Platform-driven business models have upended the way global commerce is conducted and are more vital than ever for organisations large and small in an increasingly interconnected world where vast amounts of data is produced and acted on daily.
Every organisation serious about reaching a wider audience, from the largest enterprise to a business with five employees, needs to operate within a platform model, or at least understand how platform ecosystems work so they can differentiate themselves from their competition.
Platforms connect two or more mutually independent groups, allowing them to interact, which facilitates the exchange of value. A platform doesn’t create or own its own inventory per se, but is merely an interface that brings parties together, so Uber drivers connect with their passengers or retailers interact with their customers.
Unlike traditional linear businesses, in which value only flows in one direction down a supply chain to an end customer or end user, in a platform model, the supply chain is no longer the central aggregator of business value. In a traditional model, once a business gained a new customer they had exactly that – one new customer – whereas with a platform model, that new customer can potentially interact with every other user on the platform.
This has completely revolutionised the way global business is conducted, and for anyone still in any doubt as to the impact of platform-driven business models, look no further than the largest companies by market cap in the world such as Apple, Amazon, Facebook and Alphabet, all of which are some form of platform organisation. Amazon, for example, has become the world’s largest marketplace for bringing sellers and buyers together through its platform.
Platform-business models have allowed companies to grow at a rate unprecedented in history and most organisations now appreciate the urgency of the need to transform themselves. Additionally, as platforms grow exponentially, they are far more cost-effective than other business models that still rely on interaction on a one-on-one basis.
Much of the impetus for the technology has been fuelled by the pandemic, which has forced organisations to digitise at a far more rapid rate than they otherwise might have to keep up with ceaseless customer demand for the most seamless and compelling digital services.
A big, technology-driven future
Platforms are the lynchpin of today’s modern business ecosystems, and they are already superseding the conventional concept of industries because the focus has shifted from organisations with their products and services to the customer journey or experience.
At the same time, the effects of platform transformation through artificial intelligence and other advanced machine learning technologies can already be seen in smarter warehouses, supply chains and delivery drones, for example.
Businesses need to be platform-enabled now and this will become even more imperative going forward as the rapidly changing e-commerce landscape becomes increasingly sophisticated and interactive. Being platform-ready may entail designing, developing, integrating, testing, and commercialising software and business services at a rapid rate to stay up-to-date, but it will be money well invested.
In the end, rapid transformation may be what is required to shift from a linear business model but the future has definitely arrived for organisations that are already platform-enabled.
To explore how your business could benefit from the platform-driven business model, call your local FinXL office today.