The Age of the ‘Platfirm’

Platfirm? Is this a made up word? Well actually, yes. It’s the term Open Knowledge has coined to describe businesses whose core business model is the platform. The ‘Platfirm Age’ is the theme of this year’s social business forum (#SBF16) held in Milan, Italy each year. Essentially a ‘platfirm’ is a firm that facilitates exchanges within a business ecosystem of suppliers and consumers. The popular examples of ebay, Airbnb, Uber and Amazon are regularly talked about in platform conversations. In opening the forum, Open Knowledge Co-founder Rosario Sica provided some compelling statistics to demonstrate that we are indeed in a new age of platform enabled business models. In Apple, Google, Amazon and Facebook we now have 4 of the top 5 companies in the world, by market capitalisation, being ‘Platfirms’. The issue of ‘Platfirm immigrants’ (as opposed to ‘platfirm natives’) was highlighted as a continuing challenge for traditional businesses wanting to get on the ‘from foot’, in either protecting or enhancing their businesses though platform thinking.

Keynote speaker Sangeet Paul Choudary was an excellent choice to lead the discussion. He and his co-author’s recent book on the ‘Platform Revolution’ provided the deepest coverage yet on just what makes platform businesses tick. Having read both this book and his first book Platform Scale I was pleased Sangeet was able to offer some new insights. One statement “What is good for the platform is bad for the ecosystem” brings to mind the power of a platform like Uber to be able to at times exploit both its suppliers (drivers) and customers with its pricing policies. One could appreciate now that powerful platforms relying purely on market forces could have the same negative impacts as a monopoly provider. On this point Sangeet was in favour of some regulation to guard against inappropriate use of market power. The other plea from Sangeet was his desire to see platform business opportunities in ‘public good’ applications, especially in developing countries. I think I would summarise Sangeet’s speech as ‘do good, not evil’, a refreshing perspective from a genuinely nice guy.

Sangeet was followed by several others developing ‘platfirms’, too much to report here (not the least because many of the speeches were in Italian, and my Italian is limited to food choices!). One interesting application worth reporting on and I think addresses Sangeet’s ‘do good, not evil’ maxim was from Michele Casucci, founder of Certilogo. Certilogo’s mission is to drive fake products out of the market. Now we have all probably bought fake Italian products in low cost market places before; well at least I have. But I was fully aware I was buying fake products at a very low price. And isn’t imitation the best form of flattery? More insidious though are the fake products sold at genuine prices. And on reflection it’s probably a good idea not to buy any fake product, as I suspect that those manufacturing even the cheap imitations are being exploited for their efforts. So I think Certilogo certainly meets the ‘do good, not evil’ maxim. How does it work? Certilogo crowdsources information from people who have purchased, or are about to purchase from expensive brands like Versace, Moschino, Paul & Shark etc. and then matches that information with supply chain data sourced from the brands that they support. In this way they can authenticate a product as genuine or fake in a matter of seconds. Like a classic platform, there is value exchanged on both sides. The brands get to find out where fake imitations of their product are being sold. The customers can find out whether they are buying, or have bought a genuine product or not. And perhaps by driving the producers of fake product out of the market, they are helping remove less scrupulous manufacturers, who are potentially exploiting workers in developing countries, to develop their goods.

The HBR Italia supplement published in support of the forum is certainly worth a read and is available here in English.