Strategy is no longer about building a fortress; it’s about designing a city. The most successful modern companies don’t just sell products; they architect vibrant ecosystems where others can create, connect, and transact. This requires a new kind of leadership focused on designing the “core interaction”—the single, repeatable exchange of value that powers the entire network. As pioneering strategist Sangeet Paul Choudary explains, the critical work lies in establishing the right “control points” that govern the system without stifling it. In our discussion, he provides the blueprints for leaders aiming to build the resilient, self-sustaining economic structures of the future.
In the latest episode of “The Business of Platforms,” we are thrilled to be joined by one of the world’s leading thought leaders and consultants on platforms, Sangeet Paul Choudary. In conversation with Vivaldi founder and CEO Erich Joachimsthaler, Sangeet reflects on the main themes in his book, Platform Revolution, on the shift from pipelines to platforms over the past five years, analyzes the current landscape, and looks into the future of platform businesses. He believes that huge potential lies in industries that are moving towards a digitized platform economy as they unlock new values by building business models that manage data as an asset. Not only does Sangeet apply platform thinking to industries, he is also confident that a platform strategy can help countries attract data flows and become competitive in a connected world. https://vimeo.com/315670282 See below for highlights from their conversation:
Who is Sangeet Paul Choudary?
A Foundation of Academic and Professional Excellence
Education and Early Achievements
Sangeet Paul Choudary is a globally recognized business expert and author, renowned for his pioneering work on platform economics and the network effects that drive modern business growth. His strategic insights are built on a formidable academic background, with studies at premier institutions including IIT-Kanpur, IIM-Bangalore, and Harvard Kennedy School. This foundation of excellence was formally recognized when he received the Distinguished Alumnus Award from IIM-Bangalore in 2020, becoming the youngest recipient in the institution’s history. This early acknowledgment signaled the arrival of a new voice ready to redefine how we think about value creation in a connected world.
Advisory Roles and Academic Positions
Bridging the gap between theory and practice, Sangeet actively applies his frameworks to solve complex challenges for leading global organizations. He advises major companies like ING Bank and Standard Bank on their transformation journeys and serves on the boards of prominent retailers and innovation networks. His influence also extends back into academia, where he holds positions as a Senior Fellow at the University of California, Berkeley, and a Non-Resident Scholar at Dartmouth College. This dual role allows him to shape both the corporate strategies of today and the business leaders of tomorrow.
Global Recognition and Awards
Honors from the World Economic Forum and Thinkers50
Sangeet’s impact on global business discourse has been widely celebrated. In 2017, the World Economic Forum named him a Young Global Leader, a distinction that recognized his significant contributions to shaping the principles of the platform economy. Further cementing his status as a foremost business thinker, Thinkers50 listed him among the top 30 emerging management thinkers whose ideas are poised to reshape the future of business. These honors underscore his role not just as an analyst of current trends but as an architect of future business models.
Accolades for His Written Work
His ideas have reached a global audience through his internationally best-selling books, Platform Revolution and Platform Scale. Sangeet’s work is a staple in strategic discussions, with his articles and frameworks frequently featured by Harvard Business Review. His writings have been selected for HBR’s prestigious “Top 10 Must Reads on Strategy” and “Top 10 Must Reads on Business Model Innovation,” making his insights required reading for any leader aiming to build a competitive and resilient organization. His ability to distill complex concepts into actionable strategy is a key reason his work continues to resonate so deeply.
Q: In 2013, you wrote an article called “Pipelines vs. Platforms,” can you explain what pipelines and platforms are and what has happened in these past 5 years?
A: I came up with the metaphor of pipelines to explain the fundamental shift that platform economy was bringing. Traditional businesses used to work in a linear pipeline-based model, where you have factories or service businesses creating goods and services, pushing it down a pipeline, and taking it to the end consumer, and the consumer pays using money. What’s changed is that as the world gets more connected, more of us participate on the internet, creating data. Thus, we start seeing a new business model, where the business no longer creates the product or the service and just ships it out to the end consumer. The business now connects external producers and consumers with each other, and provides the common infrastructure and organizing mechanism to which the producers and consumers can exchange value with each other. And so instead of being the sole creator of value and owner of the means of production, platforms possess the means of orchestration and organization of the ecosystem of producers and consumers. That’s the difference between what used to happen and where we are headed.
Understanding Choudary’s Core Theories
The “Core Interaction”: The Heart of a Platform
At the center of every successful platform is what Choudary calls the “core interaction”—the primary exchange of value between its users. This isn’t about the product the company builds, but the connection it facilitates. Think of it as the essential verb of the platform: Airbnb enables staying, Uber enables riding, and YouTube enables watching. This single, repeatable action is the engine of value creation. A platform’s entire brand and experience strategy must be built around making this core interaction as frictionless and valuable as possible. The focus shifts from perfecting a product in-house to designing an environment where others can create and exchange value with each other effortlessly.
