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Platform Strategy

Considering a platform strategy? The time to move is now


Platforms have disrupted industries and made companies like Uber and Airbnb household names. As the concept becomes more entrenched, traditional companies and everyday businesses are looking to capitalize on a platform strategy to innovate new products and services and stay abreast of tough competition.

A digital platform is an environment that connects different groups, allowing participants to benefit from the presence of others. Accenture called digital platforms the “most profound and global macroeconomic change since the industrial revolution.” Half of companies surveyed by Accenture defined platforms as central to their business strategy, with 40% citing platforms as a critical enabler.

A panel of experts at the 2021 MIT Platform Strategy Summit provided perspective on how and when companies should embrace platforms and how to compete through business model innovation.

The bottom line: Whether motivated by fear of being left behind or thirst for new opportunities, the platform play is here to stay.

Platforms work for most businesses, and the time to move is now

The right time for businesses to start executing a platform strategy is now, especially since more nimble competitors are likely already doing so. “Organizations need to move now because if they’re not, their competitors will be,” said Marshall Van Alstyne, a Boston University professor and visiting scholar at the MIT Initiative on the Digital Economy. “Someone is going to be coming up behind you, and you have to run really, really hard in order to stay ahead of the pack.”

Platforms aren’t just for upstarts or emerging industries — the concept has merit for traditional industries where data, artificial intelligence, and machine learning can drive change. In fact, any problem that is data-centric and can benefit from collaboration is a candidate, noted Bruno Zerbib, executive vice president and chief platform and technology officer for Schneider Electric, which is tapping platforms to make energy delivery more automated and self-healing.

“Sustainability requires way more intelligence, analysis, more AI, and more value to be added on top of the things we’ve been doing,” Zerbib said. “That’s one of the big drivers motivating us to accelerate the migration towards the platform play. To make sure that we keep delivering that value.”

One hold out against platform transformation is government services, in part because of challenges related to data privacy and AI. “Government is so obsessed with ownership of the data set and the bureaucratic processes, they become unsuitable [for platforms] as a result of that,” said ThembaLihle Phillip Baloyi, founder and executive director of car insurance company Discovery Insure Ltd. “They are not sufficiently nimble.”

It is possible to compete with the platform giants

Given that platforms are dominated by tech giants like Apple, Google, Amazon, Facebook, and Microsoft, among others, it’s natural for the average company to question how they can possibly compete. Yet panel experts said industry domain expertise, strong relationships with customers, and a willingness to collaborate with partners provides an opening for companies that aren’t tech behemoths to succeed.

“Platform companies that were born on a platform can’t cover every industry at the same depth,” said Emma McGuigan, global lead of Intelligent Platform Service at Accenture. “Knowing your customer is your strength — pull on that with partners, and it will help drive the rotation into a platform company.”

Sticking to your knitting is one lever. Another is leveraging available technologies to architect the platform rather than starting from scratch. For example, building your own virtual agent requires investment in data scientists and researchers with natural language processing and modeling chops, but offerings like Microsoft Power Virtual Agent can get a company most of the way there.

“You can use a bot framework and cognitive services, from Microsoft or another party, and stitch it together,” noted Sophia Velastegui, chief technology officer for AI for Dynamics 365 Applications at Microsoft. “It strengthens your technology capability while going to market that much faster.”

Artificial intelligence, a pillar of any platform strategy, can also be fast tracked through available services and open application programming interfaces. Embracing tools and processes built around ML Ops, a set of machine learning practices, will help streamline management of AI solutions and accelerate platform success, Velastegui said.

Promote platform strategy and culture

Given that platform success hinges as much on culture as it does on engineering practices and technology, it’s important for organizations to secure both bottom-up support from the rank and file as well as commitment from top leadership. Pilot projects can be nurtured and tested at the grassroots level, but it really takes commitment from leadership to promote a platform vision, engage with the right partners, and garner buy-in across the enterprise.

“It’s about engaging culture and shifting behaviors to drive a very different way of operating — being data-driven,” said Accenture’s McGuigan. “That has to be done, sponsored, and directed top down.”

An agile approach keeps the CFO off your back

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Platform economics is one of the hardest problems to solve, given the huge lag time between investment in a platform and monetizing the initiative. It’s best to promote the platform within the context of a multi-use value proposition and embrace agile methods to deliver benefits as soon as possible. That means coming up with a minimally viable, or what Baloyi dubs a “minimally lovable,” platform that will engage customers and showcase long-term value.

“You need to have a long-term architectural view to understand your vision for the platform, but at the same time, be extremely agile and try to get value as quickly as possible,” said Schneider Electric’s Zerbib.

When shifting business models, it’s equally important not to kill your cash cow or main line of business and to think bigger than making the transition as a single company. Rather, it takes investment in true partnerships and ecosystems take to make a platform strategy reality, McGuigan said.

“Partnership is not about a supplier model where it’s this much money for this much pay or this much compute resources,” she said. “It’s thinking really differently about shared outcomes where everybody benefits.”

For more info Sara Brown Senior News Editor and Writer