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The biggest consequence of the proliferation of platforms in our connectivity-centric economy is that both corporations and nations will not be able to survive as social institutions. Below is an examination of why that is.

Why Corporations Will Die (Because They Suck)

The short answer as to why corporations will die is because they suck: they over-concentrate wealth, stifle innovation, and generally have no personality. A deeper explanation, however, is that corporations are simply not a viable way of conducting business in a platform-centric world. The reason for this is that platforms are quintessential network business models; the more participants in the platform and the more there is on the platform to connect, the more wealth the platform will generate. Consider, for instance, Google: when a new web site joins Google's index, Google benefits more from this than any one else: they can use information about the site's content, and, depending on what Google tools the web publisher users (i.e. AdSense, Google Analytics, etc.) the site's visitors as well. The web publisher, though, probably will not receive much traffic from Google, and hence it can be argued that Google benefits more from new web sites than the owner of the web site does.

The solution to this problem is alter the structure of the corporation so that it is not a corporation but rather a network. Think revenue sharing and inverted hierarchies, not fixed salaries and vertical hierarchies. This is also more conducive to building a platform, which, as we've examined, is largely necessary.

Why Nations Will Die (Because They Suck)

Like corporations, nations also suck — their governments inevitably get corrupted. The deeper reason as to why nations will die, though, relates to how platform companies must operate. As was previously noted, platform companies must aim for user attention above almost everything — even short-term profit margins. Perhaps the best way to create a platform and to get attention is to create a commons that others can build upon and profit from. This was previously the role of governments; they would provide the communal goods and services, like public transportation and public property, to allow businesses and individuals to prosper. Now, though, companies with platform strategies give away commual goods to secure user attention. Think of how MySpace and Blogger give away property freely; how search engines and directories provide, for free, what are essentially maps that lay out the geography of the web (as interpreted by the directories and search engines). Think of how Google is offering free WiFi to get user attention and to help local businesses reach prospective customers. Previously, this type of communications service would be government regulated if not government sponsored in the United States and many other parts of the world.

And as private companies begin to take the role of governments — something that an increasingly technical and digital world will facilitate — they will have the ability to disregard governments. We are already seeing this with Google's reluctance to obey the requests of the US government's Department of Justice. And, as the world as a whole becomes more dependent on proprietary platforms than on governments for their own needs and for communal goods, expect allegiances to switch from nations to platforms (companies that breed user loyalty in the right way stand to be the big winners here). Factor in declining costs of transportation and a distributed work force, and it seems even more likely that companies can more nimbly move to countries that offer more favorable regulatory/taxation environments. Google Citizenship might sound ridiculous today, but five years from now, when the company is even larger and spreading into more and more markets and locking in more and more customers and businesses into its ecosystem, the idea may not be that far fetched.

Articles in This Series

Products vs. Platforms: The Yin/Yang of Business Strategy
Flippin' the Script: How to Switch from Being a Product to a Platform
Built for Evolution: The Organizational Structure of Platforms
The Future of Platforms: RIP Nations and Corporations