“Control Points”: Managing the Ecosystem
If the core interaction is the engine, “control points” are the steering wheel and dashboard. These are the strategic levers a platform uses to govern its ecosystem, ensuring quality, trust, and fair value capture. As Choudary explains, these are not about rigid command-and-control but about intelligent orchestration. Control points can be anything from pricing algorithms and data policies to user reputation systems and API access rules. They are the architectural choices that shape user behavior, manage supply and demand, and prevent the ecosystem from descending into chaos. For leaders, designing the right control points is a critical act of business model innovation, determining who holds power and where value accumulates within the network.
Q: In your Harvard Business Review article, you talk about a “revolution.” What is that revolution now?
A: In the pipeline world, orchestration happened contractually. You would orchestrate an entire value network, or loose network of supply chain actors through different forms of contracts. The other form of orchestration was using standards. For example, Sony would create a standard and the entire electronics industry would work around it; Intel would create the PCI and USB standard and the software industry organized around it. But what we are seeing with platforms is that they use other forms of organization mechanisms, such as data. For example, Uber orchestrates drivers and riders using location data, reputation data, route optimization data, etc. In addition, industries that were resistant to moving in the platform direction, have also started shifting towards platforms, and that’s been driven by a few different factors.
- Asset-intensive industries have become increasingly digitized because of censors, driving data that has been generated as the business processes move into the cloud. Traditional asset-intensive B2B industries have started coming onto platforms.
- Highly regulated industries, such as banking, have started getting deregulated. In UK, Europe, and Australia, banks are sharing data with third parties, embracing APIs, and when that starts happening, banking products start getting unbundled from the bank, creating opportunities for new platforms to de-organize these products and serve them to consumers.
- The emergence of new layers of interoperability – The internet was the layer of interoperability, but we don’t have an internet for global trade or global medical data sharing. However, with blockchain technologies, an interoperability framework with shared governance models, ownership models, etc. can be created between different players within a certain industry ecosystem. This then allows new platforms to emerge.
It’s a combination of these three factors that has really changed industries over the last several years.
Q: Is there an example of a perfect business model that others can learn from, or is this all still work in progress?
A: In consumer industries, it’s much faster to create network effects because there are fewer barriers to network creation and much more homogenous cases across different geographies and regulatory paradigms. In traditional industries, it’s much more difficult to make that happen. It’s a combination of the complexity of the network effect as well as the fact that the first step towards digitizing these industries happened only within the last five years. There are more works in progress at this point, but we’ve already seen a lot of value being unlocked, which can be done in many levels. You can unlock value by pure digitization, whether you’re building platforms or not. You can unlock value by managing data as an asset and creating business models around that data. Or, you can unlock new values by creating a level of intelligence and transparency about ecosystem actors and their actions. This final level is what’s still a work in progress in a lot of these industries.
Q: In the Platform Economy Summit, you said, “There are new forms of digitalization, consumption, identity, location, reputation, machine performance, and business processes.” Can you speak more about this?
A: The impact or the extent to which the platform economy has taken over has been driven by the digitization of specific elements required to make these platforms useful. If we trace back this history, we see digitization of consumer data first by companies like Amazon and Netflix, who used this data to figure out what consumers wanted. This created different opportunities not just in terms of personalization, but also in terms of anticipation of what consumers wanted, before consumers knew they needed it. The next key element that got digitized was identity, and this happened when Facebook started insisting that users have to start using university or corporate email addresses to register for a Facebook account. Following the creation of Facebook Connect, we started seeing an explosion in platforms that allowed real world interactions between people, like Uber and Airbnb. Then came the digitization of location. From 2007, Smartphones started becoming pervasive. 2007 onwards, Google had acquired Keyhole and created Google Maps. A combination of strong mapping data and the ubiquitous smartphone allowed the digitization of location. As we move towards other parts of the economy, we start seeing how digitization of the reputation of workers helped create labor platforms, how digitization of machine performances helped create industrial platforms. For example, Maertz is now digitizing its business processes and B2B life cycles, essentially creating the next generation of platforms. The argument is that, if you follow the technologies that are driving digitization and extracting value out of the digitization, you start seeing where platforms are going to come up next, which industry, and at what point in time.
Q: In one of your year-end reviews on looking forward, you talk about countries as platforms. Can you speak more about this?
