By: Jonas Wedin and Roger Ostvold
Digital platforms are critical to the future success of Nordic companies because they generate new revenue streams. And add value to existing products to preserve and protect current sources of revenue. Yet although the region has some of the business world’s leading examples of digital platforms, too many companies are hesitating. Those that continue to do so risk falling so far behind, that catching up competitively may prove impossible.
Most executives believe that the future of business lies in the melding together of business, with industry lines continuing to blur. In fact, according to Accenture research, seventy percent of executives in the Nordics said that digital platforms will reshape industries into interconnected ecosystems. (See “Digital platforms: Our definition.”)
What, exactly, is meant by that? Consider how the music industry transformed through Spotify’s platform. Instead of a multitude of labels vying for distribution in a variety of channels, digital technology allowed the creation of one channel that brings together a variety of industry suppliers for a solution that’s better for the end user: music fans. But despite shining examples from the Nordic region like Spotify and others, too many companies are hesitating when it comes to adopting digital platforms.
For those that continue to hold off participating in these digital ecosystems, competitive risks abound: They’ll spend far too much money doing everything themselves instead of leveraging platforms. And, ultimately, rivals will create a competitive gap that may be impossible to close.
What exactly is a digital platform? Our definition
People are talking about digital platforms, and many have different views of exactly what it entails. So here’s our definition:
“A digital platform brings together process, people, technology and information into a value network that provides consumers and businesses access to an extensive selection of products and services within and across multiple markets. By enabling multiple parties to engage in networked commerce, digital platforms create a multiplier effect, quickly increasing demand for products and services and generating additional value for various users along with the platform’s owner.”
Building your platform
Digital platforms serve as a critical point of intersection, bringing products and services together into a richer, more personalized experience, while creating value for both consumers and businesses. Platforms exist that respond to virtually any link of a company’s value chain.
Although a platform may begin in one category, it can diversify. Here’s what we mean by that. Take Facebook and LinkedIn. They’re information sharing platforms but both are also heavily leveraged by users for sales and marketing. Digital platforms aimed at the product or service value chain can be generic in terms of what products and services they cater to (like Alibaba for sales.)
Apple is one example of a platform play that covers a large part of the value chain on one platform. Developers large and small can use Apple’s platform to develop, test, market and sell the service through the platform. Apple then delivers the service to users and handles developer payment. It’s a service enablement approach that allows smaller players to reach a wider audience not possible before the advent of platforms.
Here are other examples of platforms that coincide with different parts of the value chain:
Fund: Crowdfunding platforms such as Kickstarter and Indiegogo
Develop: Crowdsourcing platforms such as GitHub and Local Motors
Market and Sell: Many in different flavors. E.g. Hemnet, Pricerunner
Deliver: YouTube, Spotify
Get Paid: Payment platforms such as Klarna and Paypal