BCG Henderson Institute

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The history of cities is the history of platforms. They started as places to buy and sell goods—trading platforms—and over time added new platforms to fulfill other needs, coordinate cooperation, and manage physical space. Streets and sidewalks (mobility platforms) enabled people to move between destinations, classrooms (educational platforms) brought children together to learn, and museums (cultural platforms) made art accessible to the public.

Platforms are a form of infrastructure—physical, digital, social, cultural, or hybrid—that facilitates interactions between parties. They generate value that increases with scale and intensity due to network effects. Cities now contain dozens of platforms, and these platforms have evolved and expanded to serve additional functions. Sidewalks became places for dining, music, and socializing. Schools and libraries began to serve as community centers and places to provide free lunches and other social services. And wireless networks have added digital functionality to these physical spaces as well as creating an entirely new platform. (See Exhibit 1.)

Cities now need to coordinate these multiple, interlocking platforms and functions as they seek to address vexing and complex issues such as overcrowding, housing shortages, economic development, public safety, inequality, and climate change. Their current governance model of master planning and vertical silos is no longer up to this task.

There is a better way.

Business have adopted the idea of platforms in a new powerful form, the digital ecosystem, to create such global giants as Airbnb, eBay, and Uber. If a platform is the stage, an ecosystem is the show—the full complement of actors, direction, and creativity. Ecosystems are popular in business because they foster innovation, scale quickly, and adapt to changing environments. They also allow many parties and actors to tackle complex problems from different angles. Ecosystems rely on an orchestrator to coordinate and shape, but not control, activity. Such coordination, rather than rigid top-down planning, is just what cities need today.

By returning to their roots, cities can revise their governance model to face their challenges. They can readopt the platform and its modern counterpart—the ecosystem—to address their most pressing social and economic issues, learning from businesses as they transition to this new governance model. Because cities are so complex, a single ecosystem will be insufficient. They will require an “ecosystem of ecosystems” approach.

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