How Platforms Became The Norm In Digital—And Why You Need A Platform Strategy
7 in 10 companies are now platforms. Why? Read the article and find out how platforms became so imperative for companies to thrive in the digital landscape.
In today’s rapidly evolving business landscape, platforms have emerged as the cornerstone of digital success. From Uber revolutionizing transportation to Airbnb transforming hospitality, platforms have become the standard for businesses seeking growth and expansion.
In this article, we delve into the world of platform strategies, exploring what they are, why they’re essential, and how they’ve reshaped industries. Join us on a journey to discover why you need your own platform strategy and how it can catapult your business to new heights.
What is a Platform Strategy?
A platform strategy isn’t just a concept—it’s a transformative approach that empowers companies to create thriving ecosystems. At its core, a platform is a digital infrastructure that connects various users, enabling interactions, transactions, and value creation.
Whether it’s an online marketplace or a social network, platforms provide a fertile ground for innovation, collaboration, and expansion. Importantly, platforms aren’t limited to customer-facing applications; they can also revolutionize internal operations, fostering seamless communication and efficiency across departments.
Platforms offer an array of benefits for companies looking to scale their operations:
Platforms enable businesses to reach new markets, audiences, and partners, facilitating exponential growth.
By connecting diverse stakeholders, platforms encourage collaborative problem-solving and innovation.
Platforms provide avenues for creating new revenue streams through transactions, subscriptions, and partnerships.
Customer interactions are enriched on platforms, leading to increased loyalty and satisfaction.
Internally, platforms optimize processes, reducing silos and enhancing communication.
7 in 10 Companies are Now Platforms: Why?
The platform business model has surged in popularity, with a staggering 70% of companies adopting platform strategies. This rapid adoption can be attributed to several compelling factors that highlight the versatility and effectiveness of the platform approach. Understanding these underlying reasons sheds light on why the platform model has become a dominant force in shaping the digital business landscape.
The Self-Service Trend: Transforming User Engagement
One driving force behind the prevalence of platform strategies is the self-service trend. In today’s digital age, users increasingly value autonomy and convenience.
Platforms empower users to take control of their experiences by putting them in the driver’s seat, offering them the ability to access services, products, and information on their terms. This user-centric approach enhances engagement and satisfaction, as individuals can seamlessly access what they need, when they need it.
Uber, for example, revolutionized transportation by offering a platform that allows riders to request rides, find drivers, and track their journeys in real-time. The self-service nature of the platform aligns with modern consumer preferences for convenience and control.
Dematerialization: Embracing the Digital Age
The platform model aligns with the ongoing shift from physical to digital experiences, known as dematerialization. This trend acknowledges that many traditional products and services can be digitized and delivered online.
Platforms capitalize on this shift by offering digital solutions that cater to diverse needs, reducing the need for physical resources and intermediaries. As a result, users can access a wide range of services without the limitations of geographical boundaries or physical constraints.
The rise of platforms like Netflix and Kindle Unlimited perfectly illustrates this dematerialization. These platforms provide users with digital access to a vast library of movies, TV shows, books, and more, eliminating the need for physical copies and enabling instant gratification.
Harnessing Network Effects: Catalyzing Growth
Another driving factor behind the prevalence of platforms is their ability to leverage network effects. Network effects occur when the value of a platform increases as more users join, creating a positive feedback loop.
As platforms attract more participants, they become more attractive to both users and producers, leading to exponential growth. This phenomenon underpins the success of platforms like social media networks, where more users mean more interactions, content, and value for everyone involved.
Facebook’s network effects demonstrate how users attract more users. As more people join the platform, the value of connecting with friends, sharing content, and accessing information increases, encouraging further adoption.
The Ubiquity of Platforms
The prevalence of platforms in the business landscape can be attributed to their innate ability to meet user demands for convenience, digitization, and value creation. By catering to these core needs, platforms offer a powerful framework for businesses to expand their reach, enhance user engagement, and drive transformative growth.
In our e-book “Platform-as-a-Product: The How-To Guide To a Platform Vision”, we trace the rise of platforms in the digital landscape and present the essential elements for incorporating a platform vision within your company. Click on the image to download.
The Benefits of a Platform Strategy
Here are just a few of the benefits that a platform business model can offer companies:
- Ecosystem Expansion
- Collaborative Innovation
- Diverse Monetization Avenues
- Enhanced Customer Engagement
- Streamlined Internal Operations
For a deeper exploration of these benefits, check out our comprehensive e-book “Platform-as-a-Product: The How-To Guide To a Platform Vision”.
Are platforms only a B2C business model?
The remarkable success of platforms in the consumer realm has prompted a natural question: Are platforms limited to the B2C domain? The answer is a resounding: no.
While platforms have made a profound impact on B2C industries, their transformative potential extends far beyond customer-facing applications. In fact, the platform business model has demonstrated its adaptability and effectiveness across both B2C and B2B sectors, underscoring its versatility in reshaping diverse industries.
