Tuesday, June 2, 2009

What is the difference between a platform and a product?

We would argue this question for hours when I was a product manager. We came up with plenty of definitions to clarify the difference, although I'm not sure we were ever very clear about it ourselves at the time. And yet I think this simple question lies a the heart of good product management. So here is what I think today.

One line of argument is as follows: People buy products. Platforms are structures that allow multiple products to be built within the same technical framework. Companies invest in platforms in the hope that future products can be developed faster and cheaper, than if they built them stand-alone. I would argue that as the cost of development comes down there is much less to gain here as there once was.

Today it is much more important to think of a platform as a business framework. By this I mean a framework that allows multiple business models to be built and supported. For instance, Amazon is an online retail framework. Facebook is a social media framework. Apple iTunes is an online micropayment framework.

It is the business framework that leads the product strategy. Amazon started by selling books. Over time they have expanded to selling all sorts of other things. Apple iTunes started by selling tracks and now uses the same framework to sell videos. TV programmes and software applications for iPhones.

In a technical framework, you leverage the underlying technology to build new products. In a business framework, you leverage the knowledge about the customers to build new business models. Amazon built a retail platform that gathered huge amounts of data on how people buy things online. They used this knowledge to extend the platform to sell more and different things.

How is this relevant to publishing? Suppose I am (say) a textbook publisher. I can imagine developing all sorts of products to repackage my textbooks in online formats. I might develop a great technical platform to do this efficiently. Eventually all my textbooks are online. Great. What do I do then? The business framework is unchanged, I am still selling textbooks, albeit now online.

Let's take a different approach. As a educational publisher we help students to learn. It seems logical then to think that the more we know about how students learn, the better we will be able to help them learn. Suppose then I design a platform that gathers data on how students learn over time. I might start with (say) a study guide that helps them identify what the best learning strategies might be. I would figure out a way to track how useful the learning strategies are for individual students. Over time I would build up a large data set of the best ways to help students learn. With this knowledge I can design new products for students.

That's why I believe we should be thinking of platforms before we think of products

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