Platform Ecosystems: The next frontier of Australian startup opportunity
The 2015 StartupAUS Crossroads Report was released last week, and just as it did last year, clearly highlighted some of the pains and potential gains within the local startup ecosystem.
As is to be expected, this has sparked much debate and conversation within the community. This particular article from Dr. Jana Matthews on Startup Daily certainly piqued my interest.
The reason why is the mention of platform economics.
I believe this is a critical factor in the context of Australia truly defining itself as a viable hub for new value creation.
I’ve spent quite a lot of time in the sports industry vertical exploring platform ecosystems and the potential to drive value across various ecosystem participant segments. Because of this, an article from Paul Templeman of the Australian Sports Commission on LinkedIn really got me thinking.
Paul and I have spoken about platform ecosystems in quite some depth, specifically as they relate to sports, and the mention of Professor Amrit Tiwana’s book, Platform Ecosystems: Aligning Architecture, Governance, and Strategy, often becomes a topic of conversation.
Amrit defines the elements of a platform ecosystem to include: (1) shared infrastructure; (2) a platform; (3) interfaces; and (4) apps that are used by end-users. He also introduces the notion that there are competing ecosystems, and argues that:
- Platform ecosystems are replacing traditional models in and beyond the software industry, driven largely by the digitisation of products, services, and business processes. They can expand the pie for everyone but require a fundamental shift in strategic mindset.
- Survival and prosperity of platform ecosystems require a platform owner to deliberately orchestrate their evolution.
- Orchestrating their evolution requires that their architecture and governance interlock and subsequently coevolve, which is biologically inspired business design.
Amrit goes on to say, “The potential power of platform ecosystems comes from leveraging the unique expertise of many, diverse independent app developers driven by market incentives on a scale that is impossible to replicate within a single organization. The platform model essentially outsources to thousands of outside partners innovation that used to be done inhouse, who bear all the cost and risk of innovating and then share the proceeds with the platform owner”
Paul’s summation above, and inclusion of quotes from Professor Tiwana clearly highlights the shift towards businesses that are driven by, and towards, platform ecosystems.
When I combine this with an article written by Steve Blank towards the end of last year titled; Born Global or Die Local – Building a Regional Startup Playbook, things start to make a bit more sense.
Steve argues that each locality requires a playbook to help increase the chances of a startups success, and that this playbook needs to be written, tested and validated.
In this particular instance he was referring directly to the opportunity that Australia has to become a vertical leader by building scalable sports technology companies.
I completely agree with him (as is often the case), however I would caveat this opportunity to become a vertical leader by saying that we need to focus on the development of platform ecosystems, and that platform economics, architecture, strategy, tactics and governance, should become a core component of the ‘playbook’ that we write, test and validate.
I am absolutely of the opinion that Australian startups need to be born global, however fundamentally believe that by taking/considering a ‘platform ecosystem approach’ from the outset, we enable ourselves to deliver our value proposition at scale, decrease our risk, and maximise our chances of being globally impactful.