Is your company ready for the digital transition?
Platform companies can emerge quickly in broken markets. Success requires third-party value, in-house IT control, and understanding platform economics — ask yourself if platforms could disrupt your industry.
Platform business models are not a tech upgrade—they are existential threats that can dismantle industry giants overnight, leaving behind only those bold enough to reinvent their value creation from the ground up.
Companies like Amazon.com, Apple, Facebook and Google have grown extremely fast over the last 15 years. These platform companies often have few assets of their own. At the same time, a number of them is extremely profitable.
Key takeaways
- Leaders must recognize that platform business models can rapidly disrupt broken markets, so you need to scan your industry for inefficiencies before a competitor does.
- You cannot build a successful platform incrementally; your team must thoroughly design the earning model and commit to a full launch, rather than a tentative step-by-step approach.
- Always keep your critical IT architecture in-house and selectively open it to third parties, ensuring your company retains control while enabling others to add value on your platform.
Recently I took a deep dive in how platform companies actually work. In June I went back to school and participated in a training course in Boston that MIT Sloan organized around Platform companies.
Platform pitfalls
We must be careful not to glorify platform companies. There are a lot of platforms that completely fail. What are the main pitfalls?
Because the technology turned out to be too complicated.
Another reason is that the upfront investments are very high. You have to think through the entire earning model in advance. You cannot build a platform step by step. You go live; or not.
Finally, there are various platforms that performed well from the start, but which we now hardly see today anymore. Groupon.com for example. Very popular in the beginning. But who still uses it?
Keys to platform success
Hereunder follows a summary of some important take aways. And how companies can achieve more success.
Platform business models can emerge very quickly in broken markets. Markets that do not function well. Take the taxi market, which was quickly captured by Uber and Lyft.
Platform business models can emerge very quickly in broken markets.
In order to function, a platform needs on a third party that adds value. For example, think of amazon.com. They started out as an online store. Now it is more and more a platform in which other companies can run their own stores.
Always keep your critical IT architecture in-house. Make it available to third parties, but always ensure that your IT structure does not become too open.
Customer reviews are usually worthless. They often follow the pattern of a few low scores, then a middle area with only a few scores. To end with many five star scores. On Airbnb.com, for example, 97% of the accommodations end with a five score at this moment. Most of them are heavily manipulated.
Your digital strategy questions
Finally: a few questions that you must ask yourself when you decide on your digital strategy.
Are there platforms with potential that we can join?
Do we have ideas how we could create a platform ourselves?
Do we have enough financial resources to launch a platform? Or do we need to organize extra financing?
On September 19 from 9:00 AM to 9:30 PM Dutch time we will organize a Dutch session about the lessons of the platform economy. Then we will discuss this in more detail. This webinar is also recorded, so that you can listen to it later.
Over to you.