That is the question!
If you’re the CEO of your business, or maybe the chief digital officer (CDO) responsible for digital business strategy, it’s the central question you need to be asking of your leadership team.
A platform business can take many forms, depending on how we define it. A platform business is certainly a marketplace like Airbnb, Amazon, or Uber. These digital platforms connect suppliers and customers in new and sometimes unique ways. They facilitate faster, easier outcomes and commerce.
But other, less obvious types of digital platforms have emerged. For example, API platforms deliver new digital capabilities into your own firm’s apps. Consider the way PayPal payment services are embedded in anyone’s online commerce checkout process. Or take a look at the new Coord platform, an API platform recently spun off from Alphabet’s Sidewalk Labs — it allows anyone to embed information about a city’s mobility options into their own digital solution.
Digital platforms underpin the rapid growth of brands across the digital ecosystem. We’re all familiar with how fast social platforms like Facebook, Twitter, and Snapchat have grown. Digital platforms are rich with opportunity because they are almost infinitely scalable. By design they can grow rapidly, drive significant customer value and eventually increase revenue. But it’s obvious that not every company can be the next Facebook. So where’s the opportunity for your business?
Become A Platform Business
The opportunity for most companies lies in tapping into what you’re already good at, then using this expertise to design and create a digital platform (think of this as a set of services or capabilities delivered through APIs). If your resulting platform has inherent value for a given set of customers, you can begin to extend it to potentially new markets.
Many of the more advanced companies in our digital business benchmark got there by evolving an application into a platform. This idea of starting a platform in one place and extending outward to something different isn’t new. Think MVP for your business model. Lyft started that way; so did Airbnb.
Many of us at Forrester now believe platform business models are core to how businesses will thrive in a digital age. That’s why I’ve teamed up with two of the brightest minds here, Ted Schadler and Martin Gill, to craft a new report. We’re already digging into the core elements of platform business models. Ultimately, we’re looking to help you find answers to these questions:
- Should you build a platform business? How do you know if you have something that will translate into a scalable platform?
- Can you build a platform business? Does your firm already have the right capabilities and partners or do you need to acquire them?
- How should you start? What should you focus on first? What are the key questions you need to answer before you start coding? What roadblocks will get in your way?
We’re already having fun on this journey, so stay tuned!
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