platform meaning in business

Platform business models already dominate the economy. In contrast, a platform business facilitates value exchanges between two or more interdependent groups, usually consumers and providers. In order to make these exchanges happen, platforms harness and create large, scalable networks of users and resources that can be accessed on demand. Platform businesses in the S& P 500 over the last forty years. “Unicorn” company data: platform businesses vs. linear businesses. John Hagel¹ has distinguished four different categories of platforms that are becoming increasingly prominent in the business world (and elsewhere). Platforms perform better over both the short and the long term along key financial dimensions. The next wave of large public companies is made up of far more platforms than in the past. Given this context, there is a rather extensive Wikipedia entry on learning platforms with some useful definitions included. From the most valuable start-ups that are disrupting traditional markets, to established companies that have shifted their business model from a traditional linear to a platform based approach. For example, they deliver faster growth, better return on capital, and larger profit margins. Saving money, time, and technical platform management are not the only reasons why you might want to launch your own platform. In other words, the average linear unicorn is valued at a little more than half of comparable platform companies. Once you take a look at what’s happening in the startup economy, these projections make even more sense. The core transaction is the platform’s “factory”— the way it manufactures value for its users. In this article, I use the terms “platform business model,” “platform business” and “platform” interchangeably. Engagement 11. For example, Web browsers accept third-party plug-ins, and the browser application becomes a platform to interface with. Investors value platforms more than their linear business competitors. Looking at the S& P 500, pure platform businesses or businesses for which a platform is a significant part of their business have an average revenue multiple of 8.9. Check out variant for Platform abbreviation in Business What a company owns matters less than the resources it can connect and connect to. With the advent of connected technology, these ecosystems enable platforms to scale in ways that traditional businesses cannot. It also includes tech companies like Netflix, which pays for or licenses all of its content. The auction (“infrastructure”) is a well-known event that will help to make the paintings of young talented artists (“producers”) and art collectors (“consumers”) more accessible to each on an as-need basis. Matching a platform’s design to its type is essential to its success. The explanation above is only one type of a platform business, what we call an aggregation platform that focusses on enabling short-term transactions among participants. In fact, they play an even more prominent role in developing countries than they do in the United States. A business ecosystem is the network of organizations—including suppliers, distributors, customers, competitors, government agencies, and so on—involved in the … enterprise hacks, modern monopolies, platform, platform business, platform business model, platform definition, platform design, platform design toolkit, platform development, platform innovation, platform thinking, platform types, types of platforms, what is a platform, what is a platform business. Investors love platforms. Platform: In the computer world, a "platform" typically refers to a computer's operating system. The term: Burning Platform is a business lexicon that emphasizes immediate and radical change due to dire circumstances. DTTL and Deloitte NSE LLP do not provide services to clients. In IT, a platform is any hardware or software used to host an application or service. By building a digital platform, other businesses can easily connect their business with yours, build products and services on top of it, and co-create value. In traditional competitive strategy, it is generally assumed that customers can determine their willingness to … Platform businesses are taking over every industry and are already a part of our everyday lives whether we realise it or not, from reading on our commute to work (e.g. You can’t succeed in today’s economy without understanding how platforms work. Obviously, not all of these unicorn companies will survive. We call these traditional, non-platform companies linear businesses, because their operations are well-described by the typical linear supply chain. There are many definitions on the Web, either too complex or too simplistic, so let’s define a Digital Platform with its key attributes. Business-to-business (B2B) is a transaction or business conducted between one business and another, such as a wholesaler and retailer. The origin of if the term comes from a story about a man on an oil platform in the North Sea. Examples are eBay, Craigslist, Amazon Marketplace, Airbnb and Uber. Platforms (in the context of digital business) exist at many levels. A business ecosystem is the network of organizations—including suppliers, distributors, customers, competitors, government agencies, and so on—involved in the … Whilst traditional linear business models create value through products or services by taking raw material components as inputs and creating products/services to push these to the market in order to sell to customers. Technology is an important enabler for platforms, but using modern technology does not automatically make a business a platform. Amazon Web Services is a technology platform that is not based on a platform business model. Before giving a definition to what is a Digital Platform, let’s take a few examples: Google search engine: “advertising” business model. Kicking off the interactions between those two sides is one of the crucial elements for a platform business model success. Product and Services b. DTTL and Deloitte NSE LLP do not provide services to clients. n. 1. a. But thanks to connected technology, platforms can now facilitate the exchange of value produced by decentralized networks of individuals. In traditional competitive strategy, it is generally assumed that customers can determine their willingness to … In the twenty-first century, the supply chain is no longer the central aggregator of business value. The same is true in business. Value creation & value capture 4. To top it off, platforms also got more favorable terms from investors. Platform type affects everything from the design of the core transaction to how you handle the four functions, making it one of the most fundamental distinctions that any platform business must understand. | Explanation, The Value of Digital Transformation: How Investors Evaluate “Tech”. The growth of platform businesses isn’t isolated to the United States either; platform companies such as Alibaba, Tencent, Baidu, and Rakuten have taken over China and much of Asia. What is a platform business? 