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Building platform products: part 1
Enabling internal teams and products
If you manage tech products, it’s common for your feature, API, or product to exhibit features of a platform. For example, you built a successful chatbot for the checkout experience. Another team is seeking a similar bot experience within the presales page. You have an opportunity to become a platform, starting with the use case at hand, with incremental expansion to broader chat use cases within your company. The prospect of evolving your product into a platform is exciting. But how do you explore, evaluate, and pursue this opportunity?
For context, platform products let other products build on them. They create value for the platform and its partners. Platform products can be internal and/or external. Internal platforms are for first-party products and applications within the same company. External platforms are open to third-party developers and applications.
In this post, I will share some tips on how to build internal platform products. These are the products and applications that different teams or divisions in your company develop on your platform. For example, Microsoft Teams is a platform product with internal partners like Outlook, SharePoint, OneNote, etc.
Building platform products can be rewarding to you and your product. It can help you use your company's assets and capabilities, create synergies and efficiencies across products, and deliver more value to your customers. But it also requires careful planning, coordination, communication, and alignment among stakeholders.
Here are some considerations for expanding your product into an internal platform product:
Get the license first
To become a platform, you must be a successful stand-alone product. You need to have a clear value proposition, a loyal customer base, a scalable architecture, and a competitive advantage. You need to prove that your product can solve a real problem and deliver value on its own.
This is important because becoming a platform product is not an end goal, but a means to an end. You should become a platform product only if it helps you achieve your vision and mission better. You should not compromise your core product for more partners. You should not lose sight of your primary customers and their needs.
In the case of the chatbot, the product must meet or exceed the success criteria, including usage, lift in checkouts, deflection rates, etc. And it’s durable in terms of reliability, performance, security, and compliance. If you are struggling to meet these objectives, then expanding this functionality to other areas will multiply your product woes, with the added responsibility of supporting another scenario.
Evaluate strategic fit
Once you have a successful independent product, it will naturally attract opportunities that can lead to its evolution into a platform. You should objectively assess whether expanding as a platform product is a sensible decision. You must ensure that aligning with your vision and mission can facilitate faster and superior goal attainment.
Is it better for your product to grow independently or in collaboration with partners? Do you possess sufficient resources and capabilities? Are there any unaddressed customer needs?
What are the advantages and drawbacks of transitioning into a platform product? How will it influence your value proposition, customer segment, revenue model, cost structure, and so on? How will it impact your current customers?
Intentionally gate inbound opportunities.
Assume you have a successful and growing product, and other teams want to leverage it for their internal needs. To evaluate each partner opportunity, you should consider the following criteria:
1. Customer value: How will the partnership benefit your customers? Will it address a problem, fulfill a need, or improve their experience? Will it enhance their satisfaction, loyalty, or advocacy?
2. Alignment with common objectives and principles: How will the partnership help you achieve your goals or your partner teams ’s goals? Will it mutually increase revenue, growth, retention, engagement, etc.? Will it support your vision and mission? Does it tightly align with the company’s principles? For example, the opportunity doesn’t help your product grow, but it saves cost for the company and thus maps to a higher objective.
3. Sustainability: How can the partnership be maintained in the long term? Will it be mutually beneficial and fair for both parties? Will it be scalable and adaptable to changing customer needs and market conditions? Will it be easy and cost-effective to implement and sustain?
In order to prioritize partner opportunities, focus on those that provide the most value to your customers and your product, while aligning with your objectives and being sustainable in the long run. Avoid partner opportunities that may create conflicts, confusion, or complexity for your customers and your product, and that are not in line with your goals or sustainable in the long term.
For instance, Microsoft Teams is a platform product with internal partners like Outlook, SharePoint, OneNote, and more. Microsoft carefully evaluates and selects each partner opportunity. They give priority to opportunities that create value for their customers, enabling better communication, collaboration, and coordination across products and applications. They also prioritize partnerships that help them achieve their objectives, such as increasing usage, adoption, and retention. Furthermore, Microsoft focuses on sustainable partnerships that are mutually beneficial, scalable, adaptable, and easy to implement and maintain in the long term.
Proactively seek outbound partnerships
Besides evaluating potential partner opportunities, it is crucial to actively search for and develop future synergistic relationships. Identify internal partners who can add value to both your customers and your product, while also aligning with your objectives and being sustainable in the long run. Reach out to them and present your value proposition and vision. Build trust and rapport, and gain an understanding of their needs and goals. Collaborate with them to create solutions and experiences that benefit both parties.
Successful partnerships are not a result of chance or coincidence; they require intentional and purposeful relationship building. Dedicate time and effort to seek out and cultivate the right partners for your platform product. View them as strategic allies rather than transactional vendors or competitors.
For instance, Shopify is a platform product that has various internal partners like Shopify Payments, Shopify Marketing, and Shopify Fulfillment Network. It actively seeks and nurtures future synergies with them. Shopify identifies internal partners who offer value to its customers, enabling them to start, run, and grow their online businesses more easily and effectively. It also identifies partners who can help achieve its objectives, such as increasing revenue, growth, and market share. Furthermore, Shopify focuses on building sustainable long-term partnerships that are mutually beneficial, fair, scalable, adaptable to changing customer needs and market conditions, and easy and cost-effective to implement and maintain.
Once you commit, you must own it
Once you commit, it is crucial to integrate the partnership into your overall strategy and manage it as an integral part of your product. This involves aligning your roadmap, resources, processes, metrics, and other aspects with your partner. Regular and transparent communication with your partner is essential. Furthermore, monitoring and evaluating the performance and impact of the partnership, as well as seeking and acting on feedback, are necessary steps. Addressing any issues or conflicts with your partner and celebrating shared successes and milestones are also important.
Remember that a partnership is not a one-time occurrence or a peripheral project. Instead, it is an ongoing journey and a significant feature of your platform product. Consider your partner as an extension of your team rather than an outsider or an afterthought. Dedicate time and effort to nurturing and cultivating the partnership, rather than neglecting or abandoning it.
Evolving your product into a platform can be a rewarding decision for both you and your product. It is important to ensure that you have a successful independent product first, then evaluate whether transitioning into a platform product aligns with your vision and mission, and intentionally gate inbound partnership opportunities to grow the platform incrementally. These considerations will enable you to create value for your product and its partners, leverage your company's assets and capabilities, and deliver more value to your customers.