Today every company is a tech company. This is a prediction which has come from many stalwarts in the software industry who believe that the organisations who do not invest in technology any more are going to bleed and die.
Let us see how we got here though.
Historically, all organisations followed the Pipe mentality. Firms create stuff, push them out and sell them to customers. Value is produced upstream and consumed downstream. There is a linear flow, much like water flowing through a pipe.
However, with the prominence of internet which lead to increased connectedness, decentralised production and rise of AI, we have ushered into a new era of Platforms mentality.They allow users to create and consume value.
Platforms enable two major things
- Create a plug and play infrastructure which enables producers and consumers of value to connect and interact with each other.
- They curate participants on the platform to govern the social and economic interactions that ensue
In many cases, the platforms would not own the resources that they enable. For example Uber as a ride sharing platform does not own cars and Airbnb as an accommodations platform does not own rooms.
What does this tell us about the shift that happened from Pipes to Platforms?
- Shift from Consumers to Producers – Historically the prominence in the earlier pipes model was on the consumer, his wants, his needs etc. However, in the platform thinking, the focus is also on the producers. So the producers produce content and the value of that content is perceived by the end consumers and not necessarily by the platform owners. Example YouTube, your content is a hit if people like it and you can monetise that.
- Shift in advantage from resources to ecosystems – Historically, the more you own, the more you win was the mantra. If I owned 100 hotel rooms then I was better placed than a guy with 20. Airbnb on the other hand are ecosystem producers who succeed in attracting, curating, and cultivating producers and consumers on their platforms.
- Shift in value creation from process to interactions – In pipe model, value was created from producer to consumer in a linear way. In platform model, interaction between producers and consumers facilitated by the platform, determines the value creation and the exchange
Given that now we are in the Platform era, it is more and more important for any organisation, be it healthcare, financial, experience industry or non-profit to expose their ecosystem to the external world.
The best way to expose the ecosystem to the world is by exposing APIs on your platform. This allows external developers to extend the platform functionality and contribute back to the infrastructure as improvements and innovations. For example one the big Pharmaceutical organisation that Knoldus works with, exposed its work on medicinal ontology in a searchable format via APIs.
This allowed a lot of 3rd party developers to start consuming the platform and query the platform for their needs. Apart from this a significant portion of the 3rd part organizations who were developing their own products and needed to use the medicine ontology started using the system, started contributing back to the ontology thereby increasing the value of the platform as a whole. This allowed our Pharma client to monetize and
To keep evolving in the same way, the Pharma company needs to make sure that
- It is able to attract both producers and consumers by keeping the platform available hence keeping it resilient
- By keeping the performance of the platform optimal and as per the defined SLAs so as it is responsive &
- Being able to handle varying degrees of load on the platform and able to handle spikes in traffic easily by being elastic.
All these characteristics lead to the Reactive Manifesto and the Reactive way of building modern software’s which are responsive, resilient and scalable. Users expect millisecond response times and 100% uptime. Data is measured in Petabytes. Today’s demands are simply not met by yesterday’s software architectures.
Platform thinking is a new form of product development. Every organisation needs to be a tech organisation and needs to be on the platform to scale. Platform thinking is directly analogous to the Reactive Manifesto. Building a product without keeping the reactive manifesto in mind would push the platform to unsustainable architectural needs and the ecosystem would fail to provide value to producers and consumers which are essentially the two most critical pieces in the success of the platform.
- Platform Scale