11 synonyms of platform from the Merriam-Webster Thesaurus, plus 13 related words, definitions, and antonyms. Types & examples 3. You can’t succeed in today’s economy without, Platforms will make up 5 percent of the overall S& P 500 by 2020. and will have the majority of the top valuations. As we’ve defined before, a platform is a business model that facilitates the exchange of value between two or more user groups, typically a consumer and a producer. The four functions of the platform business model. It’s a holistic business model that creates value by bringing together consumers and producers. This definition of transaction platform is in line with the definition of Parker et.al. Platform definition. Platforms that don’t get this right tend to get left behind by the competition. See Terms of Use for more information. Or, Coffee likes the working definition presented by Forrester's James Staten: "A platform business makes money from services delivered via apps and APIs on a scalable technical foundation … Auction house D.Art (“platform business”) organises its yearly modern art-painting auction in Zürich. By building a digital platform, other businesses can easily connect their business with yours, build products and services on top of it, and co-create value. What a company owns matters less than what it can connect. The role of the platform business is to provide a governance structure and a set of standards and protocols that facilitate interactions at scale so that network effects can be unleashed. Commoditized: a platform in which the good or service being exchanged has a few relevant characteristics that determine quality for consumers The average valuation for platform unicorns was $ 4.51 billion compared to $ 2.49 billion for linear unicorn companies. Remember: Platform design isn’t just about creating the underlying technology. The platform business model differs from the traditional pipe, or linear business model, in which a company relies on its own resources to deliver a product or service to customers. Enterprise Hacks brings the community of corporate innovators together to beat big tech at its own game. Platform businesses don’t, to use a common phrase, own the means of production— instead, they create the means of connection. The platform business model involves profiting from a platform that allows two or more groups of users to interact. Like Facebook, Uber, or Alibaba, these businesses don’t directly create and control inventory via a supply chain the way linear businesses do. But they are only the tip of the iceberg. An application platform, for example, consists of hardware, an operating system and coordinating programs that use the instruction set for a particular processor or microprocessor. What we mean with a platform business is a business model (not a technology infrastructure) that focuses on helping to facilitate interactions across a large number of participants. Like their predecessors, these businesses have mostly used brick-and-mortar locations to facilitate exchanges. The model predates the internet; for example, a newspapers with a classified ads section effectively uses the platform business model. Has this definition helped you understand Platform Business Models? According to current trends, platforms will make up about 5 percent of the overall S& P 500 by 2020. It’s no wonder, then, that platforms are worth more than linear businesses. The platform business model does not own the means of production, but rather creates and facilitates the means of connection. This includes China, where 81 percent of 21 unicorns are platforms, and India, where 8 of 9 are platforms. B2B transactions tend to happen in … One night he is awakened by an explosion and resulting fire on the platform. However, not all platforms are created equal, with some platforms having far more potential to trigger powerful forms of increasing returns that will ultimately marginalise other forms of platforms. Synonyms and related words 1b Another word for platform. Stay in touch! Platform business models aren’t new. Successful platforms facilitate exchanges by reducing transaction costs and/or by enabling externalized innovation. They’re also on track to make up the majority of the top valuations in the S& P 500 within the next five to ten years. A platform strategy is an approach to entering a market which revolves around the task of allowing platform participants to benefit from the presence of others. Paytm is the dominant payments platform, and Ola Cabs is vying with Uber and Didi for dominance in India’s transportation sector. In contrast, linear businesses are valued between two to four times revenue on average, depending on their business model. In 2016, four of the top five members of Forbes’s list of most valuable brands were platform companies, as were eleven of the top twenty. Find more ways to say platform, along with related words, antonyms and example phrases at Thesaurus.com, the world's most trusted free thesaurus. A platform business model generates value by enabling interactions between people, groups, and users by leveraging network effects. And because these countries didn’t have the existing commercial infrastructure that developed economies did, their industries have been molded around the Internet and platforms. Another word for platform. The most common misuse of the term “platform” is when it’s used to describe an integrated suite of software products. It is the process that turns potential connections into transactions. While a linear business creates value by manufacturing products or services, platforms create value by building connections and “manufacturing” transactions. Insights to help you manage and mitigate the risk associated with COVID-19. DTTL and each of its member firms are legally separate and independent entities. This is the first example of a consumer purchasing a product from a business through the World Wide Web—or “ecommerce” as we commonly know it today. 