Markets on Platforms as a Way to Solve Problems

Sometimes problems are big and regulations are onerous. They are too much for a small business, small builder, or everyday homeowner. One approach, taken in Lean Urbanism, is to reduce regulations, or to make compliance easier. Another approach is to both cooperate and compete: cooperate to create a platform supporting each other, and then compete in a market.

Market in Vancouver BC. Copyright: Deymos Photo / Shutterstock

Platforms

Platforms, in this sense, are the underlying infrastructure and standards that can support things like businesses, development, buildings, homeowners, and so on. They are like computer platforms – e.g. Windows or Mac OS X – that support applications such as Word. Platforms are very common, but we don’t often think of putting one together in order to be able to help the small: small businesses, small builders, and homeowners of modest means. These are always peers, and in the commercial context at least, they compete too.

A Computing Platform

 A computing platform. Based on a diagram by  Steve Yelvington

A computing platform. Based on a diagram by Steve Yelvington

In a computing platform, the platform figuratively supports the applications across a set of standards, called the Application Programming Interface (API), which for our purposes is essentially a set of standards and services available for the application, and to which it must be written. For instance, you might use the API to get information out of the operating system or to draw graphics. The API has standards. You can write something that doesn't work with it. But it also supplies services to help you do things. 

An example in the physical world might be a shared commercial kitchen like that for Edible Enterprises. It is a platform for culinary entrepreneurs, so they don't each have to open their own expensive -- and expensively permitted. Once we start thinking of things in these terms, we can think of lots of things in our cities as platforms. A street is a platform: it has services, such as mail delivery, sewer, vehicular and pedestrian access, and policing. It has standards, too, such as standards for mailboxes, sewer hook-ups, walks, and of course zoning. It supports a number of peers. So let's generalize this to think what a platform for development can be.

 A platform for humans

A platform for humans

A platform for humans is slightly different. It's not automated, so it can use some human judgment. Otherwise every law would  be zero-tolerance, and nothing would work. It still needs both quality standards and technical standards, though. A quality standard might technically be a technical standard, but for simplicity's sake, a quality standard will usually be something that can't be put down to technological requirements. For instance, the commercial kitchen might be geared toward high-quality cuisine, and not a burger joint. But technical standards are more critical, and crisply defined. The kitchen would require that all the businesses cook their food properly and don't do something that would get the kitchen shut down by the authorities.

Then on top of the standards there is usually some sort of market. On a street, neighboring businesses will compete. They may compete with each other for business, but they may also compete with each other for attention. There is a market on top of the platform. Even on a residential street, where the competition is less obvious, there's still a market for the real estate, for rental tenants perhaps, and so on. 

The West Side Market in Cleveland

The West Side Market as a Platform

Now, an actual market is clearly a platform. Obviously the merchants compete with each other, and there are both standards and services. Let's break them down.

Quality standards

There are standards to do with quality in general. Is the food good? Does it add to the mix – including ethnic mix and types of food? 

Technical standards

Do the businesses pass inspections? Do they load at the right time and use the refrigeration properly? Are the signs correctly displayed?

Services

The West Side Market provides services: refrigeration, the building itself, of course, storage, electricity, security, and so on.

Market

There are at least two markets at the market. There is the market for the stalls themselves, as well as for the food. This is a two-sided platform, in technical terms. One side of the platform is toward the stall owners, and another is toward the customers. The West Side Market itself, then, has two sets of customers: its tenants and the shoppers.

Thinking of Things as Platforms

What else can be thought of as a platform, and how can thinking that way help us? 

The idea of a platform can give us a "lens" through which to think of various kinds of institutions. If we remember all the parts, we can suss out some gaps in their deployment. For instance, a private club – stodgy or otherwise – can be a platform for networking. There are quality standards, of course, and technical standards. You have to pay your dues, but you might also have to be the "right" kind of person to get in. From that perspective, quality and technical standards can restrict access to a service: networking. And what is the market for a club? Obviously the club is marketed to the public, but there is also a market inside: a market for access to the members for access to the members.

The Union Club, Cleveland Credit: LeeG7144 (Wikimedia Commons)

A subway, of course, is a platform. There are lots of technical standards, but what markets does it support. Again, there are at least two. There is the market to riders, of course, but there is also the market to nearby real estate and businesses. There is also usually a market for advertising. 

An Explosion of Platforms

A business incubator, of course, or the commercial kitchen, is a platform. Lots of "millennial" enterprises are platforms. Certainly Twitter et al are, but so are many of the apps that run on them. Government can be a platform, as Tim O'Reilly has noted. In fact, one of the defining characteristics of the millennial generation may be that it creates and thinks in terms of platforms much more than do the previous generations. Their various things they build are often open for modification and a combination of collaboration and competition. 

It's not just that millennials are on a number of platforms: deserting Facebook for Instagram, and Insagram for Snapchat, say. It's that they routinely get together to build platforms such as, well, Instagram and Snapchat – but also building systems for crowd-sourcing comments to the city, buying clubs for materials, opening up maker-spaces and so on. 

Problems and Solutions

Certainly platforms aren't the solution to every problem, but they do provide some competition in the realm of solutions. Instead of subsidizing businesses so they can compete, perhaps we can support them with platforms. Instead of complaining about how onerous regulations are, perhaps we can apply for permits all at once, or carve out an exception – an exception that's a platform. Maybe the big, bad, scary developer can "set the table" for small builders. All of these problems and solutions can be addressed via platforms.