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Overview

Digital platform companies are transforming the way we do business by creating vast markets, compelling customer experiences and new ways to innovate. But how will small and traditional companies find success in a platform landscape dominated by digital born companies?

Accenture’s latest research shows that platform businesses are proliferating in many countries…Small enterprises and large industry incumbents are actively establishing platforms. But our analysis in collaboration with the G20 Young Entrepreneurs’ Alliance suggests most new platform businesses will likely fail. And many major economies lack the enabling factors they require to help platform enterprises flourish.

We identify the critical platform success factors for businesses and policy makers.

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ACHIEVING PLATFORM SUCCESS

Platform companies have generated market capitalization of more than US$4 trillion. Between 2010 and 2015, more than US$20 billion was invested globally in digital platforms for the online marketplace and financial services sectors alone. But these big figures mask the variety of new enterprises that are enjoying significant success with platforms in a range of industry sectors.

Platform success is underpinned at two levels: Entrepreneurs and incumbents must create the critical building blocks to establish platform ecosystems that are able to satisfy demanding customers and sustain rapid scale expansion.   Meanwhile, governments play a role in creating the right environment enablers—factors and conditions within the broader economy that are necessary for platforms to emerge and grow. These are illustrated in Accenture’s Platform Economics Model.

Digital user size
and savviness

Digital talent and
entrepreneurship

Technology and governance

Open innovation
culture

Policy and
regulation

FIVE FACTORS FOR A SUCCESSFUL PLATFORM ECOSYSTEM

There is no “one size fits all’ model for digital platforms. But there are five critical elements that ensure a dynamic ecosystem can reach critical mass and deliver new value at scale. Businesses should consider these as essential steps, whether they are platform owners, digital partners or merchants and suppliers targeting new customers:

Proposition

Proposition

Create a compelling offer based on modular solutions that address the range of customers’ needs.

Personalization

Personalization

Focus on the user journey by targeting individuals with tailored experiences that support customers well beyond any one transaction.

Price

Price

Engage participants through sophisticated, dynamic pricing models that are more responsive to changing market demand.

Protection

Protection

Build trust beyond high levels of security and privacy by committing to prevention and compensation measures.

Partners

Partners

Collaborate with digital partners, app developers or providers of payment services and other capabilities that make the platform robust and differentiated.

IS YOUR ECONOMY READY FOR PLATFORM GROWTH?

Platform Readiness Index Score

Technology investments: 31% of assets are ICT, #1 in the G20.

Open innovation: Good R&D university-industry collaboration.

Public policy: Cybercrime regulation and regulation harmonization.

Δ Digital users & savviness: Small user market size. Only 7m users of digital music.

Δ Talent & Entrepreneurship: Mid-range skills; 43% of workforce is digital.

Platform Readiness Index Score

Open innovation: Strong digital collaboration, 54/100 for large, 63/100 for small companies.

Δ Digital users & savviness: Small user market size. Only 7m users of digital music.

Δ Talent & entrepreneurship: Small pool of scientists & engineers; mid-ranking on innovation.

Δ Technology investments: Uncompetitive technology services, low investment in comms infrastructure and R&D.

Δ Public policy: Poor regulation harmonization and free trade policies.

Platform Readiness Index Score

Talent & entrepreneurship: 51% share of workforce is digital. Strong entrepreneurship ecosystem.

Technology investments: 21% of all assets are ICT; good comms infrastructure.

Public policy: Effective ICT regulations and law-making bodies.

Δ Digital users & savviness: Small size market; only 17.9m mobile broadband users.

Δ Open innovation: Low digital innovation of large companies and entrepreneurs.

Platform Readiness Index Score

Digital users & savviness: 679m Internet users access digital content twice a day.

Talent & entrepreneurship: Large digital workforce and pool of STEM graduates; high capacity for innovation.

Open innovation: High digital collaboration by large companies and entrepreneurs.

Δ Technology investments: Limited comms infrastructure; only 4% of assets are ICT.

Δ Open innovation: Below average for cybercrime regulation.

