Kathy Gibson at Gartner Symposium, Cape Town — The platform model is starting to dominate the economy today, providing a way for information, goods and services to be shared between suppliers and consumers.
But not every organisation will win in the platform economy, says Gartner analyst Brian Burke.
“There is no going back to the good old days,” Burke stresses. “It is just a matter of time before different platforms take over different businesses.
“Doing nothing will lead to dystopia.”
Uber is the classic example of a platform business model, Burke says. Amazon is another: having started as an e-commerce business, it extended to allow other companies to use its platforms.
Elon Musk, the co-founder of PayPal with interests in Tesla and SpaceX, is another example of how successful a platform business can be.
Peter Thiel, another co-founder of PayPal, believes that only a monopoly will capture lasting value.
“If you think about it, all the leaders are monopolies or near-monopolies,” Burke says. “If you want to go up against one of these organisations you will have a really tough time.”
Burke urges organisations to locate their place in the platform economy. “You are already in a platform economy. You have to decide what your role is in the business ecosystem. And what is your signal strength?”
The various roles are to build a platform — and become the dominant player; or to partner with an established platform business to provide additional services. Organisations could partner with existing businesses if they add value.
“We will all collaborate in the platform economy,” Burke says. “We have to figure out how we will collaborate, as a provider or a consumer of products and services.”
Once an organisation has decided where it’s placed in the platform economy, it has to decide how to do that, how to manage it, and how to maintain a reputation.
To thrive in the platform economy, organisations should aim to become a platform provider themselves. “That is the highest risk, but also the highest reward,” Burke says. “You could also acquire an existing platform to augment your business. This is lower risk.”
Among the advantages that incumbents looking to build or acquire a platform have over startups include: deep industry knowledge; an existing customer base; trust so customers believe it’s safer, more reliable and cost-effective; an established brand; physical locations; an established supply chain; and they already comply with regulations and manage risk.
A platform business has certain generic capabilities, but to stand out from the crowd, an organisation needs to have a dedicated community of users. And this can be acquired only by adding value.
These value-adds for community members could include training, community, motivation, financing, dispute resolution, taxation assistance, and insurance.
Organisations that might not thrive still want to survive in the new economy
Burke says the best way to do this is to partner with a platform business, to add value to the platform community.
There are some advantages of partnering: you could leverage new business channels, offer complementary value, leverage brand and experience and openness.
Be cautious, though, about misaligned goals, white-labelling and cannibalisation of your own customer base.
Companies are probably already collaborating and leveraging platforms as consumers, Burke adds. Platforms like TripAdvisor, LinkedIn, Messenger and others are likely already part of an organisation’s strategy, and Burke suggests they look for ways to leverage them further.
“As a consumer of these services, there are lots of ways you can be leveraging them.”
The bottom line on how organisations will react going forward, he says, is that the platform economy is here.
In order to survive or thrive, companies need to understand their position in the platform ecosystem, develop a strategy to leverage it, and build a roadmap for transforming in the platform economy.
“Companies that bury their heads in the sand and hope the platform economy will go away will nose-dive,” Burke says.