Product Operating Model Series: Minimize Waste
Issue #217 / Wydanie #217
In today's edition, among other things:
💜 Editor’s Note: Stop Chasing the Platform Mirage: Why Your Empire-Building Dreams Are Bankrupting Your Strategy
💜 Product Operating Model Series: Minimize Waste
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It will take you almost an hour to read this issue. Lots of content (or meat)! (For vegans - lots of tofu!).
Grab a notebook 📰 and your favorite beverage 🍵☕.
Editor’s Note by Alex 💜
Personal Note: This week I'm heading to Poland—leading product training in Warsaw and speaking at Ways Conf in Cracow on a leadership panel, plus running a masterclass on product strategy. If you're in either city, I'd love to connect. Drop by and say hi if you can make it.
Stop Chasing the Platform Mirage: Why Your Empire-Building Dreams Are Bankrupting Your Strategy
Here's something that's been eating at me: We've created an entire generation of product leaders who think success means building platforms instead of building great products.
I keep sitting in strategy meetings where someone inevitably asks, "How do we become the Amazon of our industry?" And suddenly, every conversation shifts from solving real customer problems to chasing "ecosystem orchestration" and "network effects." It's like watching smart people get hypnotized by buzzwords.
The brutal truth? Platform strategies fail over 84% of the time. Microsoft burned $8 billion on platform bets that went nowhere. General Electric torched $14 billion chasing industrial platform dreams. Nike just vaporized $70 billion in market value pursuing platform transformation. These aren't edge cases—they're the norm.
Yet we keep ignoring the evidence because platform thinking feeds something deeper than business logic. It feeds our ego.
Think about the language we use around platforms: "ecosystem orchestration," "being at the center," "controlling the value chain." These aren't business strategies—they're psychological comfort food for executives who want to feel important. Daniel Kahneman would have a field day analyzing this behavior. We're making billion-dollar decisions based on cognitive biases rather than customer needs.
Meanwhile, some of the world's most successful companies explicitly reject platform thinking. Berkshire Hathaway achieved 19.8% compound annual growth over 58 years through radical focus and decentralization—the exact opposite of platform orthodoxy. In-N-Out Burger created a cult following by refusing to expand beyond their operational sweet spot. These aren't anomalies. They're proof that platform obsession is optional.
So why do we keep falling for it?
The psychology behind platform delusion is fascinating and predictable. MIT research shows that platform strategy appeals to executives because it positions them as "orchestra conductors" at the center of complex systems. The psychological reward of controlling entire ecosystems is intoxicating. You're not just selling products—you're shaping markets.
Robert Cialdini's influence principles explain how this thinking spreads. Social proof drives competitive mimicry—if Amazon is a platform, we must become one too. Authority bias makes us trust consultant reports about platform economics over our own market knowledge. The availability heuristic makes recent successes like Uber and Airbnb feel more probable than they actually are.
But here's what really gets me fired up: we're substituting genuine customer insight with platform fantasies. Instead of deeply understanding what customers actually value, we're building elaborate systems to "capture network effects" that may not even exist in our market.
The financial carnage is staggering. Google's platform graveyard includes over $1 billion in documented losses from Google+, Stadia, Wave, and dozens of other abandoned ecosystem plays. Microsoft's Windows Phone write-down of $7.6 billion represents one of the most expensive strategic mistakes in business history. Harvard Business School analyzed 250+ platforms and found failure rates exceeding 84%, with hidden costs typically running 300-500% higher than estimates.
What breaks my heart is watching talented teams waste years building platform features nobody asked for. I've seen brilliant product managers who could be creating breakthrough customer experiences instead spend their careers optimizing "two-sided marketplace dynamics" that exist only in PowerPoint presentations.
The opportunity cost is devastating. While Nike was destroying shareholder value chasing platform transformation, competitors focused on what actually matters: making better products and building stronger brands. While GE was building industrial platforms nobody wanted, Siemens and Honeywell were winning through operational excellence.
Amy Edmondson's research on organizational learning shows that massive platform failures create "learning anxiety"—teams become afraid to acknowledge failure because the investments were so public and so expensive. This psychological safety breakdown prevents course correction, turning temporary setbacks into permanent disasters.
Here's what I want every leader to understand: focused strategies often outperform platforms when you're not in a winner-take-all network effects business. Warren Buffett didn't build Berkshire Hathaway into a trillion-dollar company through ecosystem orchestration. He did it by buying great businesses and letting them focus on being great at what they do.
Costco dominates through membership focus, not marketplace complexity. Patagonia builds customer loyalty through brand authenticity, not platform orchestration. These companies win because they choose depth over breadth, expertise over ecosystem envy.
Michael Porter's competitive strategy research remains devastatingly relevant: sustainable competitive advantage comes from doing different things or doing things differently, not from building platforms that everyone else is also building.
The platform delusion persists because it satisfies deep psychological needs that rational analysis can't easily overcome. Platform narratives appeal to our desire for growth stories and transformation myths. Fear of missing out on digital transformation drives defensive platform adoption. Misunderstanding correlation versus causation in platform success stories creates false confidence.
But organizational factors reinforce this thinking too. We hire for "digital transformation experience." Consultants recommend platform strategies because they're complex and expensive. Boards pressure executives to appear innovative. These cultural forces create what McKinsey calls "behavioral strategy" challenges where biases combine to create dysfunctional patterns.
The solution isn't more analysis—it's better questions. Instead of asking "How do we become a platform?" ask "What structural conditions make platforms successful, and do they exist in our market?" Instead of chasing ecosystem orchestration, ask "What customer problems can we solve better than anyone else?"
I challenge every executive reading this to audit their platform initiatives honestly. Are you building this because customers are demanding it, or because it makes you feel important? Are you solving real problems, or are you creating elaborate solutions to problems that don't exist?
The future belongs to companies brave enough to choose customer obsession over ecosystem envy, focused excellence over platform fantasies. Your customers don't need you to build a platform—they need you to solve their problems better than anyone else can.
Stop trying to be the Amazon of your industry. Start being the best version of your actual industry. The market rewards excellence over empire-building every single time.
What's it going to be?
Product Operating Model
Minimize Waste: Quick Reference Guide for Product Teams
Based on Marty Cagan's first principle of product discovery from "Transformed"
Core Principle Overview
Definition: Test ideas quickly and cheaply before committing significant engineering resources
Why It Matters: 70-90% of traditionally built solutions fail to deliver necessary business results
Position: First principle of product discovery in the Product Operating Model
Goal: Accelerate time to money through dramatically less waste
The Four Big Risks Framework
🎯 Value Risk
Question: Will customers find this sufficiently better than current alternatives?
