Why Your Business Needs to Shift from Pipes to Platforms Now!

For decades, businesses have operated as pipes—linear systems where value flows downstream from producer to consumer. Factories manufacture goods, media companies broadcast content, and retailers sell products in a controlled, one-way fashion. This model has defined industrial and early digital economies.

But the digital revolution has ushered in a new way of creating value: platforms. Unlike pipes, platforms do not push products; they facilitate interactions between multiple groups—producers and consumers—creating value through these interactions. This shift is not just a trend; it is a fundamental redesign of business models that is reshaping industries.

Platforms harness network effects, where the value of the platform increases as more users participate. This creates a powerful growth engine that traditional pipes cannot match. Additionally, platforms benefit from near-zero marginal costs when adding supply and demand, enabling rapid scaling.

However, the transition requires a new mindset. Businesses must focus on the smallest units of value—the core value units—and design around the interactions these units enable. This includes enabling creation, curation, customization, and consumption in a seamless cycle.

Decentralized value creation means platforms must develop incentives to motivate producers and consumers, implement trust mechanisms, and manage friction to maintain quality. These are challenges but also opportunities to foster vibrant, self-sustaining ecosystems.

Embracing platform thinking allows businesses to innovate beyond traditional boundaries, opening new revenue streams and competitive advantages. Whether you are a startup or an incumbent, understanding and adopting platform principles is essential to thrive in today’s interconnected economy.

Don’t get left behind in the pipe era—start building your platform today.

Sources: Platform Scale by Sangeet Paul Choudary, HowDo.com, Sobrief.com 2 4