Platform-based business models are becoming the gilding of the digital economy. They are disrupting and dominating markets, changing customer and supplier habits and generating hitherto unimaginable communities and scales.

These new models eliminate friction with users and introduce innovative products and services aimed at dramatically improving the user experience.

The platforms create communities and new markets with network effects that allow users to interact and transact. Each new network node expands the ecosystem and generates more network effect, that is, it expands the community and, therefore, its attractiveness and value.

We could say that globalization, the internet, and new technologies have removed space and time barriers. Now the connection between buyer and seller occurs in real-time.

It is a fact that platform-based businesses are growing faster than traditional businesses due to their lower cost of distribution and the intelligent use of digital tools that allow them to automate processes, improve user service and personalize the offer.

According to one media outlet, if we look at the past 10 years, up to 70% of start-ups with a market value of more than $ 1 billion have a platform model.

Undoubtedly, platforms are transforming: our daily activities, business models, industries, and ultimately, the economy.

There are numerous examples of the success of platforms that are generating disruption in traditional sectors such as Uber, Airbnb, Amazon, Netflix, Spotify, Booking, …

An important characteristic of this model is that it has clients on both sides since both clients and suppliers are users of the platform, which generates a hitherto unknown relationship model. There are many platforms (for example, Uber) in which both the service provider and its user are rated.

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KEY ASPECTS OF THE MODEL

In ‘Platform Revolution’, a highly recommended book to understand this new world, some key aspects of the model are specified:

* Platforms can develop rapidly because growth on one side of the network attracts users on the other. This is what is called the network effect. The diversity of the offer makes the participation of users attractive and the growth of users promotes the increase in the offer.

* The architecture is specified in five elements: users, article to be exchanged, currency, filters that help the user to select their product and information used to make that decision.

* Platforms grow faster than traditional businesses by having low growth and distribution costs, using predictive analytics to improve customer experience.

* A profitable platform charges users or third parties only when this does not deter users from joining and participating.

* Trust and value for the user are its essence and its key metrics.

Therefore, if, as seems evident, this platform model has clear benefits and in many cases, the rules of the game for entire sectors are changing, it seems obvious that companies, in the context of their strategy, should carry out an exercise to analyze their potential evolution to a platform model.

Understanding what the logic of this model is, regardless of the final decision to be made: develop a global or partial platform, participate in an existing platform or not participate by not fitting in with our purpose, is an exercise of great value for companies.

Furthermore, regardless of this decision, the exercise will have been worthwhile in terms of better understanding: the new economy, the behaviors and needs of users, the new rules of communication that evolves from “one to many” to “of many to many ”, the network effect and its consequences.

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Analyzing the different sectors, it can be seen that this disruption can occur due to the evolution of the platform of its entire value chain or business lines, of a set of them, and even to become a node of an already created or newly created ecosystem.

In any case, to make this decision some reflections are interesting :

* Does it fit in with the business?

* Is a product-based business sustainable in a connected world?

* Are we losing opportunities and competitiveness by not taking advantage of the “network effect”?

* How important is direct interaction with customers for the business?

* What alliances could be developed with third parties?

* Could you experiment with any line of business?

* Possibility of accessing new markets?

Another very relevant aspect is to understand that being a platform provider has, at least, two costs: the economic (percentage paid for the sale of services or products) and the information (the transaction data is managed by the platform).

On the other hand, platforms transform the organization of companies, since now the value is created by the user community. The model migrates from controlling internal resources and processes and raising competitive barriers to orchestrating external resources and obtaining the commitment and activity of a community.

From the client’s point of view, these ecosystems have many benefits such as diversity of offer, 24/7 service, experience or personalization.

We are experiencing a paradigm shift in the business world like never before in our history, and possibly today it has become an imperative for all companies to understand how it affects them and how they can take advantage of them to gain competitiveness and be more relevant. in the market.

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Therefore, if you have not thought of your business as a platform…. You should.

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