A WORLD OF PLATFORM BUSINESS THREE BASIC ATTRIBUTES YOU NEED TO UNDERSTAND
Contents Abstract
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1. Digital platforms – the game changer
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2. From pipeline to platform
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3. Types of platform ecosystems
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4. Essential platform charasteristics
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4.1 Network effects
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4.2 Defensibility
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4.3 Viability
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5. Key take-aways
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Contact
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Copyright: 2019 diconium GmbH | RommelstraĂ&#x;e 11 | 70376 Stuttgart
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Abstract A couple of years ago, platform business models emerged as a hot topic across industries. Since the rise of tech companies such as Uber and Airbnb, or even more prominently Facebook, Amazon, Alibaba and alike, platforms are regarded as the central hub for services. Due to the combination of different trends based on the growing potential of technologies and changed customer expectations, a new opportunity to bind both users and partners to the company is created. But what lies behind the buzzword platform? And what makes them so successful and a threat to incumbents?
We also see many misconceptions about their definitions, characteristics, and abilities. With this paper, we want to give incumbents, intrapreneurs as well as entrepreneurs, and everyone interested in platforms a basic introduction. The paper reflects our experiences as strategic advisors and digital enthusiasts, the work and thoughts of some smart people in the global platform landscape like writers, founders, and fellow digital enthusiasts. If you have questions or would like to get in touch with us to exchange some thoughts and ideas, just contact one of the authors of this paper (find contact details on page 17).
During our work in the last years, we have experienced a growing interest of diverse clients in the potential of platforms as the new grail of business.
Have a good read!
Copyright: 2019 diconium GmbH | RommelstraĂ&#x;e 11 | 70376 Stuttgart
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and ways of approaching customers are developed.
Digital platforms replace the linear traditional value chain of companies by breaking industry silos and generating value for all platform players. Activities in the value chain change radically with the development of platforms by integrating and collaborating with producers, consumers, and innovators. This concerns traditional distribution, which is often partially or completely taken over by other platform participants as well as the area of interaction with the customer. Consequently, the trade of products and services gains importance and new forms of distribution
Example: As explained in detail by our collegue Alexander Käppler in the diconium whitepaper “Platform vs. Marketplace”, Amazon Prime as a gatekeeper enables the access to various services, such as Amazon Music, Amazon Go and Amazon Video for end users. At the same time, the rising demand for services leads to extension and improvement of the IT landscape, which favored the development of B2B business e.g. in the field of web services.
Amazon Alexa
Amazon Video
Amazon Music
– Fire-TV/ Fire-Stick
Amazon Payment Image Recognition Kindle and e-book
Amazon Go
Amazon Prime Prime Air
Amazon Wardrobe Amazon Logistic
Amazon Fresh Machine Learning API
Amazon Webservices
Gatekeeper
SelfPublishing
Linked Service Additional Service
Figure 2: Amazon Prime platform services. Read more about this in the diconium whitepaper „Platform vs. Marketplace” from our website (available in German only)
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3. Types of platform ecosystems offerings and consumers use those offerings. The key question when creating a platform (strategy) is what type of ecosystem fits the status of the company’s digital journey best. In today’s VUCA2 environment, there are no “one fits all” – or “ready to use” solutions. Typically, two archetypes of ecosystems can be distinguished:
Platforms are based on an ecosystem with a common structure, including four types of players: The owners of platforms take over control and govern transactions as well as relationships between the platform participants. Providers serve as the platforms’ interface with users, such as Android does for app users. Producers generate their
Centralized Platform
Adaptive Platform
Structure
Connects to platform participants, but they interact independently from each other
Connects to platform participants, but they interact independently from each other
Owner
Platform owners interact as brokers connecting the platform participants
Platform owners interact as orchestrators collaborating with platform participants
Platform Participants
Partners provide complementary products to the company‘s product portfolio, which are coordinated by the broker company
Partners are characterized by having different business models with unfamiliar offerings
Relationship
Attracting partners by traditional outreach methods, no close relationship
Reaching out for partners through platform attractiveness, relationship supportive
Value Creation
Value for the company is the main focus
Embracing all partners to create value by efficient use of different resources
Strategy Approach
Optimizing the established business
Creating a new business
Business Environment
Approach for incremental innovation, optimizing and exploiting existing business models
Approach for disruptive innovation in order to explore new business models
Example
Mastercard providing the infrastructure for banks and merchants that enables their customers to carry out transactions
Amazon connects retailers and buyers on one platform – by focusing on value creation for all participants they maintain strong customer relationships
Figure 3: Overview of platform ecosystems, based on Ohr (2018)
The acronym stands for the volatility, uncertainty, complexity, and ambiguity of the environment a business operates in. 2
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