We live in a world dominated by digital platforms. We use Amazon to purchase products, iTunes to listen to music, Netflix to watch TV, Uber to get a ride and Airbnb to find a vacation home.
Digital platforms are the genesis of transformation and disruption. A digital platform leverages the four “superheroes” of technology: cloud, analytics, mobility and social, and uses them as a force to rapidly transform an industry with a new business model, new customer experiences and/or new services or products.
The platform effect
What is attractive about digital platforms is the speed at which we can create them. We can start small with a few simple services and rapidly expand as we onboard new customers.
Even more attractive is the low acquisition cost to attain new customers. This creates a virtuous cycle of more customers, for more services, in more markets as the platform grows.
We call this “the platform effect,” where the economics of the platform creates opportunities for exponential growth and double-digit profitability on the services offered by the platform.
The superheroes of technology
Digital platforms are rapidly built using the superheroes of technology:
- Cloud enables us to start small with minimal to no capital investment and then rapidly grow and scale to meet the exponential demands of the services in our new digital business.
- Analytics ingests massive amounts of data from many disparate sources and derives business insight and automation to personalize and differentiate our services from those of any other provider.
- Mobility brings the service into the here and now, where it is needed most and has the most impact. It enables a service to apply contextual relevance with an understanding of the situational needs of an individual.
- Social connects the world to the service, to acquire the customers and to accelerate the platform effect.
Creating your digital platform
Some companies have existed for more than 100 years, before computers or digital technology ever existed, and others are digital natives whose entire business runs on a digital platform. Regardless of where you fit on this spectrum — whether you are a product company or a service company, whether you sell to businesses or consumers — your company needs a digital platform.
You can create a digital platform in a matter of days (maybe even hours). Remember, there is minimal to no capital required to get started with your digital platform. Digital platforms can be established quickly in environments such as Microsoft Azure, Amazon Web Services and Google Cloud. These environments provide the cloud and analytics technologies you need to get started.
Establishing your digital business unit
To establish a digital business unit in your company, start with a small group of innovative thinkers and empower them to develop something new on the digital platform. It won’t take long, and soon you will be developing software and services, just as Google does.
Let your team experiment with new ideas and don’t be afraid to let them fail. Not every idea and every service will be an overnight success. But remember the platform effect, because before long, a new service will be born out of an idea that leads to strong customer adoption, that drives exponential growth of that service — the likes of which you have never seen before. When this happens, your new digital business unit and the new digital platform will be the talk of the boardroom.
And thus, the virtuous cycle begins, and another digital business is born.