Is your company ready for the digital transition?
About platform companies
Companies like Amazon.com, Apple, Facebook and Google have grown extremely fast over the last 15 years. These platform companies often have few assets of their own. At the same time, a number of them is extremely profitable.
Recently I took a deep dive in how platform companies actually work. In June I went back to school and participated in a training course in Boston that MIT Sloan organized around Platform companies.
We must be careful not to glorify platform companies. There are a lot of platforms that completely fail. What are the main pitfalls?
- Because the technology turned out to be too complicated.
- Another reason is that the upfront investments are very high. You have to think through the entire earning model in advance. You cannot build a platform step by step. You go live; or not.
- Finally, there are various platforms that performed well from the start, but which we now hardly see today anymore. Groupon.com for example. Very popular in the beginning. But who still uses it?
Hereunder follows a summary of some important take aways. And how companies can achieve more success.
- Platform business models can emerge very quickly in broken markets. Markets that do not function well. Take the taxi market, which was quickly captured by Uber and Lyft.
- In order to function, a platform needs on a third party that adds value. For example, think of amazon.com. They started out as an online store. Now it is more and more a platform in which other companies can run their own stores.
- Always keep your critical IT architecture in-house. Make it available to third parties, but always ensure that your IT structure does not become too open.
- Customer reviews are usually worthless. They often follow the pattern of a few low scores, then a middle area with only a few scores. To end with many five star scores. On Airbnb.com, for example, 97% of the accommodations end with a five score at this moment. Most of them are heavily manipulated.
Finally: a few questions that you must ask yourself when you decide on your digital strategy.
- How can a platform become active in our industry? What could such a platform look like?
- Are there platforms with potential that we can join?
- Do we have ideas how we could create a platform ourselves?
- Do we have enough financial resources to launch a platform? Or do we need to organize extra financing?
- How do we orchestrate the expertise to develop a platform? Can we develop sufficient speed? What does our past prove about our speed?
- How do we ensure that digital expertise in our company is also anchored at the board level?
On September 19 from 9:00 AM to 9:30 PM Dutch time we will organize a Dutch session about the lessons of the platform economy. Then we will discuss this in more detail. This webinar is also recorded, so that you can listen to it later. Register here. Or send us email via This email address is being protected from spambots. You need JavaScript enabled to view it.
Hopefully this inspires.
Paul Donkers
