THINKING
Copyright © 2015
Sa...
Readers share Buzzfeed and Upworthy articles
because of the social feedback that results from
such an action.
Instagram
users share their creations
for
social feedback
Source: PLATFORM THINKING
Copyright © 2015
Sangeet Paul Choudary...
Threadless
designers work for social
feedback and monetary
rewards.
Copyright © 2015
Sangeet Paul Choudary,
Geoffrey Parke...
SOCIAL FEEDBACK IS THE NEW
SALES COMMISSION
Understanding currency of interactions
is critical to success in a world of pl...
ALGORITHMS ARE THE
NEW DECISION-MAKERS
Source: PLATFORM THINKING
Copyright © 2015
Sangeet Paul Choudary,
Geoffrey Parker a...
Pipe Scale :
Managers and editors perform
gatekeeping and resource
allocation roles
Source: PLATFORM THINKING
Copyright © ...
Platform Scale :
Algorithms leverage employee and
ecosystem inputs to perform
gatekeeping and resource allocation
roles
So...
Algorithms are increasingly taking over
managerial functions of resource allocation
and decision-making
Source: PLATFORM T...
On platforms, algorithms are the arbiters
of both resource allocation and
reputation assignment
Source: PLATFORM THINKING
...
Uber’s algorithms
dispatch vehicles to
travelers while
maintaining a
driver/passenger
rating system
Source: PLATFORM THINK...
A traditional taxi service would have leveraged
a layer of middle managers to perform a similar function
Source: PLATFORM ...
Algorithms
also replace
traditional
gatekeepers
Source: PLATFORM THINKING
Copyright © 2015
Sangeet Paul Choudary,
Geoffrey...
Publishing:
From editors
to algorithms
Source: PLATFORM THINKING
Copyright © 2015
Sangeet Paul Choudary,
Geoffrey Parker a...
Funding:
From gatekeepers
to communities
ALGORITHMS ARE THE
NEW DECISION-MAKERS
Self-policing communities and the
algorithms that nudge them along
Source: PLATFORM...
REAL-TIME CUSTOMIZATION IS
THE NEW MARKET RESEARCH
Source: PLATFORM THINKING
Copyright © 2015
Sangeet Paul Choudary,
Geoff...
Pipe Scale :
Relies on slow market research
and segmentation
Source: PLATFORM THINKING
Copyright © 2015
Sangeet Paul Choud...
Platform Scale :
Relies on real-time customization to
serve the most relevant content from
producers to interested consume...
The Facebook newsfeed
A highly customized gossip column
that rearranges itself in real time
based on user preferences and
...
However,
Beware the
Filter Bubble!
Source: PLATFORM THINKING
Copyright © 2015
Sangeet Paul Choudary,
Geoffrey Parker and
M...
Platforms must ensure that they balance
relevance with serendipity
Source: PLATFORM THINKING
Copyright © 2015
Sangeet Paul...
REAL-TIME CUSTOMIZATION IS
THE NEW MARKET RESEARCH
Platforms rely on real-time customization
to serve the most relevant co...
PLUG AND PLAY
IS THE NEW BUSINESS
DEVELOPMENT
Source: PLATFORM THINKING
Copyright © 2015
Sangeet Paul Choudary,
Geoffrey P...
Pipe Scale :
Business development based on
contractual integration
Source: PLATFORM THINKING
Copyright © 2015
Sangeet Paul...
Platform Scale :
APIs enable plug-and-play business
development
Source: PLATFORM THINKING
Copyright © 2015
Sangeet Paul Ch...
The API is the contract and
the integration interface
Source: PLATFORM THINKING
Copyright © 2015
Sangeet Paul Choudary,
Ge...
Prioritize acquisition targets based on
how well they are integrated with your
existing API
Pipe scale:
Nokia, BlackBerry, and traditional carriers
sourced their apps contractually
Source: PLATFORM THINKING
Copyrig...
Platform scale:
The iPhone’s app store introduced business
development on steroids
Source: PLATFORM THINKING
Copyright © 2...
PLUG AND PLAY
IS THE NEW BUSINESS
DEVELOPMENT
Because APIs are changing the world
Source: PLATFORM THINKING
Copyright © 20...
THE INVISIBLE HAND
IS THE NEW IRON FIST
Source: PLATFORM THINKING
Copyright © 2015
Sangeet Paul Choudary,
Geoffrey Parker ...
Pipe Scale :
Relies on hierarchical control
Source: PLATFORM THINKING
Copyright © 2015
Sangeet Paul Choudary,
Geoffrey Par...
Platform Scale :
Relies on opt-in, behavior
design and gradual nudges
Source: PLATFORM THINKING
Copyright © 2015
Sangeet P...
Hierarchies are based on
rules and compliance
A unidirectional flow of
information from the top down
Source: PLATFORM THIN...
This iron fist
is giving way to
the invisible hand
The invisible hand – typically taking the form of
algorithmic decisions – nudges producers to continue
creating value on t...
THE INVISIBLE HAND
IS THE NEW IRON FIST
We are moving from a world of command
and control to a self-serve world where user...
1. The ecosystem is the new warehouse
2. The ecosystem is also the new supply chain
3. The network effect is the new drive...
PLATFORM SCALE IMPERATIVE
The management of platforms must be designed around the
goal of enabling interactions between pr...
And now,
click here
to get the whole book
Source: PLATFORM THINKING
THE PLATFORM
MANIFESTO
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Published on

Wikipedia
Ecosystem of contributors create and
manage a living encyclopedia
Source: PLATFORM THINKING
Copyright © 2015
Sangeet Paul Choudary,
Geoffrey Parker and
Marshall Van Alstyne

Published in: Marketing, Technology
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