Platform Readiness Index Score

Technology investments: Improvements in innovation, tech clusters and R&D spending.

Public policy: Strong cybercrime regulation and regulation harmonization.

Δ Open innovation: Low digital collaboration by large companies and entrepreneurs

Δ Digital users & savviness: Limited usage of online channels for accessing content.

Δ Talent & entrepreneurship: Early-stage entrepreneurial activity rate of 5.3%.

Platform Readiness Index Score

Talent & entrepreneurship: Strong innovation / entrepreneurship ecosystem scores of 5.6/7 and 4.6/7.

Technology preparedness: ICT services exports of US$51bn; 18% of all assets are ICT.

Public policy: Strong performance e.g. on cybersecurity.

Δ Open innovation: Poor scores on digital innovation and collaboration.

Δ Digital users & savviness: Small use of digital content; only 37m mobile broadband subscriptions.

Platform Readiness Index Score

Digital users & savviness: 236m Internet users with room to grow, frequent access of digital content.

Talent & entrepreneurship: Robust entrepreneurship ecosystem and talent pool of STEM graduates.

Open innovation: High levels of digital collaboration by large and small companies.

Δ Technology investments: Requires more broadband and security infrastructure and R&D spending.

Δ Public policy: More action required to promote free trade.

Platform Readiness Index Score

Δ Digital users & savviness: Few using online channels for content; very low use by businesses.

Δ Talent & entrepreneurship: Only 5% of working age population about to start/started an entrepreneurial activity.

Δ Technology preparedness: Low R&D spend of US$12bn, only 203 secure Internet servers / million persons (avg. G20: 597).

Δ Open innovation: Low digital innovation and collaboration by large companies.

Δ Public policy: Poor overall regulatory ecosystem; strong cybercrime and harmonization efforts.

Platform Readiness Index Score

Digital users & savviness: High Internet penetration and frequency of access to digital content.

Talent & entrepreneurship: High entrepreneurship levels and capacity for innovation.

Public policy: Strong on cybercrime. Platform regulation could be improved.

Δ Technology preparedness: ICT services exports of just US$3bn; low tech-governance.

Δ Open innovation: Low levels of digital innovation for large and small companies.

Platform Readiness Index Score

Technology preparedness: Good infrastructure: 1,995 secure Internet servers / million persons (avg. G20: 597).

Open innovation: Moderate digital innovation; high R&D university-industry collaboration.

Δ Public policy: Low performance on cybercrime regulation.

Δ Digital users & savviness: Limited Internet market, though above average on digital savviness.

Δ Talent & entrepreneurship: Low level of early stage entrepreneurial activity; middle ranking on STEM pool.

Platform Readiness Index Score

Talent & entrepreneurship: Strong early-stage entrepreneurial activity.

Open innovation : Mid-level digital collaboration scores for businesses.

Δ Digital users & savviness: Only 17m mobile broadband users; limited use of online channels.

Δ Technology preparedness: Very low ICT services exports (US$151mn); few innovation clusters.

Δ Public policy: Low performance on regulation and overall ecosystem.

Platform Readiness Index Score

Δ Digital users & savviness: Low device adoption, only 86m use mobile broadband.

Δ Talent & entrepreneurship: Early-stage entrepreneurial activity only 5%.

Δ Technology preparedness: Only 51 secure internet servers / million (avg. G20: 597) Low R&D spend of US$16bn.

Δ Open innovation: Limited digital innovation, low university-industry R&D collaboration.

Δ Public policy: Weak on cybersecurity regulation.

Platform Readiness Index Score

Open innovation: High levels of digital collaboration and university-industry R&D collaboration.

Δ Digital users & savviness: Only 26m internet users, low use of internet channels.

Δ Talent & entrepreneurship: Limited availability of STEM graduates, early-stage entrepreneurial activity of 9%.

Δ Technology preparedness: Low technology preparedness pulled down by a low R&D spend of USD 2bn, small ICT export of USD 253m and a moderate level of ICT assets (8% of total assets).

Δ Public policy: Limited cybersecurity regulation.