1. A linear business owns its own inventory. The next wave of large public companies worldwide, Getting the core transaction right is the. Revenue models #1 It is a technology-enabled business model. https://www.applicoinc.com/blog/what-is-a-platform-business-model In personal computing, a platform is the basic hardware (computer) and software (operating system) on which software applications can be run. Most private equity firms will find four to six platform companies for each fund, and then grow these platform companies both organically and through acquisition. #2 It facilitates exchanges between multiple groups – for example end users and producers – who don’t necessarily know each other. Even though its a technology company, Netflix is still a linear business and not a platform business. This gap is actually widening over time, and there’s a good reason. This acquisition will serve as the foundation for a roll-up of other companies acquired in the same industry. Alibaba, for example, has controlled as much as 80% of the Chinese ecommerce market while Baidu has more than 70% of Chinese search. Platform definition: A platform is a flat , raised structure, usually made of wood, which people stand on when... | Meaning, pronunciation, translations and examples The idea is that the platform is not intended to stand on its own, as its definition includes the support of other technologies or applications. The origin of if the term comes from a story about a man on an oil platform in the North Sea. A platform business model is a plan for creating revenue by allowing registered members to create content that can be consumed by a specific user group or general audience. Please see About Deloitte for a more detailed description of DTTL and its member firms. Examples are eBay, Craigslist, Amazon Marketplace, Airbnb and Uber. The term: Burning Platform is a business lexicon that emphasizes immediate and radical change due to dire circumstances. Experts (“agents”) are present to advise groups of collectors on relevant artists (“trust”). © 2020. The history of ecommerce begins with the first ever online sale: on the August 11, 1994 a man sold a CD by the band Sting to his friend through his website NetMarket, an American retail platform. 1. As case in point - with the auction house example in mind - think about the e-commerce company eBay. John Hagel, The Power of Platforms – Deloitte University Press, 2015 - Read the PDF, Jeroen is a manager within Deloitte Switzerland’s Strategy & Operations practice and focussing on innovation, strategy and business transformations. It’s important to remember that a platform is a business model, not just a piece of technology. The idea is that the platform is not intended to stand on its own, as its definition includes the support of other technologies or applications. We’re constantly updating our feeds with the latest platform news and Applico announcements. Platform: a level usually raised surface. A platform is a product that serves or enables other products or services.. The challenge is a unique one: how to get potentially millions of people to behave the way you want them to. Find another word for platform. Through its platform, eBay facilitates consumer-to-consumer and business–to-consumer sales by enabling interactions between 170+ million buyers and 25+ million sellers across the globe 24/7. I have covered this business model extensively over the last few weeks. The same is true in business. In such cases, the word “platform” really is just being used as a marketing term. In general, linear companies create value in the form of goods or services and then sell them to someone downstream in their supply chain. As a result, since the early 2000s, platforms have quickly overtaken other business models at the top of the economy. a raised structure that speakers, performers etc stand on so that they can be seen by an audience The two candidates shared a platform for the question and answer session. They range from high-level platforms that enable a platform business model to low-level platforms that provide a collection of business and/or technology capabilities that other products or services consume to deliver their own business capabilities. This is the essence of how platform business models work. As we’ve defined before, a platformis a business model that facilitates the exchange of value between two or more user groups, typically a consumer and a producer. See more. If a platform handles these four functions well enough, it will be able to facilitate its core transaction (and, hopefully, a lot of it). What a company owns matters less than what it can connect. As such, they don’t have the cost structure and underlying economics that make platform business models successful. The auction, is a well-known event that will help to make the paintings of young talented artists, more accessible to each on an as-need basis. They are organized by the type of  value that’s exchanged in the platform’s core transaction. The top five companies by market cap are all platforms. Transaction costs 7. Need to know how Platform is abbreviated in Business? Platform definition, a horizontal surface or structure with a horizontal surface raised above the level of the surrounding area. AmazonKindle), to borrowing money to opening a small business (e.g. This In the 20th century, we saw platform business models in the shopping mall and auction house. But in a networked world, scale comes from cultivating an external network built on top of your business. Synonyms for platform include