MIT’s Center for Digital Business just hosted their 3rd annual MIT Platform Strategy Summit to educate business leaders on the way that platform-centered markets impact the economics and management of corporate strategy in today’s digital-centric world. We were lucky enough to be on the invite list.
The conference featured business luminaries whose pioneering strategies and tactics have transformed (and disrupted) industry sectors including education, energy, publishing, staffing and human resources, and data management, with an all-star cast of speakers.
Together Geoffrey Parker, Professor of Management Science at Tulane University and Research Fellow at the MIT Initiative for the Digital Economy, along with Marshall Van Alstyne, Professor of Information Systems at Boston University and Research Fellow at the MIT Initiative for the Digital Economy, chaired the innovative Strategy Summit. They are also co-authors of Platform Revolution: How Networked Markets Are Transforming the Economy—and How to Make Them Work for You, along with Strategy Summit co-chair Sangeet Paul Choudary.
We had a chance to chat with Geoff and Marshall in between some of the mind-blowing presentations. Geoff told us the biggest take-away from the academic day was that there really is great interest in the social welfare implications of platforms. “For example, we invited a paper that showed that the arrival of UberX in California reduced the vehicular homicide rate by 3.5%. We are entering an exciting time where scholars can add depth to the debate around the social costs and benefits of the emerging platform economy.
There is also great interest in developing indicators of the changing economy. We call this a “platform index” that shows the growth of platform firms. As part of this index, scholars need to develop careful definitions over what is and what is not a platform.”
From the business day, Marshall told us his personal take-away. “There are huge sweeping changes in the economy. Firms like LegalZoom are unbundling services, in this case expensive lawyers, and providing measurable value at a fraction of the cost. Such services are appearing also in education, design, coding, and healthcare.”
We were curious what the conferences contents influence will be on future projects. “I expect that we will be moving our research agenda into issues of governance and helping both firms as well as their regulators think through the changing dividing line between government and platform functions,” Geoff said. “Platforms have begun to absorb what were previously government functions. Some of the areas include monitoring, incentives for good behavior and the exclusion of bad actors. The challenge for government regulators is to make sure that platforms are not using their powers to only increase their short term profits, but are instead using their powers to maintain healthy ecosystems.”
Marshall added, “Firms need help navigating the new business models. The pace of change will continue to accelerate. Projects to understand this and manage it will include developing methods to scale fast, tools to comprehend network effects, and better models of shared IP.”
As far as new topics for next year, Geoff mentioned, “We are thinking of orienting next year’s business conference around how the Internet of Things (IoT) needs a platform perspective to realize its promised benefits. To date, much of the effort around IoT has been about developing the technologies needed to link machines to networks. What has mostly been missing, however, is the economic logic that would make companies want to deploy the technologies and the incentives to make developers want to innovate on top of IoT technologies.
Next year is likely to be the year that platforms really break into the public’s consciousness. We saw signs of it this year, but the wave still appears to be growing. Firms are beginning to realize that they need to develop a different managerial competence to be able to mobilize resources outside of the firm just as they currently manager resources inside the firm. We heard from one CEO that attended the workshop that he was texting his direct reports to drop what they were doing and come straight to MIT to catch the rest of the event. He clearly recognized that there was much to be learned that was of direct relevance to his business.”
We started talking about their book, which is an inside look at the revolutionary business power of the platform, and figuring out how much overlap came into play here. Marshall told us that “Many of our speakers came up as a result of our interviews. And many of our book’s stories came from people we heard speak. There is a lot of complementary interaction between what we learned from others and what we wrote which caused us to explore more and write more. Any industry to which information adds enough value cane be transformed.”
AirBnB and Uber were mentioned a LOT at this conference. Marshall mentioned that “If we focus on Internet of things next year then clear players will include IBM Cisco GE and other global firms. Many startups such as Belleds out of MIT will also be included.”
Geoff added, “In year’s past it would have been Microsoft, Google, and Apple. I think AirBnB and Uber were mentioned because they make the platform economy very real to everyday citizens. My guess is that we won’t hear so much about them next year but I’m not sure what will emerge to take their place in the general consciousness. It is quite possible that the Internet of Things and devices such as Google’s Nest and Google’s Brillo operating system for device connectivity will move more into the general consciousness. Equally likely is that governance and regulation issues might come for to the fore as people begin to realize how much of their daily lives are mediated by large platform companies. I would expect that the issue of data ownership will become more important as people realize how valuable the data is that firms are collecting and reselling.
In terms of the value of platforms that connect small communities, it’s incredibly important that platforms can connect communities that were once isolated. An interesting example is the growth of platform firms in Africa. The technology is currently being hosted in Europe, but the businesses are specific to certain countries. By leveraging common infrastructure, firms are able to launch platform businesses at low cost and bring tremendous benefits to developing regions of the world.
Platforms can do a lot to break down barriers. Sometimes this poses challenges to certain governments. For example, China has the ‘Great Firewall’ which blocks services such as those offered by Facebook and Google. At one level, such censorship can be seen as an attempt to slow down the effects of globalization. At another level, the efforts can be seen as an effort to reduce the effects of foreign competition.”
I think everyone was a little shocked by the turnout of the day, Geoff and Marshall included. They had us all change rooms to accommodate nearly twice the number of people that were first expected—and we bet next year will be even bigger. Speaking of which, next year’s Strategy Summit dates have yet to be announced but, we suggest you get on the waiting list.