Platform approach for Digital business has passed the tipping point.
Some stats that will blow your mind:
- The revenue of the top 100 platform companies grew by 64% between 2014 and 2019. (Accenture)
- The platform economy is expected to grow from $4.9 trillion in 2019 to $15.6 trillion in 2030, representing a CAGR of 12.4%. (Business Insider Intelligence)
- Platform companies account for more than 40% of the world’s total market capitalization. (McKinsey)
Incredible, isn’t it?
But it’s not until you realize how systematically you adopt Platform Thinking in your vocabulary & thinking for solution architecture for digital transformation!
As a starter, you should look at the following 4 things in your solution architecture & design thinking for your customer (whatever industry your customer is in):
#1 – What could be a Platform proposition for the customer
This is the most important question we can ask!
What is the core value proposition of the business of your customer? What is the primary problem that the business solves for its customers, and how does it do so?
Are there supply-side & demand-side patterns in what the customer does? Is there an opportunity to scale the demand side? This is typically the customer channels. Or the supply side? typically the supply partners.
A great example of supply-side (SSP) and demand-side consolidation (DSP) is how the Advertising industry operates.
Like Uber, Zomato many consumer-centric companies consolidate demand-side (DSP) as a revenue generator, uses supply-side inventories to cater to the demand.
Tips: Like a Fintech, you need to think if there is a possibility to create a new offering for the demand side with available partner offerings or partner channels as inventory on the supply side!
#2 – How to multiply the scale of the operation through platform
Look at the value chain of the enterprise and the connected ecosystem with partners – supply chain partners & distribution partners. Do you recommend any positive change in the current configuration of supply and value creation?
The promise of the platform is scale.
If the scale of operation is increased, what increases? The number of resources or contracted relationships supporting the operation can never scale.
Instead, see if the scale of operation can be increased by automation.
If the platform components can scale without manual intervention, the operation can be scaled extremely profitably (non-linear profitability) and provide cost advantage and value differential.
For an Insurance provider, automated claims adjudication through rules, visual analysis, the value of claim, and fraudulent behavior checks help in scaling the claims operation without increasing workforce.
Another aspect of this scaling – typically for multi-sided platforms – is that opportunity of this scale is created by increasing the network effect from the participants.
When you do design thinking of participant interactions on the platform see how can you think of multiplying the participant interaction (within a journey) on the platform.
The automation & network effect multiplies the scale profitably. Just imagine if this makes a 5X, 10X impact – other players in the industry will be out of the game (if they are also not playing the platform game).
#3 – Platform approach to generate & monetize data
One of the characteristics of Platform companies is their affinity to data. They may not own taxis (Uber), hotel rooms (Air B&B), and media/news (Facebook) but they must own data. They must generate, enrich, and join diverse sets of data.
And platform companies eventually monetize data by orchestrating journeys, offering products, predicting behavior, and inserting offers in a predicted journey of customers (a.k.a. platform participants).
In other words, Platform companies are data companies.
So if you want to bring in platform thinking in your solution architecture, see the whole value of data – where data is generated to where data is used or monetized.
There is another interesting aspect of data of platform companies –
Facebook captures 272,000 attributes of a user!
LinkedIn captures several thousands of attributes!
It is not just the platforms, it is data generated by the platform.
It’s also not the data generated by the platform, it’s also about the sheer magnitude of the attributes of data managed by the platform. And eventually, monetized by the platform!
For multi-sided platforms, data attributes are used in matching demand and supplies – known as “matchmaking” in the Platform economy.
Can you create a solution blueprint that captures the generation of data with as many attributes in your solution ecosystem?
How do you model your domain entities? How many attributes can you map?
Is there any opportunity to directly monetize the data through matchmaking, or personalization?
Can the enterprise help partners in matchmaking and provide matchmaking as a service to upstream and downstream partners?
(Btw, all aggregator platforms are matchmakers)
#4 – Platform approach for omni-channel customer’s journey
Even though customer journeys start with few simple touch points in the beginning (in MVP), the customer journeys of consumer-oriented businesses quickly transform into complex journey maps.
If you have done journey mapping for multi-device, multi-channel journeys, you know there are a large number of separate touch points.
If you have event storming or have done design thinking of customer journeys, you know there are hundreds & thousands of events generated from these journeys in every hour of the day.
It is important to capture these events, store them, sequence them, analyze them, aggregate them to personalize messaging for the customers.
This must happen at the scale of the business, in clockwork precision, hour after hour after hour. This is the customer data platform, event sourcing platform, personalization engine – whatever you call it.
A platform serves as an integration layer that connects multiple touch points with the user.
For B2C companies, this is the most important “platform” that an organization should pursue. In your influence to help the customer, you should seek to create this platform.
There might be pieces of this platform already there, as an architect – you should help to assemble the pieces to bring this platform operation to life.
If you happen to prioritise your platform thinking constructs, this will be the single most important platform. It has immediate outcome for customer experience, business growth and generate more data opportunities for monetization.
What Next…
My guess?
Platforms are becoming so important that eventually all high-growth profitable companies are going to innovate, scale & compete using the power of platforms.
Platform is the growth hacking of the tech companies.
What do you think? Do you agree? Disagree?
Let me know in response!