Monthly Archives: October 2011

“The time is at hand” for Phil Simon’s new book “The Age of The Platform”

I am looking forward to soon reading, digesting, and offering any thoughts I might have on what seems like a very timely and topical book,  The Age of the Platform, by Phil Simon.     There has not been a “business book” on “platform businesses”  published for a while, even as this phenomenon has become one of the most visible and significant developments in how we interact economically and socially. 

Books by what have been to date the two major scholars in the field appeared a couple of years ago.   Annabelle Gawer’s Platforms, Markets, and Innovations  (2009) collects a range of contemporary research articles/papers by academic experts in the field of platform study (the articles/papers cover a broad range of dimensions of the subject, and in very great depth;  it is priced as a scholarly book, so will put a bit more of a dent in your research budget, though it should be worth it for the highly interested). Michael Cusumano’s Staying Power (2010) looks at how “platforms” and “services” can transform businesses, markets, and industries (it is a good, accessible business book that covers a lot of ground, draws on good examples, and describes some typical behaviors of platform businesses;  the book is priced in the typical business book range).  Both books are excellent, and leave a reader with many insights and questions of a very complex, emerging phenomenon.

The Age of the Platform comes at an opportune time when platform businesses have become visible and powerful forces in the economy and society AND interest on the part of business people and the general public is perking-up (to say nothing of the fact the platforms are now integrating economic and social interactions in unprecedented ways).  The book’s author, Phil Simon is a top-notch, thorough and  insightful business writer, and judging by the book descriptions and excerpts and the outline table of contents,  the book seems to treat the subject of “modern platform businesses” in a very clear and thoughtful way (in contrast to the often scrambled treatments of this subject in the popular business press).  The book is also a very reasonably priced business book.

I can’t wait to dig in.

Almost Part 2: How Will Our Business Models Change–Now? And Why?

Since I wrote the post, Part 1:  How Will Our Business Models Change–Now?  And Why?, I have been intending to write Part 2.  Part 1 was basically an overview of business model change dynamics, based on IBM’s study “Seize the Advantage:  When and How to Innovate Your Business Model.”  This study showed “technological factors” as climbing in importance as a reason cited by all kinds of CEOs for changing business models.

My basic assertion in Part 2 is going to be that there are two major transformations affecting all or most business models at this time. These transformations, grounded primarily in information technology,  can be referred to as  “platformitization” and “servitization.”

The term “platformitization” refers to the emergence of new economic, business, industry models referred to–sometimes ambiguously– as  “platforms.”  As noted by Phil Simon in his new book, The Age of the Platform, “Beyond the debate of ‘What is a book in 2011?’ comes the discussion about which platform will win the book wars. Will it be Amazon’s Kindle? Apple’s iBooks? Barnes & Noble’s Nook? Kobo? A new platform we haven’t seen yet?  Sadly, the discourse has been largely misplaced. Far too many people are focusing on the hardware instead of the platform behind the hardware.”   The platform/ecosystem model is emerging across many markets and–often rapidly–radically transforming basic economic models (units and structures, like firms and industries) into wholly different patterns of production and consumption and creation and distribution of value.

The term “servitization” refers to a basic actual and conceptual/paradigmatic shift in economic activity toward “service.”  In once respect, we see a growing “service sector” (financial services, logistics services, et al) as well as the increasing importance of “services” in the business models of all kinds of product/ manufacturing firms (just one well-known example, Apple and iTunes/AppStore).  Beyond this, we are seeing the rise of technology-enabled “information services” as well as information technology itself being transformed into a service (long ago starting with telecommunications and now with things like IaaS, PaaS, SaaS, etc.).  Phenomena indicating a trend of servitization are many, but there is also a framework of thinking which is gaining in relevance.  That is the framework of “Service Science,” arising around 2005, when it was significantly shaped by Stephen Vargo and Robert Lusch with their marketing-based research and theorizing of “Service-Dominant Logic” and further catalyzed by Henry Chesbrough and Jim Spohrer in their  publication “A Research Manifesto For Services Science.”

More discussion to follow on business model transformation along the lines of “platformitization” and “servitization” as powered by information technology.

From Supply Chain to Platform: Changing the Way Publishing Works

How and why are technology-enabled platform businesses clearly and rapidly disrupting and transforming traditional publishing and certain other industries?   As noted in many recent news reports (such as “Publishers: What are you doing while Amazon eats your lunch?” ), Amazon is continuing its transformation and “platformitization” (if I may coin a neologism) of book publishing–one of the various transformations and disruptions rippling through the publishing industry for years now (in books, news, magazines,music, movies, etc.).  

The traditional publishing industry has been one of those industries that seems to have become particularly vulnerable to disintermediation by new, “platform and technology savvy”  market entrants (such as Google, Huffington Post, Netflix, et al) who are able to leverage technology-based platform business models in innovative and disruptive ways to unlock and redistribute capturable value and change the shape of the industry. 

I suppose it should seem obvious that industries whose core has been the trade of information and media content are likely to be the most vulnerable to such transformations and, it seems–as fate would have it , in many cases (unlike manufacturers and distributors, for example)–the least prepared to adapt, innovate, reposition, and survive.  Some incumbent firms will cross the chasm, but most probably won’t.  I suspect this predetermined vulnerability has a basis, to some extent, in these industries’ entrenched supply chain business models and the inability to reinvent into platform and ecosystem models (as FT, Guardian, NYT are trying to do)–models, which I think confer practioners with overwhelming advantages in satisfying needs of the “traditionally organized” customers and suppliers. 

Why this inflexibility exists is another questions:  I suspect here it is a matter of the industries’ and firms’ built up stock of competencies and assets (which are probably both not well-aligned to platform models and technology) as well as the industries’ and firms’– to some degree — “change-resistant” values and structures (imbued originally for good reasons to promote standards of objectivity or quality, etc, but in some ways now a straightjacket). 

 It seems like all of these questions could be formulated into testable hypotheses and the opportunity to study the unfolding of these phenomenon in a real world laboratory exists for the interested researcher (to empirically establish what factors determine success or failure of firms, business models, etc.).   Of course, we (the simply curious and interested) can–unlike the publishers–casually stand-by  and observe how it all shakes out in coming years and make our own judgments as to why.  And we all can bear in mind how the cited article admonishes traditional book publishers:

Here’s a hint for book publishers: take a lesson from the music industry, and don’t spend all your time suing people for misusing what you believe is your content — think instead about why they are doing this, and what it says about how your business is changing, and then try to adapt to that. Amazon is giving authors what they want, and as long as it continues to do so, you will be at a disadvantage. Wake up and smell the disruption.
 
 
 

Google Doesn’t Get Platforms, According to Google’s Steve Yegge

Is Google an “un-platform”  by design or by default–and falling hopelessly behind in the “platform wars” by short-sightedly pursuing a “product one-off strategy?” An extremely interesting post by Danny Sullivan at Search Engine Land (The “Google Doesn’t Get Platforms” Family Intervention Memo) reports an accidental email disclosure, in which Google Staff Engineer Steve Yegge shares his spirited, critical views on Google’s pursuit of success as platform business.

Sullivan’s informative post, also treats, at some length, questions and characteristics of Google’s internal culture (+ and -), so I am filtering out that commentary and focusing here on  re-publishing the matters most directly related to platform models (not to say that far-ranging internal dynamics and culture, besides strategy and leadership are unimportant).  That said, I’d really like to read Yegge’s original email; he seems to have some penetrating insights into platform models, which he sees must be pursued purposely and early from a design and strategy standpoint.  Whether the strategy and approach to Google’s business will continue to prove enormously successful and whether it is or is becoming a platform business are questions which remain to be answered.

Sullivan introduces the subject: “Google now has its own version of the Yahoo “peanut butter” manifesto, where Google staff software engineer Steve Yegge wrote a “family intervention” memo about Google’s failure to build accessible platforms, leaving it vulnerable to the likes of Facebook. ”  Sullivan goes on to trace Yegge’s argument, which compares Google to Amazon (and also Microsoft), to this basic assertion: “Google is failing to be a platform, something he [Yegge] considers the ‘the most important thing in the computing world.'”    Sullivan further quotes Yegge as writing:

That one last thing that Google doesn’t do well is Platforms. We don’t understand platforms. We don’t “get” platforms. Some of you do, but you are the minority. This has become painfully clear to me over the past six years. I was kind of hoping that competitive pressure from Microsoft and Amazon and more recently Facebook would make us wake up collectively and start doing universal services. Not in some sort of ad-hoc, half-assed way, but in more or less the same way Amazon did it: all at once, for real, no cheating, and treating it as our top priority from now on.

But no. No, it’s like our tenth or eleventh priority. Or fifteenth, I don’t know. It’s pretty low. There are a few teams who treat the idea very seriously, but most teams either don’t think about it all, ever, or only a small percentage of them think about it in a very small way.

Yegge cites Google+, as a follow-on, reactive move, consistent with Google’s  “un-platform” business strategy:

Google+ is a prime example of our complete failure to understand platforms from the very highest levels of executive leadership (hi Larry, Sergey, Eric, Vic, howdy howdy) down to the very lowest leaf workers (hey yo). We all don’t get it. The Golden Rule of platforms is that you Eat Your Own Dogfood. The Google+ platform is a pathetic afterthought. We had no API at all at launch, and last I checked, we had one measly API call. One of the team members marched in and told me about it when they launched, and I asked: “So is it the Stalker API?” She got all glum and said “Yeah.” I mean, I was joking, but no… the only API call we offer is to get someone’s stream. So I guess the joke was on me.

Sullivan also summarizes Yegge’s critique further:  “Soon after, Yegge calls Google+ a “knee-jerk” response to Facebook, which seems to fit in with his larger theme that rather than let a developer community access Google+ and help it grow, Google seems to have taken a top-down it’ll control how Google+ grows attitude. That would be fine perhaps if Google had a Steve Jobs person who knew what consumers should be given.”

According to Sullivan, Yegge appears to see Jeff Bezo of Amazon (like Jobs) as a very authoritarian leader, but one who commanded a strategy and set of policies to design an open technical environment and cultivate an integrated, thriving developer ecosystem: Bezo’s core mandate went something along these lines:

1) All teams will henceforth expose their data and functionality through service interfaces.
2) Teams must communicate with each other through these interfaces.
3) There will be no other form of interprocess communication allowed: no direct linking, no direct reads of another team’s data store, no shared-memory model, no back-doors whatsoever. The only communication allowed is via service interface calls over the network.
4) It doesn’t matter what technology they use. HTTP, Corba, Pubsub, custom protocols — doesn’t matter. Bezos doesn’t care.
5) All service interfaces, without exception, must be designed from the ground up to be externalizable. That is to say, the team must plan and design to be able to expose the interface to developers in the outside world. No exceptions
 

Yegge further faults Google in its reactionary and tops-down approach and not engaging in a process of co-creation with its customers and ecosystem partners:

Google+ is a knee-jerk reaction, a study in short-term thinking, predicated on the incorrect notion that Facebook is successful because they built a great product. But that’s not why they are successful. Facebook is successful because they built an entire constellation of products by allowing other people to do the work. So Facebook is different for everyone. Some people spend all their time on Mafia Wars. Some spend all their time on Farmville. There are hundreds or maybe thousands of different high-quality time sinks available, so there’s something there for everyone. Our Google+ team took a look at the aftermarket and said: “Gosh, it looks like we need some games. Let’s go contract someone to, um, write some games for us.” Do you begin to see how incredibly wrong that thinking is now? The problem is that we are trying to predict what people want and deliver it for them. You can’t do that. Not really. Not reliably. There have been precious few people in the world, over the entire history of computing, who have been able to do it reliably. Steve Jobs was one of them. We don’t have a Steve Jobs here. I’m sorry, but we don’t.

Yegge continues his critique, training his aim on the issue of platform and data accessibility:

I apologize to those (many) of you for whom all this stuff I’m saying is incredibly obvious, because yeah. It’s incredibly frigging obvious. Except we’re not doing it. We don’t get Platforms, and we don’t get Accessibility. The two are basically the same thing, because platforms solve accessibility. A platform is accessibility.

So yeah, Microsoft gets it. And you know as well as I do how surprising that is, because they don’t “get” much of anything, really. But they understand platforms as a purely accidental outgrowth of having started life in the business of providing platforms. So they have thirty-plus years of learning in this space. And if you go to msdn.com, and spend some time browsing, and you’ve never seen it before, prepare to be amazed. Because it’s staggeringly huge. They have thousands, and thousands, and THOUSANDS of API calls. They have a HUGE platform. Too big in fact, because they can’t design for squat, but at least they’re doing it.

Amazon gets it. Amazon’s AWS (aws.amazon.com) is incredible. Just go look at it. Click around. It’s embarrassing. We don’t have any of that stuff.

Apple gets it, obviously. They’ve made some fundamentally non-open choices, particularly around their mobile platform. But they understand accessibility and they understand the power of third-party development and they eat their dogfood. And you know what? They make pretty good dogfood. Their APIs are a hell of a lot cleaner than Microsoft’s, and have been since time immemorial.

Facebook gets it. That’s what really worries me. That’s what got me off my lazy but to write this thing. I hate blogging. I hate… plussing, or whatever it’s called when you do a massive rant in Google+ even though it’s a terrible venue for it but you do it anyway because in the end you really do want Google to be successful. And I do! I mean, Facebook wants me there, and it’d be pretty easy to just go. But Google is home, so I’m insisting that we have this little family intervention, uncomfortable as it might be.

Oh, sorry, I allowed a little bit of the dirty laundry to drape over the wall into my blogger’s “clean room.”  In any case, clearly Yegge’s motivations for his observations and comments are honest and sincere, and he does a thorough job calling Google to task for not following the “platform strategies” of Microsoft, Amazon, and Facebook.

After you’ve marveled at the platform offerings of Microsoft and Amazon, and Facebook I guess (I didn’t look because I didn’t want to get too depressed), head over to developers.google.com and browse a little. Pretty big difference, eh? It’s like what your fifth-grade nephew might mock up if he were doing an assignment to demonstrate what a big powerful platform company might be building if all they had, resource-wise, was one fifth grader.

Please don’t get me wrong here — I know for a fact that the dev-rel team has had to FIGHT to get even this much available externally. They’re kicking ass as far as I’m concerned, because they DO get platforms, and they are struggling heroically to try to create one in an environment that is at best platform-apathetic, and at worst often openly hostile to the idea.

I’m just frankly describing what developers.google.com looks like to an outsider. It looks childish. Where’s the Maps APIs in there for Christ’s sake? Some of the things in there are labs projects. And the APIs for everything I clicked were… they were paltry. They were obviously dog food. Not even good organic stuff. Compared to our internal APIs it’s all snouts and horse hooves.

And also don’t get me wrong about Google+. They’re far from the only offenders. This is a cultural thing. What we have going on internally is basically a war, with the underdog minority Platformers fighting a more or less losing battle against the Mighty Funded Confident Producters.

And so, the essence of Yegge’s condemnation of Google as a business:

The problem is that we’re a Product Company through and through. We built a successful product with broad appeal — our search, that is — and that wild success has biased us.

Amazon was a product company too, so it took an out-of-band force to make Bezos understand the need for a platform. That force was their evaporating margins; he was cornered and had to think of a way out. But all he had was a bunch of engineers and all these computers… if only they could be monetized somehow… you can see how he arrived at AWS, in hindsight.

Microsoft started out as a platform, so they’ve just had lots of practice at it.

Facebook, though: they worry me. I’m no expert, but I’m pretty sure they started off as a Product and they rode that success pretty far. So I’m not sure exactly how they made the transition to a platform. It was a relatively long time ago, since they had to be a platform before (now very old) things like Mafia Wars could come along.

