Good Governance creates wealth and fairly distributes it among all those who add value. This is achieved by properly utilizing Tools that are at hand for platform managers.
The set of rules concerning who gets to participate in an ecosystem, how to increase and distribute the value and how to resolve conflicts.
This document was created for a project I am working on as CTO of AIESEC International Inc. and provides guidance to high-level executives of AIESEC in national branches of what Platform Governance means to generate buy-in to the idea of implementing means of control to AIESECs Global Information System. The ideas and concepts presented here are not mine and have all been taken from the book Platform Revolution by Parker and Van Alstyne.
Good Governance creates wealth and fairly distributes it among all those who add value. This is achieved by properly utilizing Tools that are at hand for platform managers.Bad Governance alienates users with Information Asymmetry, Externalities, Monopoly Power and Risk. These are called Market Failures.Value: Every action on the platform starts with an exchange of information between users that has value to its participants
Every platform has 3 types of actors interacting with one another. In AIESEC theseare:YOP: Youth, Supply SideEXPA: AIESEC, Platform ProviderPOP: Partners, Demand SideEach user initiates different types of interactions that can lead to various desired and undesired effects.
Definition: One participant of an interaction knows facts that other parties do not know and uses it for personal advantage.i.e.
- a buyer on eBay buying a product with a misspelling for a cheap price and immediately re-listing it for profit.
- a seller listing cheap low-quality counterfeit good on Amazon, selling them as the original.
- an opportunity provider putting incomplete information in the description that is unfavourable to an exchange participant.
Definition: An interaction affects someone positively or negatively who is not a participant to the interaction.
- inviting friends to a platform that gives me a benefit in return.
- Netflix analyzing behavioural data of similar users to suggest shows to me.
- analyzing feedbacks to improve the product for future users.
Definition: A supplier becomes too powerful and uses this to make demands.
- Zynga largest provider for games on Facebook started making demands to reduce the cost for their ads.
- a large entity or partner demanding to change development priorities in our platforms
Definition: General risk when interactions between users occur on the platform.
- Airbnb hosts not being sure if guests would treat their homes well.
- exchange participants not being sure if the political situation in a country or territory would be safe.
Definition: Serve to minimize the likelihood or impact of the aforementioned Market Failures. The tools available to the Platform Manager are Laws, Norms, Architecture and Markets. They can be assessed by their ability to impact the qualitative or quantitative measurements of Safety, Thickness, Congestion and Repugnant Activity.
- results in good, risk free interactions via transparency of information, quality of listings or providing insurance.
- enables participants from different sides (Supply or Demand) to find each other more easily.
- prevents unsuccessful searches when too many participants are in the market or abundance of low quality drives out high.
Minimizing repugnant: activities
- prevents unlawful or unwanted exchanges of information and activities to occur.
Definition: They are the platforms transparent, written, explicit rules that can be enforced. Users are well aware of these rules and know they have to act within them. Enforcement can happen through either the platform or through legal options available to the platform manager, such as:
- terms and conditions written by lawyers (Transparent)
- a set of rules published on the platform (Transparent)
- StackOverflow awards points for activities and gives users the possibility to earn more abilities on the platform (Transparent)
- Dating sites block stalkers' messages based on their behavior (Intransparent)
- your profile needs to be completed before you can apply (Transparent)
- opportunities sorted by relevance to show variance to users (Intransparent)
Definition: They are common behaviours of users interacting with a platform. These are usually actively driven by feedback mechanism inside or outside the platform ecosystem and define a platform community.
- show casing desirable interactions of platform users, like iStockphotos placing its best photo collections on its front-page.
- network management strategies driven on all levels of the organization to improve process time
Definition: Features of the platform that are designed to encourage the user to exhibit good behaviours. Platform Managers create positive feedback loops on the platform that provide valuable exchanges between its participants, creating a continuous virtuous cycle.
- ebay's spell corrector to ensure there are no misspelled listings
- implementing an auto-generated CV to ensure users are properly filling out the CV
Definition: Various incentives like "fame", "fun" or "fortune" motivates users to participate in valuable interactions.
- social currency on iStockphoto that motivates users to download or upload more pictures.
- badges on learning platforms like Duolingo encouraging users not to break their streaks.
- tracking entities on their exchange metrics and implementing rewards and recognition incentives.
Now we will do an exercise to come up with more examples of rules for our platform. Think of all the problems that you see right now with your organization and your platform. Do not think of the solution. Just take a piece of paper and write them all down. They can be real existing problems or problems you foresee in the future as our platform grows.
They could be issues like:
- entities flooding YOP on the platform with duplicate opportunities - CONGESTION - Successful searches are hampered by too many participants and low quality listings
- opportunity providers hiring exchange participants outside of the platform. - REPUGNANT ACTIVITY - Stuff that should not happen (i.e. human trafficking, sex work, etc..)
- AIESEC not following up on applications - THICKNESS- Enables participants from different sides of a multisided market to find one another more easily
- AIESEC members using their team leaders accounts on EXPA - SAFETY - Providing transparency, quality, insurance and thus enabling good interactions
All of these problems you might come up with fall in one of the two following buckets or both:
Having these Categories and Metrics in mind might make it easier for you to come up with problems, but also do not let those hold you back. Your primary exercise is to come up with problems. Extra points if you can connect them.
Only scroll down once you have done the exercise.
Are you done with the Exercise?
No want you to come up with a Proper Solution Statement for each of your problems that contain some of the elements of a platform solution!
Problem + Primary User + Category / Metrics + Tool
Every Platform-based solution consists of:
- The problem statement.
- The primary user affected by it (there can also be a secondary user affected by it, but let's focus on the primary one).
- a Category or Metric that you can put it in to measure its impact.
- a Tool to solve it.
Let's see some examples:
- To solve the problem of Information Assymetry (CATEGORY) when a seller (PRIMARY USER) was not able to sell an items for its desired price because it was misspelled (PROBLEM), ebay implemented an automatic spellchecker (TOOL, Architecture), greatly improving Thickness (METRIC).
- To solve the problem of Risk (CATEGORY) hosts (PRIMARY USER) saw when having strangers in their house (PROBLEM), Airbnb implemented extensive terms & conditions (TOOL, Law) and enables hosts to enforce them through a complaint Resolution Center, greatly reducing the possibility of Repugnant Activity (METRIC) to occur.