Platform strategy is the latest buzzword for most industries, with a magnanimous surge in demand. Digital platforms have become an essential part of the day-to-day running of businesses and don’t exist in a silo anymore. Companies like Daimler, Nike, Apple, Facebook, Uber, and Unilever operate on a digital platform business model. It is an approach to entering a market that matches buyers and sellers, gaining value and market share from network effects, and harnessing its users to innovate.
Here, platform participants’ participation is interdependent with the choices of other users. The system relies heavily on feedback, coordinated best through a cross-functional team. A set of distinct tools are developed to help platform entrepreneurs and managers tackle the challenges of value creation and value capture.
Let’s get into the advantages and statistics that conveys about platform startegy –
- Saves time and resources
An effective platform strategy, undoubtedly, saves time, resources, and effort involved in keeping up with the market’s competition. One can risk losing business opportunities if competitors deliver the same level of value to target audiences, faster and seamlessly. “Everybody is running a product team. Their product might be technology, but they’re looking to understand the customer’s goals and figure out how to make them successful. We see that mentality at (external) customer touch points, but really you need to bring it to every level of the organization.”- Ryan Murray, Director of Digital Platform Strategy, Thoughtworks. - Creates value
A digital platform is known to create a marketplace ecosystem, where all customer needs are covered with constant dialogues and feedback. It’s like a one-stop center for all kinds of needs, thereby, building customer loyalty and brand value. This helps establish stronger relationships with the target customers. As per 2019’s Mckinsey research, across products, sectors, and developed economies, a single digital platform prevails 75 percent of the time for brands. It’s important to build trust in various ways. For example, Airbnb rewards property owners for doing well, with good reviews and also, for posting accurate photos of their properties. The main aim is to design a platform that provides space for predictability and reliability.
- Increased revenuesIncorporating a platform strategy in your business plan will not only give you a competitive edge but will also result in increased revenues by building a stronger customer base. Studies have proven that a strong user base yields far better results than a one-time expensive advertising campaign. Companies with platforms had an annual boost in earnings before interest and taxes (EBIT) of 1.4 percent, compared with the 0.3 percent gains of nonplayers, as per Mckinsey’s findings.
Conclusion
In short, if you are looking to expand your business’s user base, build closer relationships with suppliers and be a tough competitor in the market, you should definitely consider platform strategy.
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