There are a new breed of companies on the rise whose business are solely based as a digital platforms.
Companies are building a digital platforms and using them to bring communities together; for example:
Amazon has a platform that brings buyers and sellers together. Buyers buy products and write reviews of the products they’ve purchased which in turn provides value to other buyers. So new buyers flock to the platform and in turn bring more sellers from their reviews. In this community of buyers and sellers both find value and as a result the network grows exponentially.
amazon and their network of buyers and sellers
Facebook also has a digital platform for people and their friends to share information with each other advertisers are now attractive to the platform because of the value it brings them.
Facebook a social space for sharing information with friends, family and hosting business promotions
LinkedIn provides a digital platform where its members can establish strong networks and showcase their professional side. Because of this companies that want to hire talent flock to the platform.
LinkedIn a networks of potential employable via a digital CV
Netflix is a platform where paid subscribers watch movies and they get movie recommendations based on what other people with similar interest watch here the platform matches its subscribers with movies and then they read these movies which help other subscribers that’s valuable!
Netflix a new form of bespoke media consumption
Some digital platforms however haven’t been so successful…
Monster.com brought employers and job seekers together but ended up with so much junk that it was difficult for either group to sift through the content to find what they wanted. The platform did not have any intelligence and so it lost its mojo!
Monster.com a complicated digital platform
A good platform provides a lot more value than just membership. Over time a platform can accumulates a lot of data. If such a platform can figure out what data to deliver and when then it’s got a secret sauce! Companies are now using machine learning and artificial intelligence to do just that. If AI implemented well then the network grows and the network becomes even more valuable. It is this relevance that keeps its members engaged and coming back.
Uber a Golden Standard
Uber provides a platform that brings drivers and riders together not only for the ride but also for the ability to use maps to not have to carry around cash as well as rate drivers and riders.
Uber is now in a position to attract insurance companies to offer bids on insurance for each ride. This make sense once one realizes that Uber has information about its riders and even more information about its drivers and so can therefore provide automatic insurance coverage for each ride. All this can be facilitated by machine learning. Companies like Allstate and other insurance companies can of course offer ride based insurance but there’s the catch, they’ll now have to compete with each other based on the data that Uber owns. This gives Uber a huge competitive advantage. This scenario should scare insurance companies because now they’re at the mercy of Uber which has enhanced its platform as a competitive advantage. Uber is only going to keep investing in its platform. Given this how does an insurance company counteract this platform network effect? One option is for insurance companies to each build a platform of their own. Another option is to be ready to compete in the platform network ecosystem. These are essentially two vastly different strategies and depending on what strategy company chooses they will have to build capabilities to deliver to those strategies. However digital platforms like Uber are much faster along their digital journey and so are closer to adopting now technologies such as blockchain in turn further outpacing those companies how have yet to even start their digital journey. Learn what works from Uber, Netflix and Amazon and remember what doesn’t from failed digital platforms such monster.com
Hope this helps…