The journey to becoming a Platform
Bill Murray, Senior Researcher & Adviser at Leading Edge Forum, outlines the concept of the platform organisation and offers practical advice that will help companies to start navigating the transformation journey.
Giant platform organizations increasingly own the digital infrastructure on which everyone else trades. The digital Titans – Amazon, Google and Facebook in the West and Alibaba, Tencent and Baidu in the East – publicly state that they want to take a cut of all our digital commerce.
Increasingly, CEOs fear the day when one of them enters their market. At LEF we believe it is possible for traditional organisations to survive, even thrive, by liberating platforms from within themselves. A traditional organisation, which produces a product or service can become a Platform Organisation that facilitates exchanges between producers, even its previous competitors, and consumers – it has swapped the means of production for the means of connection.
Many platform organisations are now more valuable and durable than traditional companies. Consequently, firms and government agencies now investigate them in their annual strategy processes and innovation groups. So how do you make that journey from traditional ‘brownfield’ organisation to one that can really benefit from the opportunity of being platform-centric? There are three phases to the journey: Design, Launch and Grow. So, let’s outline these:
Designing the platform
For traditional companies, the search for a platform business model starts outside in
an emerging ecosystem, but should also relate to the value created in the existing business model, otherwise the organisation loses the potential competitive advantage of its relationships, intellectual property, products, services, domain knowledge, scale, data, etc. The task is to explore the ecosystem and its participants, preferably by developing a Wardley Map, where the ultimate customer need serves as an anchor. Increasingly, that need is an experience, rather than a product or a service, which requires the platform to orchestrate many more partners than a traditional organisation.
Launching the platform
The next step is to work up the best opportunity into a value proposition and Market-Shaping Strategy (MSS) with relevant market participants. A Market-Shaping Strategy redefines competition in the ecosystem through Gameplay, increasingly using nudge economics. At this point there are five typical options for building a platform organisation. In the first three, you own all or part of a Minimum Viable Platform (MVPl).
- Design and build an MVPl with a few strategic capabilities and core domain knowledge from the existing organisation, and then motivate existing producers and citizens/customers to migrate.
- Enter an ecosystem, discover the most promising propositions and their supporting business model – perhaps by building an MVPl – then exit and build your own platform.
- Take a share in or buy someone else’s MVPl (in your core or a peripheral market) and help it scale.
- Join the ecosystem of an existing platform and work with that platform to become one of its most influential producers.
- Join the ecosystem of an existing platform and do enough to remain on the platform’s panel of producers.
Growing the platform
A transformation from traditional to platform model is a broad, deep change. You will have to think ecosystem-in, not inside-out. You will have to decide which parts of the ecosystem to own and which to control, and which to influence. You will have to co-create a market-shaping strategy or enhance someone else’s. You will have to change historical patterns of capital allocation, and take brutal decisions about what to make, what to buy and where to partner. You may even have to eat your own revenue.
Making the change to a platform business needs the patience for emergent strategy, the creativity for iterative design and the skills for agile execution. Above all, it needs the dedicated application of data-driven insights to help develop other ecosystem players and so to retain them. Successful platforms industrialize learning.
You can get much more advice on becoming a platform organisation, from the four-part Leading Edge Forum report “Liberating Platform Organisations” by Bill Murray.