How to spot platform opportunities — The Discovery Process
In the modern era, platforms are amongst the most powerful business models. This is only set to increase further. Recent analysis by McKinsey forecasts that 30% of global revenues ($60 trillion) will be managed by ecosystems in 2025.
In the last year alone, we have witnessed the rise of a number of major platforms — despite facing stiff competition in a B2C landscape dominated by the likes of Facebook, Airbnb and Uber.
Regardless, a recent study we presented at the Platform Economy Summit shows that a mere 2% of companies have a platform strategy in place. Traditional companies in particular are struggling to build platforms and incorporate them into their overall company strategy.
There are several reasons why:
- Many are preoccupied with the digital transformation of their core (traditional) business models
- The incentivization for top management to explore completely new business model is lacking
- The tools and right understanding to spot new opportunities aren’t in place
Within this series of blogposts, we hope to address the above and help companies with a systematic approach to explore new platform opportunities.
This is the first phase of our Platform Innovation Process — named “Platform Discovery & Design”.
Phase 1 — Platform Discovery & Design
This first steps are supported by several tools, which will be explained over the next few posts. You can also download our Platform Innovation Kit App to have access to the guide and receive full support for your ‘Platform Innovation Journey’. For those who can’t use the iOS app, a PDF download is also available on our website.
A brief overview of the blogpost series and the Discovery Process + Tools:
- Intro: Discovery Process + Tools
- Step 1: Environment Scan (Researching Trends)
- Step 2: Ecosystem Scan (Discovering Inefficiencies)
- Step 3: Ideation + Opportunity Portfolio + Selection
- Step 4: First Problem-Solution Validation
- Step 5: Platform Business Model Concept
Let’s start by having a look at the complete process and the tools we will be using.
We are big fans of design thinking, and incorporating many of these principles into our process.
This includes first understanding, and second focusing on problems and inefficiencies.
So, what happens in the different steps?
Step 1 — Environment Scan (Researching Trends)
In the Environment Scan, we have a look at what is happening around us — including looking at specific trends affecting the industry as a whole, or the individual company. This begins with assessing macroeconomic forces like global market conditions, capital markets, resources and economic infrastructures. This is followed by analysing market trends such as market issues, needs & demands, changes in consumer behaviour and so forth. This becomes more specific when industry forces such as competitors (incumbents), or new players entering the market, are considered. The final part involves assessing other trends, like technology, regulatory, societal and how these affect the current business model.
Naturally, this means a lot of research is typically undertaken prior to our workshops. This includes conducting interviews with a number of big players within the industry, as well as synthesising material from relevant studies.
All information will then be consolidated and discussed throughout the workshop. We believe that most importantly, an open discussion and alignment on a common understanding of the impacts to the business is key. As such, we are using the “Environment Scan Canvas”.
Special thanks to Alexander Osterwalder and the strategyzer team, for the idea behind an Environment Scan.
Step 2 — Ecosystem Scan (Discovering Inefficiencies)
Another great source to spot opportunities is to scan the existing ecosystem / value chain. Here we start by mapping the classic value chain of the industry starting with the consumers (Value Consumers) and the services / products they consume. This continues further down the value chain with the Value Distributors and the Value Producers.
Usually an easy task for the participants, given their knowledge of the value chain. After mapping the ecosystem, we can begin to highlight the major inefficiencies within. For the most part, where a lot of highly fragmented relationships and communication exist, many inefficiencies will be found. Unmet needs can also be mapped.
For this exercise we will be using the “Ecosystem Map Canvas”.
Step 3 — Ideation + Portfolio of Opportunities + Selection
Based on the insights gained, we then utilize our creativity. The goal is to take inputs and think broadly about potential solutions. To capture the ideas, we are using the “Idea Canvas”, which helps to describe your idea/opportunity within 3–5 minutes.
To foster creativity, we support the process with our “Platform Pattern Cards”. These cards show 5 major patterns of platforms when looking at the value chain. Of course, marketplaces are the most dominant and easiest types of platforms, but others also exist.
We will introduce each pattern in a later post.
Special thanks to our friends & partners Sangeet Choudary, Geoff Parker and Marshall Van Alstyne for their pre-study on patterns.
After creating the portfolio of opportunities, it is time to give an idea the ‘go-ahead’. Accordingly, we use our selection criteria to score the different ideas and rank them. Based on the ranking, we pick the one or two ideas which seem to be most promising and enter the next step — first validation.
Step 4 — First Problem-Solution Validation
Now comes the time for a first round of validation. For this we use the “Stakeholder Persona” canvas, for the major and most critical stakeholders of the platforms. This means we put ourselves in the shoes of the stakeholder, and map our solutions with the gains and pains of the stakeholder. This is then a good starting point for interviews and further research, to find out if the problems being solved truly are major problems, or indeed just minor.
With this analysis and validation we gain a lot of insights and can adjust our assumptions. Whilst sometimes the adjustments are only small, other times it may require a full overhaul of the solution.
Step 5 — Platform Business Model Canvas
In our final step, we bring together all information to create a first version of the “Platform Business Model Canvas”. This becomes a reference model which captures all required changes and adjustments. In other words, somewhat of a dashboard with a high-level overview of your business model.
In our upcoming posts we will explain further each single step of the Discovery process.
With this easy 5-step process combined with our canvases and supporting tools, you can start your platform journey by discovering new opportunities in your ecosystem. Of course, this can not replace a full deep-dive / evaluation analysis, but done with the right people from your organization, it gives you enough clarity to spot opportunities and to filter out non-sense ideas.
The Platform Innovation Kit is supported by Factor10 — Europe’s leading corporate company builder.
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This article appeared first at www.platforminnovationkit.com.