Platform Value

Whereas traditional business has been done by one company selling products and services to a customer, the platform changes the traditional dynamics of doing business. Platforms uncover new sources of supply and demand and create network effects. This empowers exponential numbers of buyers and sellers to engage through the platform. The more users on the platform, the more powerful and valuable it becomes. There are many manifestations of the platform business model, but essentially it presents new possibilities to create business value and competitive advantage. My name is Rob Llewellyn and as you know, companies need people with the right capabilities to manage and lead transformation. As you know, orchestrating successful transformation isn't that easy and I mean innovative transformation which creates a new future without the constraints of the past. Which is why I hope that what I share in this episode will help you get better equipped to perform at your best as a manager, leader or consultant. If you want to learn more, go.

To studythrive.com Platform value offers companies the opportunity to leverage a relatively new type of value and really disrupt market dynamics. Platforms have disrupted numerous brick and mortar companies and are plowing their way through many, many industries. Most incumbents are completely unaware of what these disruptive platforms might look like. The big question is, will your company be the disruptor or is an existing or new competitor going to disrupt your market by offering platform value before you do? Whereas traditional business has been done by one company selling products and services to a customer, the platform changes these fundamental peer to peer dynamics of doing business. Platforms uncover new sources of supply and demand and create network effects. This empowers exponential numbers of buyers and sellers to engage through the platform. The more users on the platform, the more powerful and valuable it becomes. There are many manifestations of the platform business model, but essentially it presents new possibilities to create business value and competitive advantage, with some obvious examples being Uber, Facebook, Amazon and Airbnb. There are transaction platforms. These facilitate transactions between different types of individuals and organizations such as Uber and PayPal. There are innovation platforms which consist of technological building blocks that are used as a foundation, on top of which large numbers of innovators can develop complementary products and services such as SAP and Salesforce. Then there are integrated platforms which are a combination of transaction and innovation platforms such as Alibaba and Google. And finally there are investment platforms where companies have developed a platform portfolio such as Naspers and Priceline. The unique aspect of the platform model is that you don't need to be the buyer or the seller. Look at Uber as a company. They own no cars, employ no drivers and take no rides, but they facilitate the engagement between cars, drivers and passengers and make money from that. Most traditional companies are thinking I how can we sell? Whereas platform innovators are also thinking, how can we connect buyers and sellers? This mindset is what separates digital economy thinkers from traditional business thinkers. It's important to understand that the value of a platform lies not in the technology, but in the extent of activity between the platform users. While we all know about some of these platforms, it will be a challenge for many incumbent organizations to consider how how they could possibly make money from a platform model that doesn't involve them selling their products or services to customers. To create a platform model business, a company needs to provide the foundation or platform and tools upon which others can build and add value. Until that value begins to grow, the platform itself has no value. For example, without drivers and passengers, the Uber platform has no value. And without people wanting a place to sleep and people with beds to rent, Airbnb's platform would have no value. When considering the platform model, you need to answer three fundamental questions. What will the platform supply? Who can provide the supplies? And who will need those supplies? Then you need to consider how can you make money from that? For example, Uber divides the fare of a ride by paying approximately 80% to the driver and keeps 20% for itself. What's important in Uber's platform business model is its value propositions to both of its user types, which are the customers, that is the passengers and the suppliers, the drivers. For customers, there is no need to wait for a taxi for long times. They can conveniently book a ride using mobile devices. They enjoy free rides on certain occasions and discounts from time to time. Prices are lower than normal taxi fares, and there are fixed prices for common places like airports. For drivers, well, they enjoy an additional source of income. They have flexible working schedules and can work part time or simply whenever they feel like a digital payment process is provided for them. And people who love driving can earn money while pursuing their hobby. Uber pays drivers to be online even if they don't get any requests. Of course, after establishing your platform business model, you need to consider the technology that underpins it. This requires smooth interoperability between core functionalities, which collectively make the experience between buyers and sellers possible. Key components include a customer app, a supplier app, a platform dashboard, and the ability to use data to perform smart tasks such as surge pricing, which Uber uses. The platform business model represents some of the most outstanding players in the digital economy, along with many we don't yet know about. It's one of the most fundamental shifts a company can make in the digital economy. But adopting the model also calls for a fundamental shift in business thinking.

If you want to take your transformation capabilities and and credentials to the next level, go to studythrive.com.