Great distinction. Yes, everyone wants a platform, but there's more work to do.
As you distinguished aggregation vs production (un- and re-bundling), I thought about Joe Pine/Jim Gilmore's evolution of value (and production) from goods to services to experiences to personal transformations. The Spotify, AirBnB, and Kindle case studies deliver digitized/physical experiences enabled by digital meta-data. The Food Delivery Platform is a service (improved by digitization) with bonus unbundled elements of its value chain. Each has its competitive profile.
Perhaps your other essay on generative AI (I haven't delved into it yet) falls in the transformation zone since it fits into the futurist computer scientist's "tools for thought" vision of augmentation.
Thanks Rob! Those observations and aligning them to the evolution of value make a lot of sense here.
Here's how I take what you shared and align it back to some of the issues in the article:
- In ecosystems of differentiated supply, the ecosystem provides goods and services and much of rebundling happens at the level of experiences and transformations.
- In ecosystems of commoditized supply, rebundling delivers efficiency gains (faster delivery) rather than improvements in experience.
Hi Sangeet, as with many of your posts this is quite timely and goes right to the key points. The challenge, and maybe the intent :-), is “now what if I want to bring this into my business”. Creating the strategy hypothesis using what is described here is going to be the easy part given these examples had to discover their way to this current position plus continue to drive over time to create power (and enduring value) relative to competitors. Which of course is why they are great examples here.
That’s a long way of saying reading this post alongside the theory of 7 Powers really helps one see ‘what needs to be true’ to succeed over time with a platform, and the types of real life investment needed.
Yes. I hope it’s a good distinction. Making distinctions (like your amazing frameworks) is a useful way to design. Otherwise we get caught in a bewildering world of platitudes. We spin on design, and then cannot forge commitments.
Sorry if I bothered you. There is a way to look at value creation from a supply side perspective, namely product and rebuilding and a demand side perspective. All I thought was to add to your thoughts from a marketing perspective.
Good to push people to reflect on nuance but I read this article as: aggregation per se (which is by the way quite different if you look at marketplaces or - for example - developer ecosytem platforms a la hubspot) may bot be the unique value proposition you sell on a platform, but only "part" of a broader value proposition set. And if you understand JTBD, User Experience as a whole etc... you're going to find better control points.
And if you bundle aggregation with differentiation points .... you get stronger products.
Tidemark's theory of control points can also be seen resonating with this (at least for B2B/Vertical SaaS space).
PS: only thing I'm not sure I agree 100% is the Airbnb point. Reputation looks like a structural part of an aggregation strategy to me - thus I'd read that if the product is ... reputation, then Airbnb is mainly selling a ...platform in the product - but maybe I didn't capture the essence.
Yes, you're right. My main focus was to help people think beyond aggregation to new value created through bundling.
Airbnb is a tricky one. In high-risk markets, aggregation itself is largely a conduit into curated aggregation. The higher the risk, the more reputation becomes less of a ranking variable and more of a product boundary. I hope that makes sense. As I said, it's less clean-cut than the others. But I do believe that the higher the risk, the more reputation determines your product boundary and hence becomes a factor of rebundling.
I think one way to read it is that Airbnb has developed a competitive advantage in terms of ways to nudge participants to actually explicitate reputation (+ other forms of reputation such as badges like superhost, top choice, etc...)
Thanks Sangeet, goals are specific needs. Goals are driving forces to do something while needs are something that I seek to fulfill or not. There has been extensive literature on needs and goals. A goal as defined in marketing literature is definitely: finding a book by an unknown author.
Thanks Erich. Yes, and I'm not debating goals and needs.
What I'm trying to differentiate is value of aggregation vs value of rebundling.
Your goal could be 'find a book' and aggregation solves for that with a search engine
But the specific goal of 'find a book by an unknown author' is only solved through rebundling.
My point is about understanding value created on platforms through aggregation and new value created through rebundling. All platforms operating at scale do the former, few get the latter right.
Wow. This is a great piece! Makes me think of this equation in Agoda's (or booking) context. I am not sure if there one 'product'. Needs a few cycles of thinking.
The most powerful point of rebundling in travel is the itinerary itself. Today it is bundled at the consumer's end or with a travel agency. Whoever creates the first rebundling OS for travel agents at scale will win a unique opportunity here.
Well, that's a premise a few are operating in today for sure. But this isn't just middle-man re-bundling - needs a fundamental overhaul of some of the participating industries like local transport or flights. Travel, unfortunately, isn't one industry but like ten different ones being brought together.
Very thought provoking article. Curious what you think of competition for platform products. For eg. How can one music streaming service compete against Spotify if the product in their platform and the point of rebundling is very similar?
There are many vectors of competition. My favourite is bundling and cross-subsidization. What I mean there is that Apple Music and Amazon Music may have the same 'product' in the playlist, but music itself is part of a larger bundle. In the case of Amazon, music is a CAC into Amazon Prime which eventually makes money with ecommerce. In the case of Apple, the company makes money with expensive hardware.
