Platforms defy reason. We are used to 1:1 relationships in our analogue world. Put so much in and get that much out. But platforms do not operate on a multiplier of 1 but much higher. Put in 1 in and get 100 out. Not by chance or luck, but repeatedly. This is the power of a digital platform and ecosystem.
Below is a table of multipliers from different kinds of platforms and ecosystems:
The one that sticks out is Open APIs to Corporate Data. Because it puts the potential of exponential growth at near zero costs at the hands of everyone.Which is why platform scalability is so attractive. And sometimes get the head around.
Sangeet Choudary, one of the early pioneers and the author of Platform Scale, describes it as a ‘shift in competitive advantage from resources to ecosystems’. And from ‘pipes’ to ‘platforms’.
The Growing Importance of Ecosystems
Although platforms and ecosystems are still in their infancy, they are becoming more important. For three reasons in particular:
- Change and disruption will be too high to face on our own. In an ecosystem, each member faces only a part of the change. A good example is SalesForce and their application ecosystem. Running a business (or part thereof) on this ecosystem insulates against technology change.
- Manual processes are prohibitively costly in the digital world. First, we need clarity on what is most important. Second we allocate resources according to importance. Third we build core capabilities based on importance. In an ecosystem, each member focuses on their core capabilities. And use other ecosystem members for non-core capabilities. Let’s continue with the SalesForce ecosystem. Here each member focuses on a narrow function set. And often more than one vendor are providing a similar function, providing choice.
- Resilience is needed in the face of increasing change and disruption. Shared purpose and values are the core of an ecosystem. With trust and relationships as the glue holding it together. Let’s continue the example with the SalesForce ecosystem. Here trust begins when each member providing integrated applications that provide a consistent quality customer experience.
The Platform is the Ecosystem Interface
A business platform is an interface with an ecosystem(s). Including our internal ecosystem of how we operate our business. It’s important because we cannot scale our business externally beyond our ability to scale internally.
John Hagel III of Deloitte defines the business platform as:
“Platforms help to make resources and participants more accessible to each other on an as-needed basis. Properly designed, they can become powerful catalysts for rich ecosystems of resources and participants.”
To further describe the platform it helps to identify and describe its nemesis, which is Systems.
Platform vs. Systems
Two fundamental models run through an organisation:
- The business model which describes the organisation’s external environment. Including customers, channels, products, etc.
- The operating model which describes the organisation’s internal environment. Including capabilities, processes and systems, etc.
In the analogue world, the operating model evolves to support the business model. As a result, a business has many systems that need to integrate. And cope with increasing change.
A business platform is the integration of the business model and operating model. Its competitive advantage is derived from agility.
A digital business platform is the digitalisation of the business platform where the level of scalability is dependent on its agility.
A Platform is one integrated System. It shifts the focus from complex functionality/low agility to high agility/simple functionality.
We now have enough background information to begin to put things together. We have already identified agility. But what comes next?
In a world that is spinning faster and faster, we need to understand what is most important. The digital world is unforgiving and punishes the inefficient use of resources. By knowing what is most important, we can prioritise. And make decisions what to keep doing and what to outsource to the ecosystem.
But what is most important? For the purpose of this article I have given it a name and called it Purpose. Purpose can be just profit, or a ‘higher’ purpose, or in any combination. The exact nature or make-up of Purpose is unimportant. What is important is clarity, and all things being equal, clarity on what is most important.
A focus on what is most important is the basis for productivity. And the organisation’s creative potential and output. Which in turn fuels its sustainable competitive advantage.
The Platform Completes the Digital Trinity
Finally, the Platform itself, which connects with both Purpose and Agility.
It creates two new intersections that are essential for digital success:
- Influence. The more unique our purpose is, the stronger it cuts through. The platform amplifies it and builds influence. It creates an ecosystem of like-minded co-creators and collaborators.
- Scalability. The more agility we have in our business, the more it scales. The platform amplifies it and creates the opportunity for near exponential growth. It creates an ecosystem of like-minded service providers.
Now we can put it together in six building blocks with an approach of moving forward:
- Clarity on purpose. Our Purpose is what is most important to us. It is the stake in the ground to measure the importance of what we do.
- Create an agile organisation. Agility comes from a continuous focus on what is most important. And by outsourcing what is not important enough. In general, everything that is not a core capability is outsourced.
- Drive productivity. Build real-time Benefits Realisation and Analytics capabilities to drive and measure digital success.
- Build enterprise platform. The platform matches the organisation’s core capabilities and processes with technology components. The enterprise platform operates on a component-based architecture.
- Build scalability. Define what processes to share with partners, and design organisational interfaces and API’s.
- Build influence. Communicate purpose, values, mission and mission through the platform. Co-create and add value with ecosystem collaborators.
Have you started designing or building your Platform?
He is a published author of two books on transformation. Both are available on Amazon.
- ON PURPOSE – The Path to Extraordinary Business Transformation.
- FROM ORDINARY TO EXTRAORDINARY – How to Re-Imagine Yourself and Re-Define what is Possible.
Jesper is Swedish and apologises for any Swenglish creeping into his writing.
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