This report contains a brief overview of the key topics The Future Is Here's James Wallman presented, and the Design Hotels' executive team discussed, on 10 May 2016 at La Granja, Ibiza.
The sketches are intended to reflect — and be neater! — than those produced on the day. (The originals are at the bottom of this report, in case you'd like to see them.)
This report contains:
Understanding the concept of platform businesses is essential because platforms are disruptive and dominate vast industries within a few years of launch.
In the 20th century, to get bigger, or "scale" as people like to say today, a business had to own the means of production. To get bigger, they had to scale internally.
Now, in the 21st century, that's changed. The fastest growing companies — and most valuable — in the world scale externally.
A good way to see that is the difference between pipes and platforms.
Instead of creating the supply, and selling it downstream to consumers. platforms don't own the means of production. Instead, they are like marketplaces. They provide the infrastructure, the space, the place for producers to sell to consumers.
The pioneers, and now classics, of this platform model are:
Rather than produce, these companies are platforms for other producers to sell to consumers.
Many find the Business Model Canvas useful as a way to innovate their business model. But in the case of platforms it isn't so useful. Every piece of the left hand side of the puzzle becomes some version of "the platform — managing, developing, upgrading etc". It also makes the customer segment odd: since the customers are both consumers and producers. It makes revenue structure complex too (We didn't put that in because it would make the image look too messy.)
The solution is to use the Platform Business Model Canvas, as conceived by Paul Sangeet Choudary.
The platform business model canvas neatly illustrates:
To facilitate effectively, at scale, you don't need to referee and personally oversee every core interaction. Instead, you create a culture where the right sort of behaviours happen. You do that through:
But before you've worked out the sort of rules and tools you need to create — and this will likely take some iteration — you need to design the core interaction where consumers and producers can "meet", create, and exchange value.
Note that there are 5 types of value:
We think the best way to understand this is by thinking about how Uber faciliates the exchange of value — as Uber's commoditised offer is simple to understand.
(But note that platforms work for services as well. For example, Task Rabbit.)
But there is a major problem with platforms. The model looks like it is designed for exponential growth — witness the examples of Uber and Airbnb. But…
We believe that the platform model — that your platform model — can drive exponential growth in whatever type of scale you are most interested in.
There are, for instance, many examples of platform which serve niche audiences. Read this post for more on niche platforms.
The key to not losing control and your brand's soul is to design the rules and create the tools so that you architect the choices that suppliers make.
And so, having described and discussed platforms, at this point in the day, we paused, to consider Design Hotels' existing plans for growth…
Two key ideas emerged:
This led to the creation and discussion of a new model that combines the best of both Design Hotels' current ideas and platform thinking.
We think it's perfectly possible for Design Hotels to use their existing ideas, map them onto the platform business model, and innovate a new pipe-platform model. Here's a Sprungbrett for what we believe this would look like:
Note 1: we advocate the "lean method". Design Hotels should employ the learnings of the lean startup movement. At each phase, you should design your test so that you can measure success or failure, and can then learn, iterate and improve.
Note 2: we advocate seeing your guests/members as producers of programming too. After all, it isn't only the hoteliers who have great ideas/contacts. The Design Hotels community is a global, creative tribe who are likely to be able to put on compelling programming — with the right rules and tools.
We believe that embracing the platform model will be hard at first. But that it has the potential to reap fantastic rewards.
In the Airbnb model, Airbnb effectively outsourced the creation of rooms/beds. They managed to scale quality as well as quantity through effective rules and tools.
In this innovative Design Hotels model, Design Hotels can outsource the creation of content (ie programming) that engages both producers and consumers (and therefore creates more value) by designing the right rules and tools. We think that's an entirely new — and exciting — challenge. And one that will lead to powerful growth.
If Design Hotels follows the platform path, there will be some cultural implications. We believe these are simple: