Your Organization too, can be a Platform
A few weeks ago, the well known management guru and author Rita McGrath wrote a great article, asking if our companies are ready to operate as marketplaces. McGrath reflected on both, the internal and external dimension of the emerging network nature of modern business: she correctly pointed out that in a world where “the conventional relationship between buyers and suppliers shifts to multi-sided markets and ecosystems”, networks “become a primary vehicle for exchanging information of all kinds.”
But how should the very same organizational model you use in your company, reflect the epochal changes in transaction cost and technology pervasiveness that are pushing us to reinvent how we provide services and create products?
New technologies make possible the rapid erosion of transaction costs, creating a world that is increasingly connected. The resulting level of interdependence in turn creates a radically new set of challenges for management… [Rita Gunther McGrath]
Your Organization is probably designed like in the XXth Century
When marketing sage Geoffrey Moore, looked back into Ronald Coase’s “Nature of the Firm” almost 75 years later, he expressed concerns that the nature of the changes in the enablers of modern, digitally empowered, market is going to be a trying challenge for incumbents.
Existing organizations are indeed challenged not only in terms of capability to craft modern value propositions but also in how they organize work in ways that are efficient enough to survive in an insanely competitive market.
From the value proposition perspective, in a rather straightforward consideration, Moore explained that if transaction costs decreases, customers tend to prefer services over products:
You buy a car so that you don’t have to keep on renting one. But in a digitally instrumented economy, renting on demand becomes a much more viable alternative, not just for the occasional ad hoc requirement but for recurrent usage. [Geoffrey Moore]
The bad news for existing incumbents — with century old business models and related organization designs — is that the evolution doesn't stop here. As Hagel pointed out the shift in business models doesn't stop at the transition between providing products (pay to get access to something forever) to providing services (pay to get access to something when you need it), but will ultimately evolve towards providing value (pay for the value you get from interacting with something).
This shift is extremely stressing for the traditional Taylorist organizations where management tends to dictate how employees should do the work.
As Moore points out:
“in the digital economy, where a network of specialists trumps a cohort of employees, many if not most of the resources working on your behalf will be contractors working outside the firm”. [Geoffrey Moore]
What’s important to understand is that, in a world where brands need to provide real-time and ad-hoc value to customers rather than products to consume, the organization needs to evolve into a platform. Organizations need to learn how to interact directly with customers and providers but also how to inter-operate.
In a landscape where most of the barriers to recombining elements of value, from other parties disappear through API and open protocols, it becomes possible and desirable to interact with “anyone anywhere” as Hagel explains.
Channels & Learning inside and outside the organization boundary
But if it’s true that companies must evolve by becoming inter-operating platforms, what are the key challenges that companies face in the transition? Where should they start from?
As we’ve seen in many occasions while developing and explaining the Platform Design Toolkit, there are two key aspects of being a company-platform.
First, you need to ensure you build the right channels and contexts that make it possible for the transactions and relationships that exist in your ecosystem to happen smoothly and flawlessly.
I often refer to Platform Design as of plugging wires between ecosystem’s actors that would like to connect but have hard times connecting.
The reference ecosystem must not be seen as just internal: it needs to lean towards customers, providers, third parties and all the excellencies that live outside the traditional company boundaries. The organization itself should be as little as possible, to ensure greater agility.
The second key aspect is to see your organization as a powerful engine of learning. Provide means for performance improvement that can benefit not only the company shareholders but the ecosystem as a whole.
Empowering such an ecosystem means to help the best to stand out and emerge from the crowd both among customer & suppliers but also among your employees and collaborators. Strategies to help the internal-external ecosystem growing better potential may vary depending on the history and heritage of the company, it’s size and mission. While a company like Adobe chose to create the Kickbox to encourage large scale experimentation and learning, more edgy organizations such as Enspiral or Cocoon Projects (with which I use to work) have a deeper evolutionary process in place. This process lets people approach the organization by becoming contributors first, then evolve into members gradually gaining greater decision making and governance power to shape the organization itself.
[For a deeper look at Enspiral’s inner workings see the Handbook and to know more on Cocoon Project’s operating system, LiquidO™ download the whitepaper here.]
Platform Design Thinking is a totally new way to look at your organization going beyond traditionally imposed barriers on what a business or organization should be. Approaching organization design with a fresh mindset on what a modern organization can leverage on will help us reflect on its physical, structural and sometimes legal boundaries. This conversation is key to designing revolutionary value propositions and organization like creation spaces, that aim to be great for people, instead of big for shareholders.
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Attributions:
- Jay Take-Off by enki22, CC BY-ND 2.0
