Platform business models: A primer

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Platform business models are gaining a lot of attention lately, but not everyone knows precisely what they are. These business models, which allow enterprises to set up powerful ecosystems for value exchange and innovation among participants, can be used across industries and are fast becoming a dominant business model for the digital economy.

Here are some examples of platforms and the core services that a platform typically provides, and some go-forward strategy recommendations for executives and managers to help you get started.

Definition & benefits

A useful definition of the platform business model comes from management thinker Sangeet Choudary, who defines it as follows:

A platform is a plug-and-play business model that allows multiple participants (producers and consumers) to connect to it, interact with each other and exchange value.

Platform business models are particularly compelling because they convert traditional, linear value chains into multi-dimensional value networks. They convert the pipeline business model, where value creation is one-way and subject to bottlenecks throughout the supply chain, into a platform business model where value creation is two-way and continuous.

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