August 21, 2017 | Written by: Marquis Cabrera
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Recently, I interviewed Sangeet Paul Choudary, a C-level executive advisor and an international best-selling author. He is the co-author of Platform Revolution and the author of Platform Scale. He has been selected as a Young Global Leader by the World Economic Forum and is ranked among the top 30 emerging thinkers globally in 2016 by Thinkers50 Radar, a global ranking of top business thinkers. His work on platforms has been selected by Harvard Business Review as one of the top 10 management ideas globally for the year 2016-17. Sangeet is also the co-chair of the MIT Platform Strategy Summit at the MIT Media Labs, an Entrepreneur-in-residence at INSEAD Business School, and an executive educator with Harvard Business School Publishing. He is also the youngest person to be ranked by Thinkers50 India among the top 50 thinkers globally of Indian origin. He is a working group chair at the WEF’s Global Future Council on Platforms and Systems and an expert on the advisory council for the WEF’s initiative on the Digital Transformation of Industries. Sangeet’s work has been featured as the Spotlight article on Harvard Business Review (April 2016 edition) and the themed Business Report of the MIT Technology Review (September 2015). He is frequently quoted and published in leading journals and media including the MIT Sloan Management Review, The Economist, The Wall Street Journal, WIRED Magazine, Forbes, Fortune, and others. He is a frequent keynote speaker and has been invited to speak at leading global forums including the G20 Summit 2014 events, the World50 Summit, the Mobile World Congress, and the World Economic Forum global and regional events. Here’s our interview:
What is a platform? How does it relate to a networked market?
A platform is an Open Infrastructure, coupled with a governance model, that orchestrates and intermediates the interactions of multiple stakeholders. So a platform is fundamentally a plug-and-play infrastructure, into which multiple stakeholders can connect and start interacting with each other. Producers and consumers of value can participate on top of the open infrastructure. And once a market is created, the platform sets the rules of governance that determine what gets encouraged and what gets discouraged.
The platform is the central organizing mechanism that enables a networked market. It is possible to have a network market without a platform, as well, where you have market participants working entirely through peer interactions without a central organizing platform. But in most cases today, we see a central organizing platform whenever we see an instance of a networked market. I see the platform as an infrastructure, along with the governance model, that is required to orchestrate and enable a networked market.
What lessons can governments learn from the leading (for-profit) platform innovators, such as Airbnb and Uber?
First and foremost, platform innovators are organized to innovate nimbly and rapidly around their core — building around data, machine learning, and a central infrastructure. They try to test new things in the market and that helps them open themselves for further innovation in the ecosystem. Governments can learn to become more modular and more agile, the way platform companies are. Modularity in architecture is a very fundamental part of being a platform company; both in terms of your organizational architecture, as well as your business model architecture.
The second thing that governments can learn from a platform company is that successful platform companies are created with intent. They are not created by just opening out what you have available. If you look at the current approach of applying platform thinking in government, a common approach is just to take data and open it out to the world. However, successful platform companies first create a shaping strategy to shape-out and craft a direction of vision for the ecosystem in terms of what they can achieve by being on the platform. They then provision the right tools and services that serve the vision to enable success for the ecosystem . And only then do they open up their infrastructure. It’s really important that you craft the right shaping strategy and use that to define the rights tools and services before you start pursuing a platform implementation.
In my work with governments, I regularly find myself stressing the importance of thinking as a market maker rather than as a service provider. Governments have always been market makers but when it comes to technology, they often take the service provider approach.
In your book, you used San Francisco city government and Data.gov as examples of infusing platform thinking in government. But what are some global examples of governments and countries infusing platform thinking around the world?
One of the best examples is from my home country Singapore, which has been at the forefront of converting the nation into a platform. It has now been pursuing platform strategy both overall as a nation by building a smart nation platform, and also within verticals. If you look particularly at mobility and transportation, it has worked to create a central core platform and then build greater autonomy around how mobility and transportation works in the country. Other good examples of governments applying this are Dubai, South Korea, Barcelona; they are all countries and cities that have applied the concept of platforms very well to create a smart nation platform. India is another example that is applying platform thinking with the creation of the India stack, though the implementation could benefit from better platform governance structures and a more open regulation around participation.
