Products to Platforms: Making the Leap

Following the path of companies such as Apple and Amazon, more and more firms are trying to become not just product purveyors but also platform providers, facilitating direct connections between customers and other groups. Although launching a platform can generate new revenue, success is not automatic. After studying more than 20 companies that have tried to move from products to platforms, the authors point to four practices that can separate winners from losers: 1. Start with a defensible product and a critical mass of users. A strong product and a loyal customer base will attract third parties to your platform. 2. Apply a hybrid business model. Instead of operating with a "product mindset" or a "platform mindset" alone, combine the two in order to discover new opportunities for creating value. 3. Drive rapid conversion to the platform. Existing customers are likely to flock to a platform if it provides enough new value, if the additional products and services offered are consistent with your brand, and if users have opportunities to improve both the products and the platform. 4. Deter competitive imitation. Make it tough for rivals to copy your product-to-platform strategy: consider creating proprietary standards, using exclusivity contracts and erecting other barriers to competition.