The ecosystem platform as business model

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The power of data driven business architectures

Over the past generations, technology has gained greater importance in driving the success of organizations. In this, business architectures have evolved to support the leverage information technology can bring to optimize operations. Automation brought efficiency in back office processes, as well as enabling to scale individual business initiatives to expand into global business models while maintaining control.

Through the connective nature of the internet, access to globally shared data is made possible and has fast forwarded the business community. A new ecosystem of relationships with customers, suppliers and other groups could be created directly; while in operations, synergies across supply chains of different value chains could be leveraged.

As organizations sought to align their customer journeys, processes and automation, compatible data was the element which made this collaboration possible. The idea of the digital platform as business model for innovation was born.

In the most recent CxO study conducted by IBM’s Institute of Business Value, 28% of CxO’s are already either already operating – or actively building platform business models.

IBM Institute of Business Value, Global C-suite study, 2018, 19th Edition Incumbents Strike Back

Platforms are the digitized DNA of a company

So what is a platform to the business? The platform is the digitized footprint of what the company is all about. It provides an environment which anchors the core of what the business is all about in a digital footprint. What differentiates the organization from other companies in the market? What are the unshakeable beliefs on what it should do and not do? The company’s body of knowledge is warranted through procedures and increasingly through rules of automation on the platform. The organization’s heritage of data is curated for use by relevant partners in the ecosystem, updated and maintained to remain relevant.

What are the benefits?

With fast paced changes in the business environment, companies are struggling to keep up and even be on top of trends around them. Many companies lost touch with what is happening outside their company and appear as victims rather than as victors of industry movements. They are desperately trying to catch up reactively, instead of being able to use their capabilities to use the trends for their advantage.  The platform enables a business to keep up with information on changes in the ecosystem, automate measurements and reactions 24/07, freeing energy of their corporate talent to think forward towards leveraging new developments. This can be to set and test the viability of a new, related business on the side. Nike uses their Nike+ platform to both provide a service to sporters and at the same time uses the data collected in this way as a source of insights for developing innovative products.

The NikePlus app provides health and training services to consumers on a digital platform. It also serves as a rich source of data to help innovate products.

As with trends in the market, the platform allows to absorb and integrate new technological applications on a compatible foundation. This can be custom made apps to increase the level of automation of the organization’s own business functions. It also readies the company to employ new exponential technologies into their business operations, such as mobile, AI, blockchain, the Internet of Things and robotics.

Source: Parker, Geoffrey, Marshall van Alstyne and Sageet Paul Chaudary “Here’s How Nike Became a Platform Business” Fortune April 14th, 2016

Maersk, in a Joint Venture with IBM, develops a new global platform for trade finance

Maersk, a global leader in container logistics, and IBM, a leading provider of blockchain, will use the latest technologies to help companies move and track goods digitally across international borders. They will establish a joint venture to provide more efficient and secure methods of conducting global trade using blockchain technology. The aim is to offer a jointly developed global trade digitization platform built on open standards and designed for use by the entire global shipping ecosystem.

Source: IBM and Maersk Are Creating a New Blockchain Company, Fortune January 2018

 Four success factors for establishing a digital platform for your company

1. Develop an architecture which allows for security, integrity and agility.
   Organizations need to create a clear migration plan which reflects company operations and leaves enough freedom to allow scaling and ongoing adaptability to changing conditions; as well as securing safe and functional inclusion of new users

2. Curate proprietary data actively.
   This is a necessary component of a functional platform. Only aligned data will be able to fuel a better and automated organization, as well as the generation of insights and innovation regarding scaling of external data sourcing.

3. Secure your data, processes and rules end-to end.
   Trust in the platform will be essential for its functioning and eventual success. Data security is essential to protect the differentiation of the platform business model, ecosystem partner relationships, proprietary processes and algorithms, along with the unique knowledge of people.

4. And last but not lease, proactively create buy-in from the ecosystem partners.
   This is a key step to assure success in the transformation process. Communicating your vision and the value of the changes, as well as societal and community implications is crucial. Engage with ecosystem partners and co-create benefits that will pull in participants and keep them committed to the common goal and way of working. By creating a feedback loop, the platform will constantly improve its own features and increase participation benefits of participants.