How will the platform revolution affect your organization?
Practically any industry for which information is the product or source of value is likely to be disrupted by the platform-based business model. But with the right approach, any organization can adopt the networked, customer-centric business model to unlock potentially limitless value.
One of the most important economic and social developments of our times is the rise of the platform as a business and organizational model. Today’s biggest, fastest-growing and most disruptive companies are founded on platform-based business models. Companies such as Apple, eBay, Uber and Alphabet (the parent company of Google) act in “ecosystems” and connect diverse partners in a network of businesses.
The creation of “ecosystems” — the convergence of separate entities into rich networks with variable sets of relationships between producers and consumers — is ubiquitous in today’s business world. The rise of these ecosystems forces businesses to move beyond traditional industry silos and to go from organization-centricity to ecosystem-centricity, resulting in an increasingly networked world.
How can organizations embrace the platform revolution?
For successful implementation of new platforms, organizations must have a clear understanding of the economic principles and business design across one or more ecosystems. This means they will need to move away from traditional business principles that explain the management of linear supply chains and conventional service models.
Success is determined by functional integration and network orchestration, rather than horizontal or vertical integration — this shift requires new ways of thinking and implies a new business logic.
In the past, no matter which industry, customers expected instant gratification and more intuitive, real-time and integrated solutions in their interactions with providers. Now, it is the customers themselves who have become active, independent partners in the ecosystem, sitting at the center of its strategy and reshaping their own needs. They are able to define their own journeys outside of the business’ control. As each individual, whether formally or informally, collaborates for the mutual benefit of the entire ecosystem, this ultimately leads to more information, allowing more choices and creating more value.
It is this change in pathways that needs to be better understood by many organizations as they begin to realize that, in the world of digital business ecosystems, they are no longer the only players in the market. The need to enter alliances and partnerships across the business platform should be viewed, by all stakeholders, as an important enabler to meet new growth opportunities.
The right technology enables collaboration: a digital experience platform that serves providers and consumers or users along every step of their journey and provides individual value propositions across the networked ecosystem. Consequently, companies need a digital experience and technology strategy that is informed by the needs and digital behaviors of their stakeholders. In fact, the platform must pinpoint and affect every users’ journey.
The aim, therefore, is for the platform’s focus always to be on the customer journey, as it connects to clients, manages suppliers across industries, and enables communication and data sharing while increasing sales of products and services.
The tricky part is that the solution needs to fit the requirements of all of its players, i.e., to benefit customers while simultaneously improving the business performance of both the organization and its partners.
Health care: an example of a new ecosystem
When we think of the traditional health care ecosystem, one would expect it to include physicians, nurses, pharmacies, hospitals and assurers. But there are new entrants now. Patients no longer rely just on their physician to improve and sustain their overall health. That is why we see players from industries such as sport and fitness, nutrition and wellness, plus technology and data experts, entering the arena.
The health care ecosystem is fully extensible, enabling patients, depending on their needs, to have access to different providers and suppliers that offer a multitude of products and services. From the patients’ perspective, they have access to a coordinated, online communication platform that is complementary to the face-to-face interactions with health care professionals. It provides an additional source of expert assistance to help patients navigate the health landscape.
For pharmaceutical companies, the digital platform provides insights on how patients are using their products. This data can be used to direct the development of new therapies or improve current treatments and offerings, thereby selling more products and services via the platform. One well known example for tracking and monitoring a patient’s health status is wearable technology, sending real-time information to the physician for immediate intervention or advice on better health outcomes, if required.
A new way of thinking
If organizations are to realize the benefits of a platform-based ecosystem, they must move away from traditional value chain creation, also referred to as “pipe,” toward “platform thinking.” This refers to the way in which users can create value on the platform for others to use; products and services are no longer simply sold and consumed.
Enabled by these platforms, products and services can be traded more quickly and, importantly, among new partners. Digital business platforms facilitate the simplified trade of not just the products and services of the organization, but also all the partners that are connected via the platform.
From a business to business (B2B) commerce perspective, digital business platforms allow participants in the ecosystem to connect with the capabilities of other partners and make them available to their customers in ways that create significant value for the platform participants and the customers.
Such a model provides the necessary transparency that organizations need to be able to innovate and adjust to customers’ changing demands in an agile manner. It becomes cheaper and easier to add new products and services, as real-time information provides instant insights into customers’ buying behavior.
The platform revolution will likely affect every business in the near future — yet this threat can be turned into a big opportunity with the right approach. Starting with a change of mindset.