3 compelling reasons why your enterprise needs a digital platform and ecosystem strategy
Digital platforms and ecosystems are the new battlegrounds for business. They are re-defining how markets work and the state of competition. Your enterprisee needs to be a part of that future.
Most of us ‘get’ what a digital platform is. Anyone that uses Faceboo k, LinkedIn, Amazon or Alibaba knows that a digital platform is much more than a website; it becomes ‘the place to go’ when you want something. It’s also very often the place you live out your life. I’m publishing this article on LinkedIn. I use LinkedIn as a workplace every day, as do millions of recruiters, salespeople, and other entrepreneurs and marketers.
LinkedIn is a digital platform. Not only does it serve the needs of its members that want to share their social business contacts and avoid the hassle of maintaining their own rolodeck, LinkedIn is constantly growing the value-adding features of its paid memberships because they know recruiters and sales people in their community are prepared to pay money to get extra data capture and information management. LinkedIn has become a market-place and workplace. It’s an always-on online digital platform that brings access to a global audience. To evidence the point, my last article was read by more people in India, mainland Europe, and the United States than in the UK!
According to its 76-page Digital/McKinsey Insights article titled ‘Winning in digital ecosystems’, McKinsey argues that staking out a position in ecosystems is important, because of the enormous market potential that may be up for grabs.
A digital platform is a cloud-based portal platform that services the information management and processing needs of your enterprise and its stakeholders. It is a digital orchestration of your business model.
Our understanding of digital platforms. We know that websites used to be about an online business card. Designers built websites around a concept of exhibition halls, hoping that visitors would wander around and learn something along the way. But that’s now how people short on time and patience work. People ‘Want-What-They-Want-When-They-Want-It’ and want to be directed to the answers to their questions, solutions to their needs instantly. Then, they want information in concise bite-sized chunks.
Digital platforms blur the line between websites, front and back-office information systems. They create self-service ecosystems that embed data capture and processing into the customer experience and journeys.
Take Amazon as a great example. Users of Amazon create their own account, register their payment method, control delivery addresses, manage their despatch choices and track progress. These are all characteristics of back-office ERP systems that used to require administrators to key this sort of data on behalf of their customers. Why do we do all of this work ourselves today on Amazon? Because it’s more convenient. Because we derive VALUE from buying from AMAZON. And we trust the company to get the products and services we’re buying to our door and painlessly accept return if we don’t like what we get.
Here are three good reasons why your enterprise needs to think about its digital platforms:
- McKinsey suggests that by 2025, some $60 trillion in annual revenue could be redistributed across the economy — one-third of that year’s total. You could be missing out on your slice of that cake!
- Over a five year period, McKinsey suggests enterprises with the right digital platform may be able to achieve a 10% increase in earnings before interest and taxes (EBIT) — Source: McKinsey Quarterly, The right digital-platform strategy
- Michael Treacy and Fred Wiersema, the authors of one of the most thoughtful marketing books of our generation, ‘The Discipline of Market Leaders’ suggest digital platforms connect firms with their business ecosystems, to becoming intelligent, distributed and autonomous. These platforms enable the three value disciplines1 of customer intimacy, 2 product leadership, and 3 operational excellence, and reduce operational trade-offs between them — meaning that it is now possible to excel in more than one of the three value disciplines simultaneously instead of leading in just one of them.
When digital platforms become an ‘ecosystem’, the scope of the digital platform grows to support a community or industry as exampled by LinkedIn and Facebook. An example of emerging civic digital ecosystems can be found in digital city IoT and blockchain platforms. These new platforms are equipping municipalities to create federated markets and telecommunications environments for their populations, removing barriers to accessibility and improving the standard of living of occupants and visitors.
If you don’t have a digital platform and ecosystem strategy for your enterprise, well you need to start thinking about what it means to your enterprise. Many businesses have yet to make the paradigm shift from traditional Gen-1 enterprise computing platforms to Gen-2 digital platforms. It means they’re still keying in data into their CRM and ERP systems on behalf of customers, and they continue to underpin their business model using spreadsheets; unable to bring more value to customers through self-service, always-on platforms that increase the transparency of processes that support the delivery and support of their purchases.
What needs to happen next? If your management team isn’t awake to the opportunities/threats of having/not having a piece of the digital platform future, then I’d recommend you start by re-visiting your business model and considering a review. Your business model needs to be digitally-enabled yes but first, you need to gain consensus with your colleagues on what your business model looks like today; i.e. Who is your customer? How do you create customer value? How do you turn customer value into shareholder returns efficiently?
About the Author
Ian Tomlin is a seasoned marketer, entrepreneur, and business leader with a 30+ year career at the intersection of strategy, technology, and marketing. As the founder of successful businesses, including Newton Day Ltd, Ian brings a wealth of expertise in guiding companies toward compelling brand stories. Reach out to Ian via LinkedIn to transform your marketing approach and tell your brand story effectively.