Unlike Spotify, these companies are not hard-pressed to squeeze out a profit in streaming. Hence, the terms that they can give to labels can be different, the ways in which they subsidize music to consumers can be different.
This is where tech competition gets interesting. It plays out at multiple levels of abstraction.
I'd really need to understand every aspect of the platform, the market in which it operates, levels of fragmentation among producers, how consumers buy and what alternate channels exist etc. before I could answer the question.
Finding the product in your platform is not trivial. You need to understand every aspect of the platform before you can answer that question.
E.g. The core product of a food delivery platform in a US suburb is different from the core product of a food delivery platform in Jakarta. That's because population density is a key determiner of delivery times and hence package stacking may no longer be an important product.
So as you can see, the same marketplace can have substantially different core products based on the characteristics of the market it operates in.
My core point is about rebundling. It is the least understood aspect of platforms.
The need state is much broader - arguable, aggregation (help me find what I'm looking for) is also a way to solve for the need state but rebundling solves for a far more specific problem (help me find a good book by an unknown author).
I think looking at those three statements in isolation can be misleading. They are statements to help narrow down.
The best way to understand the product is to look at Spotify's playlist. Arguably, the need state of 'help me find a song to listen to' is already solved by Spotify's search function.
The playlist does something else. It helps Spotify create a right to sit in the middle and change the dynamics of product discovery.
The same thing applies to Amazon's reviewers. A search box is sufficient to help consumers fulfil their needs and find books. But the platform creates a 'product' in delivering the ability to help unknown authors get rediscovered.
This is the key idea.
My intent is twofold:
- To bring us back to understanding that platforms are not just about aggregation but about rebundling
- To emphasise that the core product of the platform differentiates along the most important performance vector for managing interactions in that market.
Hi Sangeet.
Great distinction. Yes, everyone wants a platform, but there's more work to do.
As you distinguished aggregation vs production (un- and re-bundling), I thought about Joe Pine/Jim Gilmore's evolution of value (and production) from goods to services to experiences to personal transformations. The Spotify, AirBnB, and Kindle case studies deliver digitized/physical experiences enabled by digital meta-data. The Food Delivery Platform is a service (improved by digitization) with bonus unbundled elements of its value chain. Each has its competitive profile.
Perhaps your other essay on generative AI (I haven't delved into it yet) falls in the transformation zone since it fits into the futurist computer scientist's "tools for thought" vision of augmentation.
Love your thoughts! Rob
Thanks Rob! Those observations and aligning them to the evolution of value make a lot of sense here.
Here's how I take what you shared and align it back to some of the issues in the article:
- In ecosystems of differentiated supply, the ecosystem provides goods and services and much of rebundling happens at the level of experiences and transformations.
- In ecosystems of commoditized supply, rebundling delivers efficiency gains (faster delivery) rather than improvements in experience.
Does that make sense?
Great read. Thank you for all the examples which do as you say, really help bring the ideas to life.
Very interesting. And what you write is completely confirmed by the fact that Amazon has bought the Good Reads platform (a review production center).
Thanks! It's fun digging around to see what really drives new performance in a business model. GoodReads acquisition is a great data point.
It's truly engaging. You have opened up a point of view that I never had in mind. Thanks a lot ;-)
Very unique thinking 👏
Hi Sangeet, as with many of your posts this is quite timely and goes right to the key points. The challenge, and maybe the intent :-), is “now what if I want to bring this into my business”. Creating the strategy hypothesis using what is described here is going to be the easy part given these examples had to discover their way to this current position plus continue to drive over time to create power (and enduring value) relative to competitors. Which of course is why they are great examples here.
That’s a long way of saying reading this post alongside the theory of 7 Powers really helps one see ‘what needs to be true’ to succeed over time with a platform, and the types of real life investment needed.
Yes. I hope it’s a good distinction. Making distinctions (like your amazing frameworks) is a useful way to design. Otherwise we get caught in a bewildering world of platitudes. We spin on design, and then cannot forge commitments.
Sorry if I bothered you. There is a way to look at value creation from a supply side perspective, namely product and rebuilding and a demand side perspective. All I thought was to add to your thoughts from a marketing perspective.
Good to push people to reflect on nuance but I read this article as: aggregation per se (which is by the way quite different if you look at marketplaces or - for example - developer ecosytem platforms a la hubspot) may bot be the unique value proposition you sell on a platform, but only "part" of a broader value proposition set. And if you understand JTBD, User Experience as a whole etc... you're going to find better control points.
And if you bundle aggregation with differentiation points .... you get stronger products.
Years ago I wrote about the three value propositions that exist in platform-ecosystems once and i think this connects fairly well with this piece > https://boundaryless.io/blog/value-propositions-in-business-ecosystems-products-marketplaces-extensions/
Tidemark's theory of control points can also be seen resonating with this (at least for B2B/Vertical SaaS space).
