Technology has revolutionized the go to market strategy of modern businesses. According to a recent Accenture report, “While it used to take Fortune 500 companies an average of 20 years to reach a billion-dollar valuation, today’s digital start-ups can get there in four years. Digital platforms are largely responsible for this shift.”
Large organizations have observed for several years helpless the fantastic growth of native digital giants (GAFA) and unicorns who have built their business model on a technology platform. They have now all understood the power of such as model and started to build their own Digital Platform that will become their new business model and accelerate the reach of new markets.
Before giving a definition to what is a Digital Platform, let’s take a few examples:
- Google search engine: “advertising” business model.
- Social platforms: Facebook, Twitter, Instagram, LinkedIn – “advertising” business model.
- Knowlegde platforms aka forums such as StackOverflow – “advertising” business model.
- Application stores: Apple/Google Play – “digital good” business model.
- Market places: Amazon market place, shopping engines: “ecommerce” business model.
- Media platforms: Spotify, Deezer – “subscription” business model.
- Affiliate platforms: Commision Junction … – “earn as you perform” business model.
- Crowd-sourcing platforms: Uber, BlablaCar, AirBnB – “pay as you go” business model
- Repository platforms: GitHub – “freemium” business model: you pay only if you don’t want to share your code with the community.
- Infrastructure platforms (IaaS): AWS, Azure – “pay as you go” business model
- Classifieds platforms: real estate … – “advertising” business model
How would you define a Digital Platform?
There are many definitions on the Web, either too complex or too simplistic, so let’s define a Digital Platform with its key attributes.
#1 It is a technology-enabled business model.
#2 It facilitates exchanges between multiple groups – for example end users and producers – who don’t necessarily know each other.
#3 It offers a value that is proportional to the size of the community. There are network effects. A Digital Platform is worth nothing without its community.
#4 It is a trust enabler : it must generate trust with clear general terms and conditions regarding the intellectual property and data ownership. It also helps consumers and providers to trust each other within the network thanks to scoring mechanisms.
#5 It has open connectivity : it shares data with 3rd party developers to create new services and extend the ecosystem. This is done with APIs and participates to the API economy.
#6 It can scale massively to address millions of consumers without performance degradation.
#7 It offers compelling user experience: easy to use, no trainig needs, self-service.
#8 It has innovative business models based on the immediate value.
What are the benefits of a Digital Platform?
- Generate revenue
- Reduce costs
- Foster collaboration and innovation for new products and services
- Gain speed to put products on the targeted markets.
What is the size of this market?
According to Accenture, the platform’s market total value is $4,3 trillion. This pays for 1,3 million direct employees and several millions indirectly employeed at partner companies that service or complement platforms.