In your book you also said industries that are information-intensive are most prone to platform disruption; whereas, conversely, highly regulated industries are less likely to be transformed by platform thinking. Many global governments, however, are information-intensive and are also highly regulated. Is platform thinking best applied to developing countries? How can platform thinking help developing countries?
Developing countries have a unique opportunity to apply platform thinking for a variety of reasons. In many developing countries, the legacy systems have been so bad that it’s been very difficult to offer basic services, like financial inclusion using those legacy systems. Hence, there’s an opportunity for technology to create an alternate infrastructure independent of legacy systems. The India stack is a good example of creating an alternate infrastructure for becoming a platform. Similar examples exist in Africa. For instance an initiative like M-Pesa has created an alternative payments’ infrastructure, while piggybacking on the existing Hawala network of payments. These are all examples of applying platform thinking to developing countries.
But focusing only on technology compatibility issues misses the point. I’ve worked on designing smart city platforms for large cities in developing parts of the world. In many of these instances, rewiring legacy systems is a smaller issue than rewiring the mental models of key stakeholders.
The trend in government is to build an ecosystem of development in which citizen developers help their governments. For example, West Sacramento Mayor announced how he was working with local innovators to develop a Tinder-like app for citizens to express their like or dislike of city services. But some states are creating internal platforms that are language agnostic. For example, California developed an innovation portal for internal employees to have a sandbox to develop new ideas. Evidently, there’s an internal platform and external platform revolution taking place in government. How does government as a platform (GaaP) fit into the platform revolution? And, what advice would you give to large IT vendors looking to capitalize on this new platform revolution in government?
Thinking about government-as-a-platform, I think of three different models:
The first model involves creating an innovation sandbox where governments look at existing data and open it to enable external innovation. This form of approach has historically been more opportunistic than strategic. Look at what data you have and open it out to an ecosystem.
A second model that is slightly more market-centric but still doesn’t leverage platform thinking. In this model, governments transform specific verticals. Mobility is a common vertical that governments want to transform because there is significant user pain around mobility and transportation. Healthcare and Energy are examples of other such verticals. We have many examples of governments doing platform initiatives in silos within these verticals. Even though this involves bringing together a vast range of stakeholders to solve that problem, you’re still operating in silos. Eventually, you create these many different platforms that don’t talk to each other.
The third way of doing it is a platform-centric model: Where you create a central platform and then start launching these initiatives off the central platform. You may create a central platform for the whole nation (government or city) and then start a mobility initiative on top of that. As you get data from the mobility initiative, say, data about traffic – you can connect it with data about real estate to understand what parking optimization should be done. Once you have data about real estate and about how buildings are using energy, you can connect that to data about the grid to see how buildings can interact with the grid to optimize the use of energy. The right way to apply platform thinking is to ensure that the various initiatives that you are “platformizing” are all interacting with each other and not operating in silos.
It seems there’s always a chicken-before-egg problem in government, especially due to the funding mechanisms, even though CMS and the White House Office of Social Innovation fund some innovation projects that are seemingly scalable. Out of the eight proven chicken-before-egg platform strategies talked about in your book, which one best applies to governments?
With governments, solving the chicken-and-egg problem is best achieved by ensuring that the ecosystem believes that the government is fully committed to the platform. This in turn is achieved though a few mechanisms. First, you can start with a marquee player coming on board and kickstarting the platform. Alternately, the government assigns a very deliberate source of funds for the success of the ecosystem so that the ecosystem can participate. External innovators can participate on the platform with the guarantee that they will get outcomes from participating on the platform. And finally, ensure that there is a very compelling use case that is created by the government and by its initial partners before you start opening it up to the larger ecosystem because nothing is more discouraging than being on a platform that is not being consumed. And so creating that initial use case is critical.
Again, thinking back on my work building smart city platforms for governments, I’ve always seen creation of the initial use case as being critical to the long-term success of the platform. In Chicago, the initial use case was the smart grid. In Singapore, it was transportation. In the Middle East, it may well be irrigation. A successful use case early on is critical for solving the chicken and egg problem.