A recent article in the Economist, “Something to stand on,” shows how digital platforms are the heart of the new economy, and by extension the strongest opportunities for entrepreneurs and investors. Platforms provide the basis for people and companies to build businesses, services, features or just about anything. The core building blocks remain stable so that the other parts can evolve more rapidly by combining, recombining, and adding new ones.
Platforms are not a new concept; they exist in the non-digital world but started garnering attention as the software industry exploded in the 1980s. In the physical world, railways could be considered a platform as they allowed services such as mail order to develop. The power grid is another platform, as it facilitated the creation of multiple electrical household appliances. Shipping containers (those big crates on ships) were a platform that boosted global trade.
Platforms, however, started getting attention as an economic driver (and source of business success) with the rise of the software industry. Microsoft identified—much earlier than its competitors—that power and profit rests with those who control the operating system (in its case, Windows). It also saw that the key to creating a successful platform is building a thriving ecosystem around it to gain a network effect. The more programs that run on Windows, the more users will want it, and therefore the more attractive it will be to developers. Continue reading “Digital Platforms: The Center of The Future Economy”