PS: only thing I'm not sure I agree 100% is the Airbnb point. Reputation looks like a structural part of an aggregation strategy to me - thus I'd read that if the product is ... reputation, then Airbnb is mainly selling a ...platform in the product - but maybe I didn't capture the essence.
Yes, you're right. My main focus was to help people think beyond aggregation to new value created through bundling.
Airbnb is a tricky one. In high-risk markets, aggregation itself is largely a conduit into curated aggregation. The higher the risk, the more reputation becomes less of a ranking variable and more of a product boundary. I hope that makes sense. As I said, it's less clean-cut than the others. But I do believe that the higher the risk, the more reputation determines your product boundary and hence becomes a factor of rebundling.
I think one way to read it is that Airbnb has developed a competitive advantage in terms of ways to nudge participants to actually explicitate reputation (+ other forms of reputation such as badges like superhost, top choice, etc...)
that's design advantage
Thanks Sangeet, goals are specific needs. Goals are driving forces to do something while needs are something that I seek to fulfill or not. There has been extensive literature on needs and goals. A goal as defined in marketing literature is definitely: finding a book by an unknown author.
Good thinking. And thank you for sharing
Thanks Erich. Yes, and I'm not debating goals and needs.
What I'm trying to differentiate is value of aggregation vs value of rebundling.
Your goal could be 'find a book' and aggregation solves for that with a search engine
But the specific goal of 'find a book by an unknown author' is only solved through rebundling.
My point is about understanding value created on platforms through aggregation and new value created through rebundling. All platforms operating at scale do the former, few get the latter right.
Wow. This is a great piece! Makes me think of this equation in Agoda's (or booking) context. I am not sure if there one 'product'. Needs a few cycles of thinking.
Thanks.
The most powerful point of rebundling in travel is the itinerary itself. Today it is bundled at the consumer's end or with a travel agency. Whoever creates the first rebundling OS for travel agents at scale will win a unique opportunity here.
Well, that's a premise a few are operating in today for sure. But this isn't just middle-man re-bundling - needs a fundamental overhaul of some of the participating industries like local transport or flights. Travel, unfortunately, isn't one industry but like ten different ones being brought together.
Very thought provoking article. Curious what you think of competition for platform products. For eg. How can one music streaming service compete against Spotify if the product in their platform and the point of rebundling is very similar?
There are many vectors of competition. My favourite is bundling and cross-subsidization. What I mean there is that Apple Music and Amazon Music may have the same 'product' in the playlist, but music itself is part of a larger bundle. In the case of Amazon, music is a CAC into Amazon Prime which eventually makes money with ecommerce. In the case of Apple, the company makes money with expensive hardware.
Unlike Spotify, these companies are not hard-pressed to squeeze out a profit in streaming. Hence, the terms that they can give to labels can be different, the ways in which they subsidize music to consumers can be different.
This is where tech competition gets interesting. It plays out at multiple levels of abstraction.
In a platform that sells Made in Italy gastronomic excellence (oil, pasta, vinegar, chocolate, honey ...) what do you think is the ''product”?
Can the playlist be a box of different products?
I'd really need to understand every aspect of the platform, the market in which it operates, levels of fragmentation among producers, how consumers buy and what alternate channels exist etc. before I could answer the question.
Finding the product in your platform is not trivial. You need to understand every aspect of the platform before you can answer that question.
For example like Ocado.com
Imagine an ecommerce platform that aggregates thousands of Made in Italy food products from small artisan producers and ships them home in a few days.
What is the product in this case?
As I said, too little information.
E.g. The core product of a food delivery platform in a US suburb is different from the core product of a food delivery platform in Jakarta. That's because population density is a key determiner of delivery times and hence package stacking may no longer be an important product.
So as you can see, the same marketplace can have substantially different core products based on the characteristics of the market it operates in.
Thank you, Sangeet. This means the product is really the need that a platform solves in the life of consumers. We call this a need state.
My core point is about rebundling. It is the least understood aspect of platforms.
The need state is much broader - arguable, aggregation (help me find what I'm looking for) is also a way to solve for the need state but rebundling solves for a far more specific problem (help me find a good book by an unknown author).
Airbnb: Assure me of a safe stay
Amazon: Help me find a good book by an unknown author OR Help me get discovered as an unknown author
Meituan: Help me get my food as soon as possible.
I think looking at those three statements in isolation can be misleading. They are statements to help narrow down.
The best way to understand the product is to look at Spotify's playlist. Arguably, the need state of 'help me find a song to listen to' is already solved by Spotify's search function.
The playlist does something else. It helps Spotify create a right to sit in the middle and change the dynamics of product discovery.
The same thing applies to Amazon's reviewers. A search box is sufficient to help consumers fulfil their needs and find books. But the platform creates a 'product' in delivering the ability to help unknown authors get rediscovered.
This is the key idea.
My intent is twofold:
- To bring us back to understanding that platforms are not just about aggregation but about rebundling
- To emphasise that the core product of the platform differentiates along the most important performance vector for managing interactions in that market.