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.
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
Digital talent and
Technology and governance
A large base of digitally-savvy consumers and businesses. Scale can benefit from cultural and lingual uniformity, but diversity is also a strength.
A supportive business environment with limited red tape, good access to finance and a mature exit market. A need for both hard technical skills and softer, digitally creative skills.
High speed connectivity for both businesses and consumers; and differentiated proprietary technologies to support relevant local services.
Businesses must be willing to partner with 3rd parties outside their sector and to share IP and data as part of more dynamic innovation.
Proactive and participative policy making, working with platform players on complex areas, such as data privacy or blockchain and cybersecurity.
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:
Create a compelling offer based on modular solutions that address the range of customers’ needs.
Focus on the user journey by targeting individuals with tailored experiences that support customers well beyond any one transaction.
Engage participants through sophisticated, dynamic pricing models that are more responsive to changing market demand.
Build trust beyond high levels of security and privacy by committing to prevention and compensation measures.
Collaborate with digital partners, app developers or providers of payment services and other capabilities that make the platform robust and differentiated.
Five steps are critical to create the environmental enablers that
support the local creation
and expansion of digital platforms.
Harmonize privacy and data security rules between jurisdictions to reduce costs and facilitate data sharing that is the lifeblood of platforms.
Ensure regulations that protect consumer and producer interests do not stifle innovation or prevent market disruption.
Simplify and harmonize trade and customs rules to encourage greater cross-border electronic trade.
Accelerate Internet access and adoption, especially among small businesses and underserved communities.
Educate users andSMEs
Train and educate SMEs
on alternative finance,
consumer protection and
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.
Global Managing Director
Thought Leadership Principal Director
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.
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).