B2C Platforms: Triumphs and Transformations
B2C platforms have captured the spotlight with their ability to reshape traditional business models and industries. Amazon, for instance, has revolutionized retail by creating an expansive online marketplace that connects millions of sellers with an ever-growing customer base. This platform not only offers unparalleled product variety but also streamlines the shopping experience, from product discovery to checkout and delivery.
Similarly, ride-sharing services like Uber and Lyft have disrupted the transportation sector, enabling individuals to seamlessly connect with drivers, transforming the way we commute.
However, the impact of platforms isn’t confined to the realm of products and services aimed directly at consumers. Rather, the platform revolution is permeating the intricate landscape of B2B interactions as well.
B2B Platforms: Driving Efficiency and Collaboration
In the B2B sphere, platforms have proven to be a game-changer by facilitating efficient collaboration, enhancing communication, and driving value creation. Salesforce, a pioneer in B2B platforms, revolutionized customer relationship management (CRM) by providing a unified platform that empowers sales teams to manage leads, opportunities, and customer interactions seamlessly.
This platform approach eliminates data silos, fosters cross-departmental collaboration, and ultimately enhances customer engagement. Beyond CRM, B2B platforms have expanded into various domains.
The advent of cloud computing platforms like Amazon Web Services (AWS) and Microsoft Azure has transformed how businesses access and deploy technology resources, shifting from traditional infrastructure investments to flexible and scalable cloud-based solutions. These platforms offer a range of services, from computing power to data storage and analytics, catering to diverse business needs.
Embracing the Platform Revolution: A Holistic Approach
Platforms have proven their worth in reshaping both B2C and B2B industries, driving efficiency, collaboration, and value creation. As businesses continue to evolve, the platform business model offers a holistic approach that bridges the gap between customer-centric applications and complex B2B interactions.
By understanding the flexibility of platforms, organizations can unlock new avenues of growth, streamline operations, and stay ahead in today’s dynamic business landscape.
4 Successful Cases of a Platform-Based Transformation
1. Airbnb: Disrupting Hospitality & Redefining Travel
Airbnb pioneered a transformation that turned everyday people into hosts and travelers into explorers. By embracing the platform model, Airbnb transformed underutilized homes and rooms into desirable accommodations.
This democratized hospitality enables individuals to share their spaces while offering travelers unique and personalized stays. The platform’s seamless booking process, user reviews, and host profiles fostered trust and authenticity, revolutionizing the way people experience travel.
Airbnb’s platform-based model thrived due to its ability to connect demand with a previously untapped supply of accommodations. Traditional hotels couldn’t match the diverse range of lodging options offered.
The platform’s community-driven approach and commitment to creating memorable experiences differentiated it from conventional hospitality options, making it a preferred choice for travelers seeking unique stays.
2. Spotify: Rewriting the Music Industry Playbook
Spotify disrupted the music industry by replacing ownership with accessibility. Through the platform model, Spotify dematerialized music, offering users an extensive library of songs on demand.
The platform’s personalized playlists, discovery algorithms, and user-generated playlists transformed music consumption into a social and dynamic experience.
Spotify’s platform flourished because it addressed music lovers’ desire for convenience and variety. The platform’s ability to provide a vast catalog of songs without the need for physical storage or purchases resonated with users.
The freemium model, coupled with premium features, gave users the flexibility to choose their level of engagement, making it a win-win for listeners and artists.
3. Adobe: Empowering Creativity With the Cloud
Adobe transitioned from selling boxed software to offering creative tools as a service through Adobe Creative Cloud. By adopting the platform model, Adobe democratized access to powerful design tools. This shift empowered creative professionals and enthusiasts to collaborate, innovate, and create across a unified platform.
Adobe’s platform-based transformation succeeded by addressing the modern need for continuous updates and collaboration. By shifting to a subscription-based model, Adobe ensured users had access to the latest features and tools, removing barriers to innovation.
The platform’s cloud storage, seamless sharing, and collaborative features enhanced user engagement and productivity, making it an invaluable resource for creatives.
4. Amazon: From E-Commerce to Ecosystem
Amazon’s journey from an online bookstore to an expansive e-commerce ecosystem demonstrates the power of platform-based transformation.
By embracing the platform model, Amazon welcomed third-party sellers, expanding its offerings to encompass a wide range of products. The platform’s efficient logistics, personalized recommendations, and customer-centric approach redefined online shopping.
Amazon’s platform-based model thrived because it addressed consumers’ evolving shopping habits. The platform’s vast product selection, competitive pricing, and streamlined delivery processes catered to a diverse array of customer needs.
The inclusion of third-party sellers enriched the platform’s offerings, attracting businesses seeking a broad customer base. Amazon’s customer-focused approach and seamless user experience solidified its position as the dominant e-commerce platform.
Build a Platform Vision With the Platform-as-a-Service Approach
The path to success in today’s digital landscape is paved with platforms. To harness the transformative power of platforms, many companies are choosing to adopt the Platform-as-a-Service (PaaS) approach.
This method can help guide you in crafting a visionary platform strategy that aligns with your business goals and propel your organization’s growth potential. If you’re still not sold on the platform vision, we’ve recently released an e-book that goes in-depth into how a company can begin this transformation.
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