The Businesses That Platforms Are Actually Disrupting

The Businesses That Platforms Are Actually Disrupting

The Businesses That Platforms Are Actually Disrupting

Platforms are all the rage these days. Powered by online technologies, they are sweeping across the economic landscape, striking down companies large and small. Uber’s global assault on the taxi industry is well known. Many platforms, some household names and others laboring in obscurity, are doing the same in other sectors.

Surveying these changes, you might conclude that if your business isn’t a platform, you had better worry that one is coming your way. Everyone from automakers to plumbers should count their days as traditional businesses. And maybe you should jump on the platform bandwagon too. If it worked for Airbnb, why not you?

Based on our research into the wave of online platforms that have started in the last two decades, we don’t necessarily disagree. Traditional businesses should worry, and maybe they should think about platform strategies. But we think these conclusions are overwrought — and miss what’s really going on.

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The businesses most at risk from platforms powered by rapidly improving online technologies aren’t, in fact, traditional businesses that sell products and services to consumers. They’re “traditional” matchmaker businesses that have been operating platforms for connecting different groups of customers.

After all, platforms, including disruptive ones, are nothing new. Village matchmakers started making their living organizing marriage markets millennia ago. And many platforms today, such as 50-year-old MasterCard, were started back when a browser was someone thumbing through magazines at the local newsstand.

The evidence is striking that these existing matchmakers, rather than traditional firms, have so far experienced the greatest disruption from new platforms.

We identified significant platforms based on three different measures of importance: the five largest publicly traded ones by market cap; the five largest nonpublic startups by most recent valuation; and the five largest by web traffic. Two online platforms appear in both lists, so we have 13 online platforms. All but one of these new matchmakers directly disrupted an existing platform industry. Airbnb is the one exception. It has mainly disrupted the hotel chains, which are not platforms, but it may well disrupt online booking sites, which are.

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These empirical findings make sense. Existing matchmakers have already identified situations in which a platform can create value by helping to connect members of different groups that could benefit from getting together. But they also face significant risk from startups that use new technologies to operate more-powerful, more-efficient, and more-scalable platforms.

Microsoft Windows, for example, has been the dominant platform for users, developers, and hardware makers for more than 25 years. Using new technology and business models, Apple’s iOS and Google’s Android mobile operating systems whacked Microsoft hard enough that the sale of Windows-based PCs fell.

 



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