

This article is an excerpt from the Shortform book guide to "Platform Revolution" by Geoffrey G. Parker, Marshall W. Van Alstyne, and Sangeet Paul Choudary. Shortform has the world's best summaries and analyses of books you should be reading.
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Do you work in platform management? What’s a strategic platform administration?
Once you launch your platform, you need to manage it carefully to ensure its success. To help you accomplish this, we’ll cover three key management principles.
Take a look at the three principles of platform management.
1. Strategic Platform Administration
A strategic platform administration system can help you in platform management as you maintain control of your platform’s quality as it grows. This is important for 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. To keep users happy, Geoffrey G. Parker, Marshall W. Van Alstyne, and Sangeet Paul Choudary state that your administration must be straightforward, clear, judicious, and fair.
Second, Parker, Van Alstyne, and 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.
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).
2. Tailored Performance Measurements
Parker, Van Alstyne, and Choudary say that many traditional performance measurement tools can’t account for network effects, so they won’t be useful for evaluating the financial health of your platform. They recommend using metrics that capture one of three key indicators of platform performance, depending on which stage of life your platform is in.
For new platforms, measure the value you offer to users. Quantifying this value helps you prove that your platform will grow and succeed. There are many ways to measure value to users. For example, Parker, Van Alstyne, and Choudary recommend evaluating user satisfaction by tracking users’ activity and measuring their trust that the benefits of participating in your platform outweigh the risks.
For scaling platforms, determine the equilibrium between producers and consumers and the value each user type offers. Parker, Van Alstyne, and Choudary explain that if there’s a mismatch in the number or quality of producers and consumers, you must implement strategies to ensure users are still getting value from the platform. To illustrate, imagine there’s been an influx of producer bots on your platform, resulting in unfulfillable sales listings. You’d need to remove the bots to keep consumers happy.
For well-established platforms, study users’ activity to determine opportunities to improve your value to users. For example, this is why Facebook began Facebook Marketplace—it noticed its users were using the platform to buy, sell, and trade. The authors explain that determining opportunities to improve value helps you remain competitive—a necessity we’ll talk about in the next section.
3. Clever Competitive Tactics
According to Parker, Van Alstyne, and Choudary, traditional competitive strategies, like those described by Michael Porter in Competitive Strategy, don’t fully account for the nature of competition among platforms. One reason for this is that platforms disrupt markets by leveraging network effects. For example, consider how Spotify fundamentally changed the music market by introducing a streaming library, which shifted the consumption model from ownership to access, reshaping supply and demand. Instead of trying to steal artists from their record labels (the old competitive mode in the music industry), Spotify collaborates with a large network of stakeholders, including artists and their labels, to negotiate deals that it claims create value for everyone.

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- How platforms like Spotify and Amazon became so successful
- What makes platform businesses so unique and competitive
- Tips for aspiring platform entrepreneurs