Platform Disruption

The network will soon connect over 6 billion people. Being networked at such scale, changes people’s life chances, choices and behaviour. It ought to change your strategy too.

Whether you are a small new market entrant, a global player or an employee, there was never a more important time to think different.

Perhaps the biggest question is how you can build new strategies and new techniques when the change is structural and not just about a new product or a new innovation.

But first, how does connectivity change life chances, choices and behaviour? Being connected is changing our sensory world.

  1. Many new opportunities arise for gig economy income (Airbnb, ride-shares, Upwork type piece work; freelance contracting at a distance; the supply of services virtually and so on), creaeting new levels of independence but potentially at lower incomes which place other constraints on our choices;
  2. Yet many more people want to trade (buy, sell or engage) internationally and often instantly (the growth of small businesses that need accecss to six or more currencies increased by 129% 2013–2016, the rise of new payments systems facilitate speed and instant gratification) and people have more opportunity to meet their individual needs, however, limited a market they might constitute, through sites like Amazon, Alibaba; sexual fetish sites; new and changing nutritional behaviour, remote counselling, wellness advice etc).
  3. People are addicted to virtual relationship building of one form or another including the consumption of an ever increasing ocean of content (dating, flirting, beautification, Facebook, remote gaming for relationships and YouTube, Netflix, Amazon, Alibaba and more for new forms of content).

Being globally connected changes many aspects of demand and supply so it surely has to change how we think about disruption and about the business strategies we can use to effectively respond to it.

Yet very few incumbent companies have truly adapted to these three changes. There is a bigger prize though, bigger than we’ve ever known.

As we connect globally, the world’s population is primed to increase substantially (the African population will double in the next 30 years!) so certain aspects of demand will be turbo-charged (for example environmental degradation mitigation, adaptation and environmental loss and damage programs, official migration services and various services to migrants, affordable housing systems, electricity, network technologies).

Business platforms are ideally suited to these conditions:

  1. Companies like Alibaba are reshaping global trade by connecting people with the fullest possible range of suppliers;
  2. Electricity grids are bringing domestic producers into national and internationally traded energy networks;
  3. Agricompanies are trying to by-pass conventional distribution and “own” the planted seed wherever in the world it lies buried in the ground;
  4. GE is trying to create a global community of data specialists around turbine use;
  5. Amazon wants to be the world’s retailer;
  6. IngDan wants to tbe the single platform for IoT components;
  7. RoyalFlora Holland is creating the global exchange for cut flowers.

That short list could be a very long list. Platforms are becoming increasingly significant. I’ve written about their impact in different parts of the world for the global payments infrastructure provider SWIFT and for Peter Hinssen’s Nexxworks.

I have also emphasised in many articles that platforms are a new enterprise form and a new economic structure. They are material to the company itself but also to the restructuring of the economy:

Disruption happens in waves that encompass (a) the breakdown of vertical market structures into horizontal activities and (b) as a result, reward substantial innovation in the reorganization of wealth creating activity. This is analogous to the idea I mentioned in Shift that economic activity has escaped “enclosure”. By that I mean we have to innovate in how we organise because in many cases now the firm IS the market. This is exactly what the platform does.

This is not such a bizarre idea though it seems it. The last big process changes were supply chain management and the Web. Both required companies to invent new processes; both had an impact on global economic structures. Both have been transformative.

There are analysts of the platform economy who think platform development is really a question of devising a new business model but this misses the most important parts of platform life:

  1. They involve reorgansing the firm, therefore some significant process innovation (which companies should be addressing anyway)
  2. They involve owners in restructuring markets
  3. And in both these cases they require a new approach to assets, more of which in a later article

In Platform Disruption we’ll be looking at how those significant structural changes can be planned and executed. That’s our mission. The framework you need for platform strategy is more than just a canvas.

In my view it needs to embrace:

  1. New forms of customer segmentation
  2. Asset discovery and strategy
  3. A strong understanding of what motivates and sustains ecosystems
  4. A new approach to the executive portfolio
  5. And faster ways to work.

Those are big requirements. The place to start though is with how you view assets. That’s the subject or our next article.

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