Why Companies And Countries Need To Embrace Platforms

Why Companies And Countries Need To Embrace Platforms

Seven of the 10 most valuable companies globally are now based on a platform business model: the creation of digital communities and marketplaces that allow different groups to interact and transact. Companies like Apple, Google, Amazon and Alibaba have used the model to grow exponentially and grab significant market share from established firms.

Platforms represent a big change in the way industries have traditionally been organized. And first mover advantage is important in an environment where the winner often takes all.

But all is not lost. Experts say established companies have the chance to create platforms of their own or, at the very least, to become part of another platform’s ecosystem.

While many established firms believe that platform models are only relevant in a business to consumer (B2C) context, it is the business to business (B2B) world that is currently seeing the most activity,” says Launchworks’ Laure Claire Reillier, a former senior executive at eBay Europe who has worked for a number of high-growth startups and established tech firms. She cites as examples recent B2B platform developments in many verticals (Siemens’ EasySpareParts marketplace), boutique law firm services (Lexoo), and office supplies for businesses (Amazon Business marketplace)..

Reillier sees B2B and B2C platforms emerging in many sectors including retail, education, healthcare, transport, agritech, fintech and real estate.

Business author Choudary, a World Economic Forum Young Global Leader and publisher of a blog called From Pipes to Platforms, believes platform business models will also be adopted in logistics, manufacturing and industries that rely on heavy engineering. “Blockchain and digital ledger-based initiatives will be an important starting point to creating interoperability in traditional industries and, over the coming years, we will see new platforms coming up around these initiatives,” he says in a blog posting.

He makes a case for why not only companies but countries need to pay attention to platform models.

The platform economy is reshaping global trade, he says. Global small and medium-sized business trade is on the rise, driven by the growth of platforms such as Alibaba, which allow much smaller enterprises to participate in global trade, without the need to invest in their own supply chains. As these platforms scale, control over trade could shift from countries to these digital platforms. In a world dominated by platform companies that offer ways for customers and companies to connect, countries that want to act as global trade hubs must think like a platform nation, Choudary said during a presentation at the Platform Economy Summit in Berlin.