A: That’s been a big theme in my work over the last years. If you look at countries like Switzerland, they’ve always been at the hub of flows of capital, and countries like Singapore have been at the hub of trade. As the world gets more connected, we’re also starting to see flows of data. It’s similar to what we see in an industry, where you have small startups disrupting the large, asset-heavy incumbents. Countries that are able to attract data flows will potentially be more competitive than countries who have the resources but don’t have the data to make intelligent utilization of these resources. Today, more countries realize this, and smaller countries around the world are using regulatory arbitrage to attract technology and IP in their direction.
From Theory to Policy: The Real-World Impact
Sangeet’s work extends far beyond strategic frameworks for business leaders. His insights are actively shaping the rules of the new economy, influencing how governments and global organizations address the profound societal shifts driven by platforms. This transition from theory to practice is where the true power of platform thinking becomes clear, creating more equitable and transparent systems for everyone involved. It’s one thing to identify a problem; it’s another to help build the solution at a systemic level. This is precisely where Sangeet focuses much of his effort, moving from boardroom strategy to the complex work of public policy and social impact.
Informing Platform Regulation Globally
The rise of dominant digital platforms has created complex challenges for regulators worldwide. Sangeet has become a key advisor for governments trying to foster innovation while ensuring fair competition and protecting consumers. He has actively engaged with European governments to help them develop smarter, more effective regulations for the digital age. For example, his recommendations were instrumental in guiding the Danish government’s approach to platforms like Airbnb, leading to policies that mandate data sharing to increase transparency and accountability. This work demonstrates how a deep understanding of platform mechanics can lead to better, more balanced public policy.
Advocating for Worker and Creator Rights
The platform economy’s impact on labor is another critical area of Sangeet’s focus. While platforms create new opportunities, they also introduce new vulnerabilities for the individuals who power them. Recognizing this, Sangeet has researched how platform models can sometimes exploit labor and has advised organizations like the International Labor Organization (ILO) on how to safeguard worker rights in the gig economy. His advocacy pushes for policies that ensure the creators, drivers, and freelancers who build value within these ecosystems receive fair compensation and the protections they deserve, rebalancing the relationship between the platform and its participants.
Q: Where are things headed for you and what else would you like to leave the audience with?
A: There are a few things that I believe will become more important going forward. I’m interested to see how platform regulation plays out, because a lot of platforms have mushroomed in the wild west without being properly regulated, and now the regulators are catching up. So we have to see which business models get weakened and which get strengthened because of those regulations. Another important theme is countries as platforms. We are in a connected, data-rich world and countries have to think about data to stay competitive rather than think about resource holding and talent holding only. Lastly, we should observe how traditional industries will see commoditization and competition. When platforms come into a certain industry, they increase competition in all other layers of the value chain, except the layers that they want to play in. In doing so, they start commoditizing all these layers. When Facebook and Google emerged, they commoditized content, which heavily impacted media companies. When Apple and Google entered the telecom industry, they commoditized over-the-top services, which led to telecom companies’ loss of revenue. As we see this happening in trade, finance and healthcare, we need to think about where commoditization will happen next and where the profit will move to. Tune into more of The Business of Platforms podcast here. If you’d like to learn more about Vivaldi’s platform strategy offering, contact us at hello@vivaldigroup.com.
Explore Choudary’s Influential Writings
To understand the forces reshaping modern business, leaders must engage with the thinkers defining the new rules of competition. Sangeet Paul Choudary is a central figure in this landscape, providing essential frameworks for navigating the shift to platform-based, AI-driven economies. His work moves beyond academic theory, offering a clear and actionable lens through which to understand and act upon the most significant business transformations of our time. For any organization looking to build enduring value, his writings are not just insightful—they are a strategic necessity for charting a course through a world where the old playbooks no longer apply.
Best-Selling Books
Choudary’s books provide the foundational knowledge for strategic reinvention, breaking down the core principles that govern the modern economy.
Platform Scale and Platform Revolution
His best-selling work, *Platform Revolution*, co-authored with Geoffrey Parker and Marshall Van Alstyne, masterfully deconstructs the monumental shift from linear “pipeline” businesses to networked “platform” models. This is not a simple change in tactics but a complete reimagining of value creation, where companies evolve from being sole producers to ecosystem orchestrators. The book explains how this model inverts the firm, allowing businesses to scale by facilitating interactions between external producers and consumers. For any organization undertaking a business strategy transformation, this text is the definitive guide to building a modern, resilient growth engine that thrives on network effects and community co-creation.
Reshuffle: AI and the Future of Work
In his upcoming book, *Reshuffle*, Choudary addresses the next seismic shift: the transformative impact of artificial intelligence on work, competition, and value creation. He argues that AI is not merely a tool for efficiency but a force that is fundamentally reshaping industries and the very nature of competitive advantage. This work highlights the urgent need for leaders to develop robust AI and data strategies that go beyond automation to build intelligent, adaptive systems. It serves as a critical playbook for understanding how to leverage AI to create new forms of value and design organizations that can thrive in a rapidly evolving landscape.
