Platforms harness the power of multiple revenue streams, pervasive customer insight or data and creators' possibility to build more layers of innovation on top
Digital platforms have become an absolute must for any business and are no longer a digital native strategy. According to a popular survey, "platforms are quickly becoming a must for competition and a foundation for creating new value — and companies that fail to embrace them might get left out on the sidelines by watching them." Many digital platforms have become an integral part of the business landscape and are no longer exclusively digital natives' domains.
In the Age of Platforms, the term is almost a buzzword in the industry. Tech giants like Facebook, Apple, Google, and Amazon have redefined business, a platform that is merely a structure made up of integrated features. For example, Amazon initially was an e-commerce delivery platform. Adding integrated features like AWS, Audible, Amazon Pharmacy, Amazon Fresh, and others have shifted from a product to a trustworthy platform. Likewise, Google, which was initially a search engine, has now adding planks such as YouTube, Docs, Maps, Gmail, and others have turned into a platform.
Platforms harness the power of multiple revenue streams, pervasive customer insight or data and creators' possibility to build more layers of innovation on top. When Amazon struggled to achieve scale as a singular e-commerce business, they turned inwards to seek a more solid platform, systems and processes. That laid the foundation for the world's largest cloud service provider. Companies including Daimler, Nike, and Unilever are launching their platforms as their business models mature. Effective platforms are based on technological excellence but cannot exist exclusively in the technical realm. They rely heavily on support and feedback from other parts of the business that are coordinated better through a cross-functional team that defines success metrics and tracks progress. Centralized leadership by the CXO can manage this better by mobilizing the right talent and "product owners" accountable for success in their specific business areas.
Need to move from product to platform mindset
Developing a business platform strategy requires slightly different products to help entrepreneurs and managers create and capture value. Companies that focus on building platforms have learned to integrate an ever-widening universe of partners and consumers into their ecosystems. Consumers rather than enterprises drive today's economy—the need for CXOs to focus on consumer-driven platforms matters more than ever. Many products have transformed into software as a service. For instance, Microsoft's traditional "Windows First" strategy evolved into the "Cloud First or SaaS" model with emerging technologies. The company recognized that transformation was not just a strategy by mindset about the customer experience and sales function.
Leaders must rethink the shift from transforming products into services while considering what services instead of products across industries. All companies face limitations when it comes to driving innovation. However, it is possible to expand those limitations with a powerful platform. Innovation is the responsibility of every stakeholder in the company, making it a contribution by partners, users, developers, and other collaborators. Building a platform gives the power to cultivate the whole ecosystem. The development of digital media assisted by the third-party API (Application Programming Interface) providers can allow participants to exchange data for developing new services. The main goal of digital platforms is to improve collaboration between end-users and manufacturers to transact with each other. These platforms allow users to exchange various information, such as new products and services and connect the platform's ecosystem. This technology also makes it possible to build a reliable network to add value.
How is the platform strategy beneficial?
Platforms shift knowledge ownership from the owner to the community & personas using the platform. Platforms are built for catering to different personas with different needs, which in turn means aggregation of different data sets. The handling of data of a platform needs to be well thought out, as otherwise the true potential of any platform will be left uncovered. The ability of a platform to break data-sets into bite-size, actionable insights that an enterprise can use to get better, deliver better experience and identify opportunities, binds the entire organization together. The biggest power of a platform is to reduce ‘data’ silos and aggregate data sets which enable cross function/teams valuable insights for successful use-cases.
What is a platform strategy framework?
The digital platform strategy aims to penetrate the online marketplace, focusing on allowing one segment of participants to benefit from the presence or interaction of others. The general assumption is that customers can independently determine their willingness to pay for a service or product. However, platforms can disprove this assumption, as the participation of the user segment on the platform depends on the user's choice. Developing a business platform strategy requires slightly different products to help entrepreneurs and managers create and capture value.
Digital platform strategies need to align well with the organization's work across all channels. If they are not well integrated, businesses will often run into problems in the long run. To develop an effective platform strategy with long-term solutions, collecting as much information as possible is essential. Along with this, define goals and criteria from the very beginning. The use of digital platforms in the workplace has become commonplace. Platform strategies, whether practiced individually or jointly, become a strategic imperative. Companies that have yet to make the transition will find it challenging to keep up.
Platform companies move faster than their product-centric traditional counterparts. The post-pandemic time is crucial to expand one's horizons, and platforms help to diversify with intelligent business solutions while reducing the risk. The CXO needs to dematerialize a traditional ecosystem and aggregate functions on a platform. It has been assumed for a long time that leaders need to commit resource allocation and operations to either product-based or platform-based approaches. However, moving away from the traditional strategy, companies have successfully transitioned from product to platform and have employed a hybrid model.
The author is CEO & Co-Founder, iauro Systems