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How to thrive in the platform economy
Leading companies need to build dynamic ecosystems and deploy next-generation platforms to gain a competitive edge, says Ramadurai Ramalingam, managing director at Accenture.
Modern enterprises are increasingly collaborative. They need to be. Today's markets are simply too competitive and customer loyalty too fickle for companies to go it alone. Rather, today's leading companies recognize that to thrive in the platform economy, they need to build dynamic ecosystems and deploy next-generation platforms to gain the competitive advantages they need to expand into new, complementary sectors.
Take Audi as an example. It's pilot service with Amazon and DHL, Audi Connect Easy Delivery, allowed participants to receive parcel deliveries from Amazon (fulfilled by DHL) to the trunk of their Audis. It's exactly the type of collaboration that's driving next-level, customer-centric experiences. It's also the type of platform-centric experience that can help brands succeed in the face of omnipresent competition. Companies that fail to explore and create comparable ecosystems and partnerships may find it hard to keep up.
Enter next-generation business platforms
That's why next-generation platforms centered on advanced cloud, mobile and analytics capabilities are proving to be so important. Indeed, four of the top S&P companies by market value are leading, next-generation platform companies: Apple, Alphabet/Google, Microsoft and Amazon. Such platforms provide a common foundation of core technology that opens businesses to other companies and enables the creation of new, disruptive services.
When deployed effectively, platform-centric approaches help businesses foster valuable new partnerships, access new markets, drive innovative business models, exploit growth opportunities and reduce time-to-market for new services. Next-generation platforms also enable 'network effects': the proven notion that a steady stream of additional platform users makes the platform's overall value increase -- both to the company that owns it and to the users who experience it.
Importantly, while B2C technology platforms are the best known, the approach delivers equal value to B2B companies. Cisco is a great example of one such next-generation B2B platform business. Its ecosystem brings together a large network of trusted partners to deliver solutions, software and services that use Cisco's internet of things capabilities to deliver new value to enterprises. Whether B2B or B2C, virtually every company has interconnected assets along the industry value chain and internal product development lifecycle. These represent opportunities to unlock value and future-proof the business against disruption.
Building a next-generation platform
Establishing a platform-centric business, and by extension a partner ecosystem, can be a daunting endeavor -- particularly, for incumbent companies that are used to going it alone. But a transformation must be undertaken if companies want to win in the platform economy. At Accenture, we recommend that businesses follow a four-pronged strategy to ensure that the evolution of a company's platform approach is as impactful as possible:
- Reimagine. Completely change how you think about the ecosystem in which your company operates, together with its competitors, suppliers, buyers, and/or end users.
- Open-up. Enable third parties to contribute to (i.e., via APIs) and consume from the platform.
- Attract. Connect customers, partners, products and platforms to create an integrated ecosystem that offers value greater than its component parts.
- Free flow. Ensure a smooth flow of information across the platform value chain, but also consider what data should (and should not) be exposed through APIs.
Critical factors for success
A platform-centric 'strategy' is just a starting point. To successfully deploy next generation platforms, organizations must factor in three key elements during execution:
- Build foresight and resilience into the platform to cope with future disruption and changing customer expectations. A well-designed platform will foster inclusive innovation, meaningful feedback and value-based benchmarking. This, in turn, will lend foresight to the business and help it prepare for uncertainties, risks and opportunities. Importantly, the right platform approach will help businesses overcome market fluctuations by helping it remain relevant, fueling innovation and protecting the business against future market disruptors.
- Decouple intelligence from your assets. Many of the leading platform companies (i.e., Uber and Airbnb) are digitally born organizations and own few, if any, assets. Instead, these businesses have developed transaction points that enable the more efficient creation and use of assets across their ecosystems. Incumbents must follow suit -- establishing a greater number of transaction points and interactions with external partners to spread innovation more widely and to limit risk.
- Invest time and effort in building APIs to bring platforms to life. APIs free data from the confines of a single enterprise. The disruptive impact of APIs lies in the fact that they can sit at any point along the data value chain and help companies open a broader world of consumers, third-party developers and other platform providers. APIs are, therefore, one of the core building blocks of the platform economy and partner ecosystems.
Become an innovation leader
By reimaging your entire business as an element of wider, interconnected, customer-centric ecosystems, you will be able to unlock new efficiencies, drive innovation and grow at pace. My advice to all businesses is to start your platform journey today. Examine your business and consider how you can extend it into the broader platform economy. Then, confront your platform challenge head-on: Open your business up through APIs and essential partnerships, allow secure access to the right data for third parties and look to continually build value for your customers by integrating the strengths of others with your own core capabilities. The result will be a business that's fit for the future.