stage, dais, podium, stand, rostrum, soapbox, tribune, pulpit, belvedere and boards. The 'platform' metaphor has long been used in a variety of ways. For more, read here. Not surprisingly, platform businesses also have most of the funding raised by these unicorn startups. As with all of the preceding examples, these SaaS companies are still linear businesses. Getting the core transaction right is the most important part of platform design. In the context of platform economy, 21st-century usage of the word platform sometimes refers solely to online matchmakers – such as Uber, Airbnb, TaskRabbit etc. The companies that find ways to design and deploy learning platforms will likely be in the best position to create and capture economic value in an increasingly challenging and rapidly evolving business environment. Platform (Digital Business) A platform is a product that serves or enables other products or services. As part of Deloitte’s Center for the Edge EMEA team... More, Preparing your organization for the new worker ecosystem. Economic value-add 5. In particular, the huge shift toward platforms among unicorn startups suggests that the next wave of large public companies worldwide will be mostly platforms. First you must attract users to join, then you aid them by matching them together, providing the technology to facilitate the transaction and establishing the rules that govern the network in order to build trust and maintain quality. Given this context, there is a rather extensive Wikipedia entry on learning platforms with some useful definitions included. Other research has found a similar valuation gap between platforms and linear businesses. organises its yearly modern art-painting auction in Zürich. We hope that this blog gives you some insights in the world of platform businesses. Modeling platform applications and platforms Use the Business Application form to create a record and capture the details of a platform application just as you create a record for a business application. The concept of a platform business is not a new phenomenon. In the twenty-first century, the supply chain is no longer the central aggregator of business value. A platform ultimately enables this value creation by facilitating transactions. The core value being exchanged is (by platform business type): platforms to scale in ways that traditional businesses cannot. Social platforms: Facebook, Twitter, Instagram, LinkedIn – “advertising” business model. An iMac, on the other hand, runs on the Macintosh platform. Automation is here to stay…but what about your workforce. B2B Chemical Marketplaces and Tech Startups: Landscape and State of the Industry, Platform Business Model – Definition | What is it? Sent weekly on Sunday. For further information on platform types, read more here. a … The good news is that any of the three forms of platforms—aggregation, social, and mobilisation—have the potential to evolve into learning platforms. Nearly 60% of today’s billion-dollar “unicorn” startups are platform businesses. Design 12. Unlike platform businesses, linear businesses own their inventory and it shows up on their balance sheets, whether it’s a car manufacturer like GM or a subscription content provider like HBO, which either creates or directly licenses all of its content. Because these companies are effectively launch platforms, there are certain criteria that buyers look for when seeking out a platform acquisition. In the case of SaaS companies, they’re building products, not networks. Nowadays platforms are increasingly supported by global digital technology infrastructures that help to scale participation and collaboration, but this is an enabler, rather than a prerequisite for a platform. A horizontal surface raised above the level of the adjacent area, as a stage for public speaking or a landing alongside railroad tracks. Maker platforms facilitate 1:many connections. The types of businesses have mostly used brick-and-mortar approach to enable interactions and to facilitate value exchanges. A platform is a business model that creates value by facilitating exchanges between two or more interdependent groups, usually consumers and producers. platform synonyms, platform pronunciation, platform translation, English dictionary definition of platform. Exchange Platforms vs. Maker Platforms: Exchange platforms faciliate direct, 1:1 connections. According to our research, investors value platforms more highly than their linear equivalents. Getting the core transaction right is the most important part of platform design, as the platform business will need its users to repeat this process over and over to generate and exchange value. An application can also be a platform if it is a base for other programs. In India, Amazon is competing with local platforms Snapdeal and and Flipkart for control of India’s rapidly growing ecommerce market. Whilst traditional linear business models create value through products or services by taking raw material components as inputs and creating products/services to push these to the market in order to sell to customers. LendingClub). For example, a Dell computer running Windows XP would be considered to be running on a Windows platform. Platform businesses are becoming increasingly integral to business value creation. If you look internationally, the numbers are even more surprising. Use the same form to create individual records of all business applications that run on the platform. In addition to the three mentioned above, the list includes Amazon, eBay, Instagram, YouTube, Twitch, Snapchat, Slack, WhatsApp, Waze, Uber, Lyft, Airbnb, Pinterest, Square, Social Finance, GitHub, Kickstarter, ZocDoc and more. It also includes resellers like Walmart, Macy’s or Target. Generally, platform acquisitions tend to have the following characteristics: 1. In fact, most of today’s biggest IPOs and acquisitions are platforms, as are almost all of the most successful startups. In Asia, 31 of 36 unicorns are platforms, or about 86 percent. An online marketplace that places one party in touch with another, such as buyers and sellers. Examples of a few well-known linear businesses. Define platform. Non-commoditized: a platform in which the good