Are you ready for the platform economy? Do you even know what that means?
At the MIT Sloan CIO Symposium in Cambridge, Mass., last month, subject matter experts convened to discuss the role CIOs can play in the future of business strategy in our new digital economy.
Marshall Van Alstyne, a professor of information systems at Boston University and researcher at MIT, said the digital economy is no longer about products or services -- well, no longer about only those things. It is about leveraging a company's rich data sources -- some new, some old, but more accessible – into a new business model.
In a word, it's about platforms.
[ Talk nerdy to me. Read 10 Smartphone Apps You Can Talk To. ]
Van Alstyne, who moderated the session Platform Shift: How New Business Models are Changing the Shape of Industry and the Role of CIOs, said some of the most successful business models today are platform-centric. For example: Uber owns no cars, Airbnb rents out no real estate of its own, and Facebook creates no significant content itself. In all three of those examples, platform users represent the origin point of the product or service.
"Products have features; platforms have communities," said Van Alstyne.
Panelist Bryan Kirschner, director of the Apigee Institute, said that the technical costs of platform implementation and maintenance are negligible compared with traditional IT infrastructure. "Probably a lot of your business practices and your IT practices [were created when] computing power was thousands of times more expensive than it is today," Kirschner said.
Another of Van Alstyne's panelists, Vivanda CEO and cofounder Jerry Wolfe, saw the wide-open industry opportunity during his time as CIO of food products firm McCormick & Company -- leading the incubation of FlavorPrint, an online recipe recommendation platform for consumers that Van Alstyne describes as "Netflix for food." FlavorPrint, available as an app for iPhone and Android smartphones, now forms the basis of Wolfe's new company Vivanda.
"[Our] inspiration, from Pandora, was: What if we could create for the food space the equivalent of the music genome?" Wolfe said. "What if we could get it to everyone?"
The results: FlavorPrint users, who added value for each other by contributing to the platform. It is this crowdsourcing, then, that represents the true value of the platform economy.
For enterprises such as McCormick, which are traditionally "product" companies, embracing the platform mindset can help extend existing offerings to new associated products and services, and potentially increase revenue. It also opens up opportunities for CIOs to prove their value as the technology experts needed to bring the platform economy to life in their organizations. Here are four ways CIOs can help advance the platform economy in their own organizations:
What do you think? Has your organization embraced the platform economy? Do you think this is a temporary fad, or the wave of the future? Tell us all about it in the comments section below.Joe Stanganelli is founder and principal of Beacon Hill Law, a Boston-based general practice law firm. His expertise on legal topics has been sought for several major publications, including US News and World Report and Personal Real Estate Investor Magazine. Joe is also ... View Full Bio