Primetime for Platform Game Begins NOW — Part 3
Comments on relevant platform and ecosystem economy trends
This is the third part of my comments on the platform and ecosystem economy trends.
Future is here, don’t wait for Platforms 2.0:
Any discussion of the platform economy is incomplete without mentioning emerging technologies like Blockchain, IoT, AI, 5G and others, primarily because they can become the catalyst for the next step in platform economy’s explosive growth.
The new technologies will play a significant role in improving the underlying core capabilities and utility functions of platforms and extended ecosystems, including analytics and insights generation, cyber-security, identity management, end-to-end process automation, and cross-ecosystem coordination. These emerging technologies will generate a whole new range of opportunities that before were not feasible, operationally, or the unit economics didn’t work. Many organizations have already adopted them to test and gather necessary learning on how to create business opportunities. Yet, the extent and scope are still limited, and the next 24 months will be critical for some of the technologies like 5G.
However, businesses do not need to wait for emerging Tech to mature to develop their strategy and participate actively in the ecosystem and platform economy. We are already well-equipped in terms of the existing and available technology stack to participate and benefit from the abundant platform economy 1.0 opportunities.
I believe that generating awareness about platforms and ecosystems among employees and key stakeholders should be the priority for any organization wanting to invest in this space, as it is typically the main barrier. Equally important is to develop a sound platform strategy, that should also encompass the data potential assessment, including internal, external, public and relevant industry primary and secondary data sources.
Next step in the order of priority for developing your ambition should be establishing APIs strategy. It is astonishing how many organizations are still lagging in this space, with only some scattered and siloed initiatives limited to the IT department. API’s are a great example of established and proven technology enabling connectivity, interoperability, and standardization fundamental for any ecosystem and platform. APIs are the operating system of platforms and rails for the business model and value creation. That’s you can easily recognize a mature platform business where API’s are at the core of the business strategy discussions and not limited only to the technical domain and experts.
There are many low hanging fruits in this domain, starting from exposing your existing individual business capabilities to your partners and augmenting them with existing services to prove the value creation and gain necessary learnings where even the government is taking the lead ahead of many industries.
It is Time for Bold and Persistent Strategies.
Those aiming to reap the platform economy's benefits must take the first step now and devise their strategies immediately. There is substantial evidence that even unsuccessful platform strategies can offer more positive financial gains to businesses than not having any strategy. It forces companies to understand the context, and analyze multiple scenarios, which ultimately increases business readiness to respond, take the right type of risks and make informed decisions.
However, the days of mundane and run-of-the-mill strategies are long gone; today, building a winning platform strategy requires you to be bold and have enough grit. It should start from the top management and the board, providing support and direction, because it isn’t merely about incremental improvements but about taking a calculated risk and implementing fresh business models by leveraging ecosystems and platforms opportunities.
The one rule followed by successful businesses is making platform strategy; one of the key pillars of their corporate strategy to guarantee sufficient and ongoing focus. Although this requires devising bold approach and risk-taking, it doesn’t necessarily mean that the entire business, it’s culture or core operations has to change. The basic idea behind integrating a platform strategy is to reinforce your core strength to attain sustainable growth and help become a world-class business in your industry and segment.
Some companies to reduce the execution risk, establish an entirely new business unit or operating entity, equipped with the necessary support and resources to prevent innovators dilemma conflicts — core business cannibalization, and issues from affecting it.
There’s nothing wrong with this tactic, but, if you want to establish an individual, separate business, then don’t fall into the trap of creating an innovation lab. Operate it as a real, full-fledged business.
The same economic rules and transparency should be applied to that new venture for any other part of the business, especially when assessing mid-to-long-term viability and impact. Although at the initial stage, the success should be evaluated based on value delivered to the ecosystem and progress in achieving product-market fit and unit economics. Furthermore, advancement in goals achievement should be done regularly in short intervals along with an incremental review of the targets in line with assessing the viability of the new model.
The most common fatal flaw is the lack of persistence and boldness when rolling out the platform strategy. Even if organizations have ambitions to fully explore the available opportunities, many will fail to sustain the course due to short-term pressure and needs, like shifts in priorities, short-term company strategy, or management team changes.
The point to remember is to be patient and persistent to ensure sustainable growth. Overnight success stories are indeed possible, even though scarce, but such stories lead people into developing unrealistic expectations about the speed of growth. That’s why educating stakeholders is so essential. Anyone aiming to take the lead in driving platform strategy and ecosystem development must first invest time and resources into internal education to create alignment and gain internal stakeholder support and buy-in.
This article was originally published in March 2020 on my LinkedIn pulse blog: https://www.linkedin.com/pulse/primetime-platform-game-begins-now-part-3-tomasz-kurczyk