Digital Publications and Newsletters
Beyond his foundational books, Choudary’s ongoing analysis provides a real-time pulse on the digital economy, translating complex trends into strategic guidance.
Leading Columns and Articles
His contributions to premier publications like the *Harvard Business Review* and *MIT Sloan Management Review* serve as strategic briefings for senior leaders. In these articles, he translates complex platform theories into actionable frameworks that can be applied across industries. He consistently focuses on the strategic importance of platform thinking, demonstrating how it can drive both innovation and efficiency. These pieces are essential reading for leaders looking to apply these powerful concepts to their own organizations and build sustainable competitive advantages in a deeply connected world, making them invaluable for shaping modern brand and innovation strategies.
The “Platforms, AI, and the Economics of BigTech” Newsletter
For those seeking to stay continuously informed, Choudary’s Substack newsletter, “Platforms, AI, and the Economics of BigTech,” is an indispensable resource. It offers sharp, timely insights into the critical issues at the intersection of technology, economics, and business strategy. The newsletter moves beyond headlines to analyze the deep structural forces at play, delving into how data and AI are being leveraged by today’s dominant companies. It provides a clear-eyed view of the economic principles driving Big Tech, making it a vital tool for leaders who need to anticipate market shifts and make informed decisions in a dynamic competitive environment.
Frequently Asked Questions
What’s the simplest way to understand the difference between a traditional “pipeline” business and a “platform” business? Think of it this way: a traditional pipeline business operates like a car factory. It sources materials, builds a product, and pushes it down the line to a customer. The value is created inside the company and flows in one direction. A platform, on the other hand, is like a city’s road system. It doesn’t build the cars or decide where people go, but it provides the essential infrastructure that allows drivers and passengers to connect and exchange value with each other. The platform’s primary role is to facilitate and govern these interactions, not to create the end product itself.
My company is in a traditional industry like manufacturing or banking. Can we still apply platform thinking? Absolutely. Applying platform thinking isn’t about trying to become the next Airbnb overnight. It’s about shifting your strategic focus from selling a product to orchestrating an ecosystem. For a manufacturer, this could mean creating a platform that connects your industrial customers with maintenance providers, software developers, and parts suppliers. For a bank, it could mean moving beyond simply offering loans to building a system that connects small businesses with financial advisors and investors. The goal is to find a central, valuable interaction you can facilitate for your entire industry network.
The post mentions that data is a key organizing mechanism. What does that actually mean for a business? In a traditional business, you use data to make your internal processes or products better. In a platform model, data is the essential ingredient that makes the entire ecosystem work. It’s what you use to orchestrate the connections between users. For example, a platform uses data about location, reputation, and availability to successfully match a rider with a driver. For your business, this means using data to understand the relationships within your network, anticipate needs, and establish the rules and standards that make interactions trustworthy and efficient for everyone involved.
Building a platform sounds great, but what are the biggest risks leaders should watch out for? The most significant challenge is a cultural one: moving from a mindset of total control to one of orchestration. You have to be willing to let go and empower external users to create value, which can feel counterintuitive for established leaders. Another major risk is failing to establish trust. If producers or consumers don’t believe your platform is fair, secure, and reliable, they simply won’t participate. Finally, as platforms become successful, they inevitably attract regulatory scrutiny, so you must be prepared to address complex issues around competition, data privacy, and user rights from the beginning.
With AI becoming so prominent, does that change the platform model, or is it just another tool? AI acts as a massive accelerator for the platform model; it’s far more than just another tool. Think of it as the intelligence layer that makes the entire ecosystem smarter, faster, and more predictive. AI can optimize the core interactions on your platform by making matches more precise, personalizing user experiences at scale, and managing the system’s rules in real-time. It allows a platform to evolve from simply connecting participants to actively anticipating their needs and creating new forms of value.
Key Takeaways
- Orchestrate Value, Don’t Just Produce It: The most powerful growth models today are platforms, not pipelines. Your strategic focus should shift from creating and pushing a product to architecting an ecosystem where external producers and consumers can easily connect and exchange value.
- Design Around a Core Interaction: Every successful platform is built on a single, repeatable exchange of value. Identify this “core interaction” and use strategic “control points”—like data policies and reputation systems—to govern the environment and ensure quality, rather than trying to command it.
- Data Is the New Competitive Moat: In a connected world, advantage is determined by the ability to attract and manage data flows. The most forward-thinking organizations—and even countries—are building their strategies around data as a primary asset to create intelligent and predictive business models.