Platform: the new science of corporate success

Platform thinking is changing the face of business around the world as more and more companies are transforming their businesses from products to platform. Amazon led the way in 1994 when it set up the first online bookstore. Although it began as an online bookstore, Amazon now makes it possible for retailers to sale a variety of products on its website which has now surpassed Walmart as the most valuable retailer in the world according to New York Times report in July 2015. EBay and Etsy followed suit in 1995 setting up their own online platform.

Since then many other companies have applied the platform model successfully, both online and offline. Jiji.ng, Jumia.com, Konga.com are just some of the companies that operate the platform business model.

And it is working. Businesses not thinking platform are lagging behind. Consider the smart phone industry. Blackberry is today a shadow of its former glory. According to a report “BlackBerry Subscribers 2014”, BlackBerry was considered one of the most prominent smart phone vendors in the world, specializing in secure communications and mobile productivity. At its peak in September 2013, there were 85 million BlackBerry subscribers worldwide. However, BlackBerry has since lost its dominant position in the market due to the success of the Android and iOS platforms; the same numbers had fallen to 23 million in March 2016. But the triumph of Apple and Android is not from features and functions. It is from the app store on which external developers create value. That’s platform at work.

JC Penney has made platform thinking a pillar of its reinvention strategy. Its stores are featuring more and more “boutiques” managed by others.

Nike is also shifting from products to platforms. Building on the success of its Digital Sport products, Nike recently launched its Nike+ Accelerator to help companies build on the Nike+ platform. Nike’s announcement shows platform thinking. “We are looking for people who want to create companies that build upon the success of [Nike+] to make the world more active.”

But then what is a platform?

Generally, a platform is something that lifts you up and on which others can stand. Its existence dates back as far as 2500 years ago. In classical Greece, it is a place where several functions were performed including, religious rituals, politics, law, athletics and gymnastics, music, poetry, weddings, funerals, and symposia. But the important thing to understand is that platform provides a stage for performance.

The same is true in business. By building a digital platform, other businesses can easily connect their business with yours, build products and services on top of it, and co-create value. But platform is not limited to digital products, JC Penny has already demonstrated the possibility of platform model in boutique business, that’s how possible it is to implement it in the textile, broadcasting, publishing, transportation industries etc.

The power behind platform rise in recent times

First of all its important that platform fosters collaboration which makes it possible to create maximum value. But the power behind the platform rise today can be narrowed down to three transformative technology:

• Cloud computing
• Social media and
• Mobile telecommunications

Cloud computing provides shared computer processing resources and data to computers and other devices on demand. It enables a global infrastructure for production, allowing anyone to create content and applications for a global audience.

Social media makes it possible for users to share information, ideas, career interests and other forms of expression via virtual communities and networks. They connect people globally and maintain their identity online

Mobile communications provides connection to this global infrastructure anytime, anywhere. This leads to a globally accessible network of entrepreneurs, workers, and consumers who are available to create businesses, contribute content, and purchase goods and services.

How to achieve platform success

There are fundamentally three factors that spell the success of the platform model. First is how easy it is to connect to the system to share and transact. Next is the traffic to the platform. How attracted it is to both producers and consumers. And finally, the degree to which it fosters exchange and co-creation of value.

The building block of successful platforms

1. The Tools: A platform involves collaboration. To be successful, there must be accessible tools needed for the work. Accessible tools make it easy for people to connect to the system to share and transact. For example Jiji.ng infrastructure makes it easy for people to upload their content for sale. Wikipedia provides writers the tools they require to effectively collaborate on an article. Facebook makes it easy for people to share what’s important to them with those they care about.
2. The attraction: this involves what will make them come. What attract both the users and developers in the case of Apple and Android, buyers and sellers for Jumia, Ebay and Amazon? The design of the incentive, pricing model, returns policy, and easy access will determine the level of traffic to the platform which of course determines its success.
3. The business matching solution: match making makes it possible for buyers and sellers that share common interest to come together through data management. The platform must be able to capture rich data and then leverage it to bring people that share a common interest on the platform together.

The world has moved on, collaboration to create optimum value is the new science of business success and platforms will help you achieve that.

 

By Brian Reuben 

 

Brian Reuben helps companies and individuals operate, sale, market and communicate effectively. [email protected] 0808 726 4420