What you should know about the platform economy

Posted by Olivia Chapman
May 27, 2016 03:49 pm

“In the past 10 or 15 years, ‘platforms’ and ‘digital platforms’ have become pervasive buzzwords,” says Annabelle Gawer. This is the same person whose MIT professor once said to her “Interesting thesis, but don’t use the word ‘platform’ in the title. No one knows what it means.”

Readie member Gawer is a world leading platform expert and Professor of Digital Economy at the University of Surrey and regularly advises policymakers across Europe about the regulation of online platforms. So what actually is a platform? The European Commission defines online platforms as “search engines, social media, e-commerce platforms, app stores, price comparison websites”. Gawer cuts through such lists and goes straight to the heart of the matter, “a platform is simply a building block or template on top of which lots of people can innovate”.

In Gawer and Peter Evans’ The Rise of the Platform Enterprise: A Global Survey published earlier this year, platforms are taken to create value in two principal ways. These are by being ‘transaction platforms’ such as Uber and Airbnb or ‘innovation platforms’ like the Apple iPhone which provide the technological building blocks upon which large numbers of innovators can develop products.

“The word platform actually pre-dates our so-called digital economy,” Gawer says. “If you think of product families such as automobile manufacturing or in the 1980s when Sony were building Sony Walkmans, they had at their core a template, a chassis, an architecture that can then be innovated upon by adding and plugging in little peripheral components and changing the overall product.”

And creating value is something they are doing in bucket-loads. Gawer and Evans’ report, based on a comprehensive survey of the 176 platform companies around the world, found the aggregate market value of platforms to be over $4.3 trillion. So, from automobiles to Zipcar and Uber, platforms are hugely influential and exciting policymakers, businesses and individuals alike.

Don’t quite understand the jargon? Need to get up to speed on the ins and outs of the platform economy? Watch our video interview Annabelle Gawer:

Annabelle Gawer on digital platforms from Nesta UK on Vimeo.