“Digital platform” is a term I first proposed more than a decade ago to describe a new breed of company that was about to dominate in our economic and social discussions. The term never caught on, sad to say, probably because it wasn’t catchy enough, but the prediction proved true. I used the word platform to get away from the word ecosystem, a term that many had fallen in love with in the early 2000s as they believed it described Apple’s astonishing success with the iPod and, later, the iPhone. And though ecosystems can be powerful economic tools, they are not as powerful as digital platforms, not the way I meant them to be understood.
To illustrate, four of the five companies I called digital platforms in 2008 were Amazon, Apple, Facebook, and Google. They all had the potential to do something that the word platform describes well, namely giving customers a platform on which to stand from which they can reach up and harvest all the expanding benefits the company makes available. A platform requires a home for a consumer — in Amazon, that home was the shopping website; in Google it was the search interface, even as the company was already adding mapping and, later, the Android mobile OS. From that home base, a consumer must be able to reach out and ask for — and have a high likelihood of receiving — benefits that stretch for miles, seeming even infinite. Platforms must necessarily scale out horizontally, partnering promiscuously to get as many adjacent benefits lined up as possible. Apple soon had its App Store, and Amazon had its expanding categories and its marketplace for third-party sales. Platforms end up requiring an investment in infrastructure that can itself become a product — Amazon Web Services is a good example, as is Amazon’s delivery network, but so are Google’s and Facebook’s advertising tools and infrastructures.
Platform power is unique not just because of the strategic direction a platform company must take to fulfill its platform destiny but because platforms must be incredibly obsessed with customers. They must know their customers, harvest data from them to learn more about their interests, and continually experiment with new services to keep the attention and interest of their customers. This requires thinking beyond the products of today and imagining a blended services model where the customers get what they want, when they want it, without having to navigate your corporate silos or antiquated product models.
The Logical Shift From Product-Driven To Service-Driven Companies
I have described this shift from a product-driven company to a service-driven company as the end goal of a platform company and any that would successfully cooperate or compete with it. Obsess about the customer, build an infrastructure and ecosystem capable of delivering services that continually expand in value, and thereby maintain the emotional and behavioral engagement of the customer. This is essentially the bulk of the work I do today, though we quickly found that we also had to guide companies through the internal employee and culture issues that often stand in the way of change.
In the end, it all lined up nicely: If you enable your employees to obsess about your customer and build the services that increase the frequency of engagement, you will win. But I soon came to realize that a model based on hyperconvenient services-based experiences was also vulnerable. Services are easy to copy. And because digital switching costs are often zero, it is hard to satisfy people in a way that makes them feel that elusive thing called loyalty.
But most important, and the motivator behind this post, is that services-based relationships often fall into a convenience trap. In this trap, in a laudable effort to reduce friction and increase the ease of trial, companies spend so much time on making it easy to do business with them that they gradually lose sight of reminding you why you would want to do business with them.
Why Would Consumers Want To Do Business With You?
To understand why this matters so much and why it’s especially important now, reflect on the history of human development. As Pascal Boyer, a celebrated evolutionary anthropologist, writes in his book Minds Make Societies, the best explanation we have so far for those human behaviors that exist across culture groups, nations, and ideologies is an evolutionary one. If we did not evolve the ability to tell whether someone is lying (which we did not — read Malcolm Gladwell’s new book Talking to Strangers for more on that topic), then we must not have needed it to get this far. If, on the other hand, we evolved to quickly assign intentions to the people and even objects around us, then that must be a crucial part of our survival as a human species — or it was for so long that even if it might no longer serve the same purposes, we are stuck with it.
What does that mean for how we choose which app to install or which company to buy from online? It means that our intention radar is constantly working, continually evaluating trading partners for the strength of their long-term commitments. That intention radar begins to supply the why for the affiliations we make, the companies we choose. Boyer’s book discusses this at length, showing how all human societies have mechanisms for signaling long-term intentions precisely because the receiving humans are constantly evaluating those intentions — everything from tattoos that show relatively permanent group membership to wedding bands that publicly affirm commitment to a relationship.
When we shop, we are not only driven to look for signs of long-term positive intentions but we are hoping to find them. In other words, it’s not just a danger detector; it’s also an aspirational drive that we call hope.
We need to affiliate with people, objects, movements, and groups that we have reason to believe intend to do well by us. If we can’t find that, we despair. When we do find it, we experience hope.
In weighing a company in the balance — let’s take Amazon, for example — what used to count as good intentions, something as simple as quick shipping or a liberal return policy, no longer stands out as differentiating, either because customers got used to it or because competitors have matched it. This undifferentiated service makes it hard to compete in rational terms, sure, but it also untethers the customer’s urge for hope from the company.
Meanwhile, unaware, digital platform companies and all their in-industry competitors have fallen deeper into the trap of hyperconvenient services. “We’re obsessed with our customers,” they insist. “We’re using journey maps, and we’re cutting out friction. We’re so agile and flexible that we might as well be cooked spaghetti over here!” But what they don’t understand is that an untethered urge for hope is one that has to be attached somewhere. And in the absence of a compelling offer of hope, people will assume the worst about your intentions.
Losing The Connection To Hope Is What’s Really Plaguing Digital Platforms Today
That’s what has happened to Facebook. It’s happening to Amazon and Google. It has been slowly happening to Apple, as the faithful question technical decisions such as whether the company should have dropped headphone jacks or switched to Thunderbolt. In recent years, reporters have asked me to explain what’s happening to these companies; I’ll admit it has sometimes been hard to quantify. People keep using Facebook, even if they use it differently. People keep increasing their spend on Amazon. More people are buying Android phones every year. And Apple keeps making money hand over fist. Reporters are puzzled: Why does it feel like these companies are losing their mojo even as the numbers say otherwise?
Because they’re losing their claim to customer hope.
The hope that an entire generation previously placed on these companies, the hope that made us forgive the inevitable fits and starts like Amazon’s Fire Phone or Google Glass . . . that hope is now untethered for people over thirty-five. And worse, it was never attached in the first place for most Millennials.
That’s the real challenge ahead of these large digital platform companies. Their products are amazing. Their services are top-notch and only getting better. But we have a need for hope, an urge for hope, and the hope that we would normally have attached to these companies is now flying free in the wind.
I think Apple senses this in a way the others do not. In Apple’s recent event, where the company announced a variety of modest improvements to its Apple Watch lineup as well as its iPhone line, not to mention filling in the details of its various gaming and video subscription services, the company also elevated the aspirations of its customers toward hopeful outcomes, like saving people’s lives with Apple Watch or achieving new levels of personal and group creativity via the new iPhone cameras. It was subtle, and I’m not sure most industry observers picked it up. But if Apple continues to develop this message, it will be the first of these big platforms to make a play for the reattachment of our urge to hope.
Meanwhile, this vulnerability in the model of the big digital platform providers suggests that there is finally an opening for you, dear reader who doesn’t work at Google or Facebook. If you know your customer well enough, your company can step up and consistently show such good intentions that your customers not only transact with you or subscribe to you — big wins in an earlier stage of our economy — but they also attach their hopes to you. Sure, they will still use Amazon for everything they can, but they will be connected to you — bank, healthcare provider, fitness gym — in a way that will give you permission to serve them for years to come, no matter how large or small your platform.
Are you up for it? I hope so.