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Platform business models like Vitality, Uber, YouTube, and Airbnb are fast becoming the darlings of the digital revolution. These technology-enabled businesses create value through exchange and often disrupt older business models by delivering compelling customer experiences and offer new forms of innovation.
Musa Kalenga, founder and chief executive of Microtising told a Gibs forum that a platform is a philosophy around which value is derived and can turn traditional commercial business models on their head: “It is a collection of people with a collective goal, and the interest of the users or end beneficiaries often initially overshadows the commercial interest of the company.”
Lindsey Elkin, head of marketing for ride sharing platform Uber in sub-Saharan Africa explained that platforms create opportunities and allow for entrepreneurial mindsets.
Liquid studio director and innovation lead at Accenture, Rory Moore, however pointed out that in the digital world, “screaming successes are often retrospective, and often don’t detail the challenges and difficulties that go into building platforms.”
Creating a platform mindset
“Building a platform is a continuous discovery of the community you serve,” Kalenga explained.
“Saying you have all the information from the beginning is problematic.”
Moore added that in the development stage, it was not always possible to have all the answers before you start: “Often, you have to start moving before you know with certainty where you are going.”
Flexibility, continuous learning and constantly challenging assumptions are critical attitudes when developing a new platform, Elkin said.
“A platform mindset means having patience, while being receptive to feedback. You need to listen to your partners and customers and continually improve.”
For example, Uber started adopting cash payments in 2015, following customer demand, after initially assuming that cashless rides would be one of the service’s draw cards.
“Being bigger means you can’t always be as nimble as you would like, but you have to challenge your existing assumptions all the time.”
Platforms are very much embedded in the real world, Elkin insisted, and explained that Uber learnt from its earlier mistake of insisting they just provided the technology for the service. “It is a risk to try and separate yourself from the real world,” she said.
Platform development challenges
Neil Adamson, chief information officer for Discovery Vitality Group, admitted that building a platform was much harder than the group had initially anticipated. Through Discovery Partner Markets, his team is responsible for the design and implementation of the Vitality wellness platform into the global insurance partner markets in Asia, Europe and the United States.
“We are still trying to figure out what a platform is,” Adamson said.
“We would have preferred a centralised data repository in the cloud, which would have given us a lot more insight into the health behaviour of people. However, we didn’t become platform ready – we had to build the platform to enable the business aspiration.”
Adamson explained that his team followed a micro-services architecture strategy which is similar to a set of Lego blocks, allowing the group to attain scale while managing the various moving parts.
Platforms with community-created content are essentially an opening up; creating a system to allow people in, he said. “You are allowing others into your system and environment, which is about letting go of control. It is a different mindset.”
While creating an open platform, you cannot cede complete control, and it is important to still have the appropriate governance structure in place, he cautioned.
The initial platform build stage requires a strong technical and commercial team, Kalenga said. The next stage is to “get as many people as possible exposed to the product. There is no point in attempting to commercialise your platform if you haven’t proved beyond a doubt that people will use it,” he explained.
Marketing efforts should be agile and focus on guerilla marketing tactics.
However, Elkin insisted “if the technology and the user experience aren’t there, you have nothing to market. Focus on the user experience before the marketing.”
While Uber now has household name brand recognition, the company had to initially build customer awareness.
“The community has to be engaged and interested, and openness is core to platforms. You have to assume a certain level of risk.”
The importance of leadership
According to a 2016 Accenture research report, South Africa is among the countries least prepared for platform readiness.
Kalenga argued that the country’s primary challenge from a platform readiness perspective starts with business leadership: “Most businesses are still run by accountants, who think very specifically about business. The way their minds operate in relation to value creation, the way they quantify risks and analyse opportunities and think about the world is very particular.”
Rather, platform readiness demands lateral thinking. Otherwise, “you continue to put effort into doing all the wrong things over and over again. Platform thinking requires you to fundamentally burn the bridges and start again, or figure out other ways of doing things correctly,” he argued.
