Building a platform business to encourage co-innovation

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A business model dubbed “the platform” is disrupting industries by enabling data-driven innovation. By being part of a digital platform, suppliers and consumers can come together more easily to create new customer value.

The digital platforms we’re most familiar with broker services in the B2C sector. Alibaba, Baidu, Uber, Apple and Airbnb are all great examples. They enable smaller companies and individuals to sell a greater choice of products and services to consumers, while creating a system of trust for all participants through peer ratings.

YouTube, Taskrabbit and eBay are all platform businesses. They don’t create the content, provide the services or manufacture the products they sell. But they do bring additional value. YouTube, for example, provides detailed analytics on video subscribers to power an advertising ecosystem and provide an income for vloggers; whereas, Taskrabbit has helped to create the gig economy, enabling enterprises to access scarce skills and workers to enjoy the variety of lots of different projects.

Platforms allow organizations to work easily across industries and sector borders. According to McKinsey, these digital ecosystems will account for more than $60 trillion in revenue by 2025. “Failing to embrace digital platforms is one of the biggest pitfalls in digital strategy,” according to Martin Hirt, who leads strategy and corporate finance practice at McKinsey.

This is the beginning of the third wave of the Internet – what Orange Business Services calls the “Internet of Enterprises” era – in which connected objects and workflows are being adopted at scale. In the Internet of Enterprises, data needs to be shared with an organization’s extended enterprise or business ecosystems to deliver greater value to customers.

Data powers digital platforms. It needs to be managed in real time, stored, cross-referenced, analyzed and protected in compliance with country-specific privacy and data sovereignty regulations as well as the ecosystem partners’ data governance rules.

In the transport sector, for example, an open data platform created by Airbus is enabling airlines to benchmark themselves against their peers – looking at data on the frequency with which parts are replaced in their industry to enable them to make better maintenance decisions and assess airport turnaround times to pinpoint potential efficiencies.

A platform for co-innovation

According to the Most Innovative Companies 2019 report by Boston Consulting Group (BCG), organizations are relying more and more on platforms to support their innovation efforts. Platforms serve multiple functions, including “facilitating (and sometimes profiting from) the innovation of others, expanding reach and collaboration and enabling new multiparty solutions and offerings.”

BCG’s research highlights the fact that platforms need to be open to a number of contributors, with 83% of digital ecosystems involving partners from four or more industries and 53% involving partners from six or more industries. An auto company might draw on 30+ partners to create an autonomous car, for example, or develop mobility-as-a-service offers that will run on digital platforms.

Strong innovators were also shown to focus on external innovation with 75% using incubators, 81% leveraging academic partnerships and 83% partnering with other companies. Platforms enable them to access different expertise and data sources, which they can use to construct new business models, products and services.

Smart cities must become platforms

Smart cities are an ideal candidate for platform-based co-innovation. Solving complex, inter-related challenges – such as urbanization, congestion, pollution and respiratory health – requires access to data insights on a digital platform and the support of many different ecosystem partners. Orange is working with Abu Dhabi to provide a data visualization platform to explore the connected world using virtual reality and 3D technology and to help it address a range of smart city challenges.

Meanwhile, in the logistics sector, DB Schenker has launched Drive4Schenker, a digital platform that helps truck drivers across Europe find a backload for their return trip after making a delivery. Research by the European Environment Agency suggests on average, trucks are empty 30% of the time as they travel on roads around the region. Only a full truck earns money. A platform can address this challenge, boosting the profitability of haulage firms while reducing congestion and emissions.

Frictionless places to collaborate

The most successful platforms are designed for low friction. This is achieved by making it easy for partners to join and use it. A platform must be reliable and function as promised – fulfilling orders, rendering services and successfully transferring payments. Security is essential, as platforms operate on shared network infrastructures and handle increasingly valuable transactions.

Organizations can create their own business platforms, partner to create platforms or look to leverage third-party platforms. Whatever the chosen option, platforms involve a significant shift in mind-set. They require organizations to move from being owners to co-creators of value.

Find out more about the enabling technologies in the “Internet of Enterprises” era of business ecosystems.

Jan Howells

Jan has been writing about technology for over 22 years for magazines and web sites, including ComputerActive, IQ magazine and Signum. She has been a business correspondent on ComputerWorld in Sydney and covered the channel for Ziff-Davis in New York.