Platform & Ecosystem Check

Test honestly whether platform logic applies to your business. If it does, decide which side gets the subsidy, what you open and what you keep closed, and whether you run an ecosystem or take part in someone else's.

Evidence: mixed. The research overview by McIntyre & Srinivasan (2017) shows a field that has not settled how much network effects and platform quality each matter; practitioner treatment in Cusumano, Gawer & Yoffie (2019). Platform effects are real but depend on context, and no source read here gives a rule for when winner-take-most occurs.

Use it when:

• Your product connects two distinct groups, such as buyers and sellers, and "becoming a platform" is on the table.
• You compete against a platform and need to know whether its advantage applies to your market.
• You build on someone else's platform (an app store, a marketplace, a supplier portal) and depend on its rules.

Skip it when:

• The gate in Section 1 says you are a pipeline (you make, sell and serve). That is fine: use 7.4 Business Model and Value Chain and 7.23 Value Creation Check instead.
• You are choosing how to enter a market rather than how your business works: use 7.12 Entry Mode & Local vs Global.

What makes platforms special is the network effect: when each new participant on one side makes the platform better for the other side, growth feeds on itself, and the fight is for critical mass rather than margin. McIntyre and Srinivasan (2017) review the research and show a field with open questions, including how much network size and platform quality each matter.

Practitioner reasoning, not that review, adds that network effects weaken when participants cheaply use several platforms at once (multihoming), when a local market saturates, and when quality dilutes as the sides grow. The costliest error is running a platform playbook on a business that is not one. So this page opens with a gate. Most businesses fail it, and that is good news: a pipeline with sound economics beats a platform without critical mass.

A platform creates value mainly by connecting distinct groups that could not transact as easily without it. Answer for your business as it is today, not as you would like it to be.

Strong answer: "Yes to the first two: farms and restaurants each gain from the other side growing. No to the third: restaurants already know the big farms; the gain is for the small ones." Not: "Yes, we connect people."

• Do at least two distinct groups get value from each other through you, not just from you? ☐ Yes ☐ No
• Does each new participant on one side make the other side better off? ☐ Yes ☐ No
• Would participants struggle to find or trust each other without you? ☐ Yes ☐ No

Verdict: ☐ Platform logic applies, go on ☐ Pipeline: stop here and use the templates in "Skip it when". Calling a product a platform does not make it one.

Illustrative example: the business is made up.

A small Danish firm wants to connect farms in Jutland with restaurants. Section 1: two distinct groups that find each other poorly today; yes to the first two questions, so platform logic applies. Section 2: the effect across sides is positive both ways; within the farm side it is negative (more farms compete for the same chefs). Restaurants can easily order elsewhere, so multihoming is high on that side. Section 3: subsidize restaurants (free ordering), charge farms a share of sales later; open the order feed to a restaurant bookkeeping tool, keep farm quality ratings closed; role: owner, one town at a time because delivery makes the effects local. Section 4: the test is whether ten restaurants reorder within a month. The check stops a national launch that would have spread the subsidy too thin.