Platform Readiness Index Score

Δ Digital users & savviness: Only 51% Internet penetration; only 25m mobile broadband users.

Δ Talent & entrepreneurship: Low on innovation capacity and pool of STEM graduates.

Δ Technology preparedness: R&D spend was US$6bn, ICT services exports of US$369m, only 50 secure internet servers million.

Δ Open innovation: Low levels of digital innovation & collaboration of large companies and university-industry R&D collaboration.

Δ Public policy: Weak ecosystem and limited public sector initiatives.

Platform Readiness Index Score

High talent & entrepreneurship: High capacity for innovation, strong entrepreneurship ecosystem.

Technology investments: Very high international internet bandwidth; 29% of all assets are ICT.

Open innovation: Mid-range on digital collaboration of large & small companies.

Public policy: Driven by good ICT regulation and a strong ecosystem.

Δ Digital users & savviness: High Internet penetration but limited use of digital content.

Platform Readiness Index Score

Digital users & savviness: Very high use of online channels and frequency of access to digital content.

Talent & entrepreneurship: High levels of innovation and a good entrepreneurship ecosystem.

Technology preparedness: Strong innovation clusters and tech-governance; 29% of assets are ICT.

Public policy: Strong cyber security and a strong ecosystem.

Δ Open innovation: Poor levels of digital innovation by large and small companies.

There is a link between the health of the platform enablers prevalent in a country’s economic and social environment and the levels of local investment and activity in digital platforms. Our research shows that G20 countries vary significantly in their ability to encourage the flourishing of platform businesses. Countries with the highest platform readiness – China, the United States, India, the United Kingdom and Germany – look certain to keep their lead as other economies struggle to put in place the right measures.

The United States and Asia are in a strong position to succeed, particularly thanks to vast populations of digitally savvy customers. But many parts of Europe are held back by the continent’s fragmented digital market and its inconsistent levels of entrepreneurial and innovative culture.

RECOMMENDATIONS FOR POLICY MAKERS

Five steps are critical to create the environmental enablers that support the local creation and expansion of digital platforms.

Ensure
interoperability

Proposition

Harmonize privacy and data security rules between jurisdictions to reduce costs and facilitate data sharing that is the lifeblood of platforms.

Regulate for
innovation

Personalization

Ensure regulations that protect consumer and producer interests do not stifle innovation or prevent market disruption.

Cultivate
cross-border trade

Price

Simplify and harmonize trade and customs rules to encourage greater cross-border electronic trade.

Invest in
infrastructure

Protection

Accelerate Internet access and adoption, especially among small businesses and underserved communities.

Educate users and
SMEs

Partners

Train and educate SMEs on alternative finance, consumer protection and cross-border
e-commerce.

OUR PERSPECTIVE

Digital platforms are not simply a fresh route to growth and efficiency. They are more significant than that. A century ago, the mass production factory emerged as the analog platforms of the day, bringing together workers, machines and suppliers. Modern factories transformed the wider economy and society. The impact of digital platforms could be as profound, changing the way we produce, work and consume. Platform businesses are therefore not an option. They are an imperative for all enterprises and governments to embrace.

ABOUT

About the Research

Accenture undertook research and analysis on behalf of the Young Entrepreneurs’ Alliance between January and June 2016. The research program comprised in depth interviews with 50 leading experts, academics, platform owners and service providers. The Platform Readiness Index is a proprietary model covering 16 G20 countries and takes into account 30 quantitative indicators. The program also included a survey of more than 100 small and medium sized business in China.

About Accenture, the B20 and the G20 YEA

In addition to being a knowledge partner of the G20 Young Entrepreneurs’ Alliance, Accenture is a knowledge partner and co-chair of the B20 SME Development Taskforce chaired by Jack Ma, Executive Chairman of Alibaba Group. The B20 brings together business leaders and policy makers to help shape policies that address critical issues for enterprises - including economic, social and financial issues – raised by the G20.

At this year’s B20 in China, Accenture contributed to the development of the B20 Policy paper which addressed the opportunity for SMEs to find growth through cross-border e-commerce (see below).

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