The word platform has a long technical history of referring to the infrastructure that provides a structure on which a building can be built. Today, the term has a much broader meaning in technology and business. In the world of digital business, it refers to a framework that connects and interconnects external tools, teams, data and processes.

The concept of the platform enables businesses to innovate at a faster pace and more deeply engage with customers. It also helps them create unique offerings that can provide a competitive advantage and stand out in the marketplace.

In a platform model, who a company connects with matters more than what they do or what they own. That’s why six of the top 10 companies by market capitalization are platform businesses. That includes Apple, Microsoft, Amazon, Alphabet (Google), Facebook and Alibaba.

Linear business models like those of car manufacturing and subscription content providers generate revenue by selling or leasing products they own outright to consumers. Platform businesses, on the other hand, generate revenue by facilitating transactions between two parties without creating, manufacturing or owning any inventory. Examples include online marketplaces for vacation rentals and taxi services, as well as user-friendly apps for video streaming.

Building a digital business platform can be challenging, but the rewards are significant. The platform approach leads to faster innovation, higher quality, improved reliability and reduced costs – especially if the platform architecture is flexible enough to adapt as technology evolves. It also enables companies to deliver better customer experiences and boost productivity. platform