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DISRUPTION NETWORKS
SANGEET PAUL CHOUDARY
is an entrepreneur, advisor,
and business author. He is the CEO of
Platformation Labs, a C-level advisory
and research firm, focused on the
research and application of platform
strategies across industries.
He is also the co-chair of The MIT
Platform Strategy Summit at the
MIT Media Labs.
especially in emerging markets such as
those in the Middle East, where privacy
permeates both personal and corporate
life. Companies fear that divulging their
data or operating methods will damage
their competitive edge. The reality, how-
ever, is that sharing is not a question of
what to open, but of what to keep closed.
This is the part that companies miss;
they think of things as open versus
closed, whereas the real key to openness
is understanding which resources are
critical, and which are not. Critical resources
should be kept closed while the non-critical
resources, where others can innovate, should
be made open.
A number of years back, Google got this
horribly wrong, but it learned its lesson very
EMB
quickly. When Apple launched the iPhone,
it decided to keep control over the handset
and not share or open it out at all, only
opening out the App Store and the creation
of apps. You simply had to work with Apple
on their terms. By contrast, when Google
entered the mobile space, it created Android
as a completely open platform. Soon after,
however, it ran into the ground when other
companies started creating their own
version thanks to Android’s openness.
Companies could just tweak things and
totally bypass Google in the process.
Google’s response came in the form of
maps – the tool that really makes a mobile
phone useful: your location can be tracked
and a lot of things can be provided on the
basis of that. Specifically, Google closed
access to its maps and forced companies
to pay a licensing fee. Everything that
was valuable, they put inside Google Play:
the maps, the user data, the user login.
Conversely, everything that was not valua-
ble and could be innovated, such as operating
systems, were opened out. Today, if you use
an Android phone, your relationship is with
Google and not with Samsung. That is how
Google realized that openness is about
what should be closed rather than what
should be open.
A DIFFERENT TAKE
ON CONNECTIVITY
In all this talk of Google and digital con-
nectivity, it is easy for companies in less
technologically advanced parts of the world
to conclude that platform strategies are
not for them. But they are wrong. Let’s
not forget, platforms of various shapes
and sizes existed long before the arrival
of the World Wide Web. It follows suit,
therefore, that with a little ingenuity and
innovation, where digital capabilities are
lacking, platforms can still thrive.
Africa’s M-Pesa demonstrates how
poor connectivity infrastructure can work
with a platform model. The mobile phone-
based money transfer service relies not
on connectivity with end users, but on
end users having access to the existing ha-
wala system of money transfer. If that ac-
cess is in place, then it is the agents who
run the hawala system, not the consumers
themselves, who become integral to the
M-Pesa network. With the agents on-
board, money can be transferred with
ease, without the need for consumers to
be connected.
The way in which e-commerce used to
function in India before the country became
EMERGING MARKETS BUSINESS
SUMMER 2017
ISSUE NO. 3
39
connected also provides insight into how
a whole ecosystem of players can work
together to make a platform strategy func-
tion. In the early 2000s, if Indian consum-
ers did not have access to the Internet or
even a mobile phone, there were two ways
in which they could transact online:
1. A consumer could go to a cyber cafe
and pay a fee to the attendant in order to
make their purchase. In essence, the cyber
cafe would then become the retailer,
charging a premium on top of the item –
typically flight tickets or hotel bookings
– for the transaction.
Businesses must
get their platform
strategy right
from the start:
self-serve or assisted
service, to create
or participate.
2. Even if consumers had access to the
Internet they probably did not have credit
cards to pay online. To overcome that ob-
stacle, they would use another platform
in the form of a physical payment card
called Itz Cash. In exchange for cash, the
consumer would receive a prepaid card of
the same value, along with a code that
could be entered online to make the payment.
In these cases, what we see is traditional
connectivity infrastructure in action,
providing innovative – if not digital –
ways to facilitate platform strategies. So,
as competition builds up in the platform
realm, emerging market companies have
more ways than they might think of com-
peting on the global stage.
To turn options into success, however,
businesses must get their platform strate-
gy right from the start: self-serve or as-
sisted service, to create or participate,
what to open and what to keep closed.
These all count amongst the considerations
that can determine if a platform ultimately
sinks or swims.
THREE BUILDING BLOCKS
OF A SUCCESSFUL PLATFORM
SUCCESSFUL PLATFORM STRATEGIES INCORPORATE
THE FOLLOWING THREE BUILDING BLOCKS TO VARYING
DEGREES, DEPENDING ON THE BUSINESS.
1 2
CREATE A TOOLBOX
For others to easily plug
into your platform, it is
important that your
infrastructure enables
interactions between
participants. Apple does
this by providing