Scaling Your Platform and Managing its Evolution
Examples of platforms are all around us. Businesses that have been successful at building platforms have disrupted traditional companies and scaled quickly. AirBNB, Amazon, Salesforce, and Uber are just some examples of platforms that have become massively successful in recent years. You’ll find platforms across many industries, from transportation to book publishing.
For a product manager, managing your platform is different from managing your product. Platform product managers must think about longer-term roadmaps, manage multiple stakeholders – including developers – and keep the big picture in mind. It’s about a focus on capabilities and not just about features.
If you are early in your platform evolution, curation of your partners (app developers) is important, as you’re entrusting your brand to these partners. Uber, for example, launched its partner APIs with a handful of partners like Open Table and Starbucks. Uber was able to reach many prospective customers with these APIs, in effect using its partners as a discovery and customer acquisition channel. It is critical to take the right path to scale based on your industry ecosystem.
My experience is in working on multiple platforms in the food-tech and supply-chain industries. In order to successfully scale a platform and manage its evolution, I’ve found it is important to have focus and clarity in a number of key areas, listed below.
What is the value proposition of the platform for the customer, the partner (app developer) and the platform? Different partners might be attracted to your platform for different reasons. Most partners are interested in access to a large set of potential customers available on your platform. Other partners will want to leverage your infrastructure to bring their innovation to market faster and at lower cost. It is important to understand your platform’s value proposition and how it meets the needs of different types of partners.
Apple Pay, for example, markets itself to developers as “an easy and secure way to pay” that leads to “increased conversion rates and new user adoption”, while customers “love the simplicity”. I choose to shop at certain stores because the Apple Pay experience is easier and faster compared to the “insert card and wait for a long time” experience of chip cards.
What is the value proposition for your customers? Do partners create incremental value with a great user experience? Do customers get access to the latest innovations due to the platform?
Are your goals about user growth, data exchange or monetization or some combination of these themes? The platform product manager should have a clear idea of what each of the partners or partner-types brings to the table, and this must align with the overall business strategy. For example, a partner in a new geography or a different customer segment can help the platform reach a newer set of customers. These decisions require a deep knowledge of your industry ecosystem, its relationships and economics.
When I was at Amazon every project I worked on included a set of guiding tenets aimed at helping the team with decision-making. The idea is that they help align the team and make the decision-making process consistent and reliable.
For example, a tenet could be to “support and accelerate internal and external innovation”. This tenet can help you to balance your investments across different project types and partners. Buy-in from your team and the executive leadership team is a prerequisite for guiding tenets.
Partner Selection Criteria
Given that a platform product manager has many customers, both internal and external, prioritization is usually a challenge. As a platform product manager you should get buy-in from different stakeholders for the decision-making process to filter partners and prioritize the roadmap. Do you want to add more users or do you want to add partners that get you more data, or are you solely focused on revenue? What are the trade-offs between the metrics that measure success?
An established set of criteria for partner selection – whether it is additional functionality for your end users, additional value capture for the partner and the platform, or brand association – leads to consistent, transparent and fair decision making. For example, we decided to add higher resolution imagery for to our customers (farmers) for their farms from drones and aircraft, in addition to satellite imagery. The higher-resolution images help farmers to better monitor the health of their crops throughout the season, and this new capability has deepened the type of services we could offer to our customers and created additional value for them.
While the KPIs will vary for different industries, they all should fall under the holy trinity of retention, growth and monetization. Your metrics should align with your strategy, and should be actionable and (critically) leading. Leading metrics are like inputs – they measure the actions necessary to achieve your goals. Metrics and customer feedback must be used to learn and improve the platform and its services. To give you an example of what I mean by leading metrics, in a subscription model, renewals is an important metric, but usage and engagement metrics are leading metrics that are correlated to your renewals. Therefore, tracking those earlier metrics will enable you to more quickly adapt and predict probable fluctuations in your KPIs, as well as understand how the ecosystem of your platform is behaving.
As a platform product manager you should have a clear thesis for marketing your platform to customers and partners (app developers), and for marketing your partners to your customers. Your marketing approach will be different depending on your industry, your philosophy, and the type of platform you are building. For example, Google’s strategy has been to provide more support to Android developers to make development easier, and to assist them through tools like Firebase and its back-end infrastructure suite. By contrast, Apple has updated its subscription model to incentivize partner loyalty with a higher percentage revenue split for developers who retain subscribers for over a year.
Google is pushing to make its developers more successful by providing them with better tools and support, whereas Apple is focused on monetization by forcing developers to think about the customer experience. These marketing strategies reflect the differences in their customer base, their approaches to monetization, and their overall company philosophies.
The type of marketing support provided by the platform in industries that are in an early stage of their development – such as digital agriculture (digital tools and data analytics to help farmers improve productivity) – is very important. A platform can provide a great way for innovative app developers to reach a large audience in such an environment. So having a clear and effective way to promote your partners is a powerful way to quickly gain market share in these new sectors.
For a technology platform, managing its evolution and growth is critical, although the path taken can obviously be different for different industries. It is the job of a platform product manager to understand the different decision criteria, the industry ecosystem, their platform goals, and how the platform creates value for different participants. This understanding will help you to chart the right course for your platform’s growth and evolution.