or service being exchanged has a large number of relevant characteristics that determine quality for consumers, Filed under: But the trends in both public and private markets show that platform businesses are quickly overtaking linear companies. Everywhere we look today, platform businesses are in the news. The economies of many of these countries were growing rapidly at the same time that Internet access became widespread. Platform business models usually comprise two sides: supply and demand. The platform is solely focused on building and facilitating a network. As D.Art does not own the paintings, it simply lays out the rules of interactions (“eliminate friction”) to enable the information exchanges (“value creation”) between the artists and collectors followed by compensation through money, goods and/or services, and fees for D.Art (“monetising strategy”). Platforms (in the context of digital business) exist at many levels. Search costs 8. Sign up to join over 20,000 other subscribers and receive the latest in platform news and insights. For now, this summary gives you a foundation for understanding how platforms build and maintain their networks and then turn those potential connections into transactions. Strategy 9. Now, you are getting a comprehensive summary. Venture investor Marc Andreessen famously wrote “software is now eating the world”— encoded intelligence dominates business. Platform businesses can be both physical and virtual (AliBaba, eBay). The number of platforms at the top of our economy is growing fast. An online marketplace that places one party in touch with another, such as buyers and sellers. a set of actions or ideas that forms the basis for future development: a platform for sth Every euro spent on marketing and market development will provide a platform for long-term growth and profits. White Label solution is often developed for the number of less obvious reasons: The business intends to focus primarily on brand building or developing innovative customer serving strategies. In fact, they’re as old as human civilization itself – going all the way back to early marketplaces, bazaars and auction houses in ancient Rome. Think about the old ancient marketplaces or the massive American shopping malls or even exhibition centres. And as of early 2017, the top five companies by market cap are all platforms. Unlike the other platforms, though, learning platforms do not view participants as “static resources.” On the contrary, they start with the presumption that all participants have the opportunity to draw out more and more of their potential by working together in the right environment. Platform Innovation | Topics: PLATFORM BUSINESS MODEL DEFINITION: a business model that creates value by facilitating exchanges between two or more interdependent groups, usually consumers and producers. Find more similar words at wordhippo.com! Platform businesses also receive higher valuations than linear startups. The three most successful platforms to date are Google, Apple, and Facebook. For more on how platform business models work and how you can build one, check out our bestselling book, Modern Monopolies. The role of the platform business is to provide a governance structure and a set of standards and protocols that facilitate interactions at scale so that network effects can be unleashed. As with social and mobilisation platforms, learning platforms critically depend on the ability to build long-term relationships rather than simply focusing on short-term transactions or tasks. Successful platforms have strong moats in the form of their networks and operate at a scale that positions them to dominate their industries. DTTL and each of its member firms are legally separate and independent entities. Network effects 6. Definition of platform 1 : plan , design 2 : a declaration of the principles on which a group of persons stands especially : a declaration of principles and policies adopted by a political party or a candidate A platform company is the initial acquisition made by a private equity firm in a specific industry or investment type. (For more on the difference between linear and platform businesses, go here.). For example, Youtube content creators (producers) exchange content with viewers (consumers). Billion-dollar platforms have received more than twice as much funding as their linear competitors, with $ 46.24 billion in funding for platform unicorns compared to $ 21.96 billion for linear companies. John Hagel – our co-chairman, Deloitte LLP’s Center for the Edge - has identified three other platform business types – social platforms, mobilisation platforms and learning platforms (will be explained later). One night he is awakened by an explosion and resulting fire on the platform. Whether you’re building a platform business or not, you can’t succeed in today’s economy without understanding how platforms work. Deloitte AG is an affiliate of Deloitte NSE LLP, a member firm of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (“DTTL”). In the old model, scale was a result of investing in and growing a business’s internal resources. Google, Facebook, YouTube, Airbnb, Uber, eBay, Alibaba, PayPal make use of the platform business model. Our message to you is, a platform business is not opportunity, it is an imperative! Platform unicorns were valued about 12 percent higher relative to the funding they received when compared to linear platforms, indicating that investors are more confident in the upside of their platform investments. Figuring out which platform type a business fits into should always be one of the first steps in designing a platform. In the twenty-first century, the supply chain is no longer the central aggregator of business value. However, although a platform enables the core transaction, it doesn’t directly control its users’ behaviors. Platforms will make up 5 percent of the overall S& P 500 by 2020 and will have the majority of the top valuations. Become a platform expert – sign up for our newsletter now! A platform is a group of technologies that are used as a base upon which other applications, processes or technologies are developed.

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