Maybe they just looked at us and asked: “How can we beat Google? What are they missing?”

The problem we face is pretty huge, because it will take a dramatic cultural change in order for us to start catching up. We don’t do internal service-oriented platforms, and we just as equally don’t do external ones. This means that the “not getting it” is endemic across the company: the PMs don’t get it, the engineers don’t get it, the product teams don’t get it, nobody gets it. Even if individuals do, even if YOU do, it doesn’t matter one bit unless we’re treating it as an all-hands-on-deck emergency. We can’t keep launching products and pretending we’ll turn them into magical beautiful extensible platforms later. We’ve tried that and it’s not working.

The Golden Rule of Platforms, “Eat Your Own Dogfood”, can be rephrased as “Start with a Platform, and Then Use it for Everything.” You can’t just bolt it on later. Certainly not easily at any rate — ask anyone who worked on platformizing MS Office. Or anyone who worked on platformizing Amazon. If you delay it, it’ll be ten times as much work as just doing it correctly up front. You can’t cheat. You can’t have secret back doors for internal apps to get special priority access, not for ANY reason. You need to solve the hard problems up front.

All the questions Yegge raises are good ones and, I think, pretty clear

  • The most fundamental one seems to be:  Is Google pursuing a product vs a platform strategy, and will this ultimately be a detriment to its business success?  After all, platforms are not the only business models that are successful, even today.
  • What are the essential characteristics that make a platform business a platform business?  Open design of technology and functionality for others to utilize/leverage, accessibility, cultivation of development and other ecosystem communities, evolutionary co-creation of valuable offerings with customers and partners….  Others?

Yegge clearly wants Google to be a platform business (similar in form to Amazon, Microsoft, Facebook) because he holds a strong conviction that this is best (only?) path to Google’s business success.  We are living in a time of rapidly evolving business models and emerging innovative platform businesses.  It will be extremely interesting to follow this–analyze, predict, and speculate–and, some years from now, see how this particular set of businesses has evolved and manifested.

Any predictions anyone?

 

“In The News:” Platform/Other Business Model Transformation Underway in News Publishing/Media

In some of my previous posts, I have discussed business and social issues related to ongoing transformation of the publishing/news and information/media industries, key sectors of our economy and our society.   These have included:  “The Huffington Post: A short course in platform business economics?,”   “Huffington Post (Redux): Not just business as usual…,”   and “The Business Model for Distributing “Scientific Publications” — A “Peer Review” Finds a “Canary in the Coal Mine”.”

An article recently published in GigaCom by Matthew Ingram (obliquely titled, “Memo to media: A Facebook app is not innovation”) presents some additional observations on this general subject of transformation in the news-content publishing/distribution/media industry, where traditional business models have come under crushing pressure to evolve.  Link to  article

The articles nicely summarizes some responses by traditional news  industry players (a subset of responses along part of the overall potential range of responses).   From one such summary of  The Guardian’s (UK)  response to evolutionary pressures bears quoting here:

Why not think of your paper as a platform?

But The Guardian has taken by far the most dramatic steps of any newspaper in rethinking what its business consists of, with what the paper called its “open platform” project, which launched last year. Instead of spending all its time trying to put walls or sandbags around its content and control where it appeared, the Guardian released an open API that allowed outside developers to make use of its content — provided they agreed to either pay for the data, or form an advertising partnership with the paper. Instead of doing a deal just with one platform vendor like Facebook, they made it possible for anyone to become a partner.

More importantly, The Guardian‘s approach — along with other innovations like the crowdsourcing effort behind its feature on MP expenses in 2009 — was driven by a fundamental rewiring of the way it thought about its purpose and function as a newspaper. Editor Alan Rusbridger has talked about a “mutualised” newspaper, one that includes its readers as partners in discovering and reporting the news, and one that doesn’t think about itself in terms of what particular medium it uses to distribute that news. In other words, not a “news-paper” company at all, but just a news-distribution company.

For this and several other observations of current developments, the article (and many of its comments) is a good read for those following the evolution of business models in new publishing/distribution/media.