A conference meeting of empty chairs with a chart, showing the importance of business administration.

What’s the importance of business administration? How can a strategic platform administration help your company?

A strategic platform administration system can help you maintain control of your platform’s quality as it grows. To keep users happy, your administration must be straightforward, clear, judicious, and fair. 

Learn more about why a business administration is important.

The Benefits of an Administration

The importance of business administration can be displayed through two reasons: First, platform experiences are an increasingly significant part of life for countless people, and they have real-world implications. For example, banning a user from a social media platform could impact their ability to contact their loved ones.

(Shortform note: Controversy about an administrative practice called “shadowbanning,” where social media platforms restrict the visibility of a user’s content without informing them, illustrates the importance of a strong platform administration system. Research suggests that users find shadowbanning frustrating and unfair, since it’s applied inconsistently and often with a seemingly political bent, which has fueled a crisis of trust in social media platforms. Because of this distrust, social media users have collectively invented a new lexicon called “algospeak,” which replaces words that might get you shadowbanned with made-up alternatives (like “seggs” for “sex”). Algospeak is an attempt to skate around the rules, undermining platforms’ authority.)

Geoffrey G. Parker, Marshall W. Van Alstyne, and Sangeet Paul Choudary argue that strategic administration can increase the value of your platform. One reason for this is that poor administration can lead to “market failures,” an economic phenomenon that occurs when producer-consumer connections are unsuccessful or exploitative or result in harm to others. A preponderance of market failures decreases the value of your platform by diminishing its reputation, reducing user engagement, and decreasing revenues.

(Shortform note: As Niall Ferguson argues in The Square and the Tower, US platforms are largely unregulated, which means that users are liable to encounter a variety of market failures. At worst, these include dangerous producers and products, including social media trends that encourage harmful behaviors, platform-mediated exposure to violence, and purchasable items that cause fire and injury. However, many platforms that produce market failures remain valuable (for example, Craigslist was worth at least $3 billion in 2017, despite its link to over 100 murders). As we discussed with regard to seemingly exploitative monetization strategies earlier, users may be willing to take on huge risks for platforms if they deem them indispensable.)

The authors explain that strategic administration systems prevent market failures in four ways: First, they lay down hard-and-fast rules with clear consequences (for example, you might prevent market failures by banning users who incite violence). Second, they proactively promote desired behaviors (for example, promoting engagement by notifying users of trending activity and prompting them to contribute). Third, they develop software that deters market failures (for example, an automatic moderation feature that removes posts and listings made by bots). Fourth, they use economic tools to shape supply and demand and minimize risk (for example, they might eat the costs of market failures like fraudulent sales, fostering user trust and participation).

(Shortform note: As you decide which market failure prevention strategies to use, experts say you should ensure that the strategies cover four key areas of concern: First, your strategies must cover general concerns like privacy and security to maintain a basic level of trust and safety on the platform. Second, to protect your business interests, they must encourage profitable behaviors and prevent issues that could cost your platform money. Third, they must shield your company from legal harm by promoting responsible technology use. Fourth, they must address platform-specific concerns (for example, it may be more vital to address trolling and harassment on a platform like LinkedIn, whose central purpose requires professionalism.)

Importance of Business Administration for Your Platform

Katie Doll

Somehow, Katie was able to pull off her childhood dream of creating a career around books after graduating with a degree in English and a concentration in Creative Writing. Her preferred genre of books has changed drastically over the years, from fantasy/dystopian young-adult to moving novels and non-fiction books on the human experience. Katie especially enjoys reading and writing about all things television, good and bad.

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