Digital platforms are now one of the most valuable and influential companies in the world. Airbnb for accommodations, Amazon for retail stores, Haier for home appliances, Countless platforms, like Uber for transportation, are developing innovative ways to connect supply and demand more closely than ever before.
These disruptive companies (usually unicorns) turned the traditional business model upside down and then created a new business model. As a result, it has changed the way we live, work and play, and in the process, entire industries like healthcare, education, transportation and even real estate.
In this rapidly changing environment, leaders must understand how platforms work and how they differ from traditional business models. This is important knowledge for strategists who want to compete in today’s platform economy.
Transitioning from a traditional model to a platform model
In a world where customer needs and expectations are constantly evolving, linear value chains are no longer fit for purpose. To remain competitive, companies must therefore adopt a more agile approach to value creation, based on a continuous cycle of experimentation and learning. This means moving from a linear value chain to a more iterative and flexible model: a platform.
Platforms have the unique ability to create value by connecting different stakeholders, including users, developers, and businesses. This ecosystem enables a constant flow of feedback and data that can be used to improve the user experience. For example, Haier has developed an open platform that allows third-party developers to create apps and services for their products. It was a huge success. Today, the company has over 100 million users of his and over 1,000 developers building apps for their products.
Until now, companies have largely relied on closed systems, which controlled all aspects of the value chain. But this is no longer viable in today’s fast-paced communal economy. Platforms can create value by emphasizing collaboration and peer-to-peer interaction, connecting people and resources in new ways. connect people who have Uber connects people who need a ride with drivers who have cars.
Huda Khan, Lecturer at the University of Aberdeen, said in an email. “Because they are so scalable and open, they can reach critical mass quickly. And because they are built for a two-sided market, they can create value for users and developers.” That’s why, according to a study released by McKinsey, “platforms are becoming the dominant business model across industries.”
Where the Platform Makes an Impact
There are three main classifications of platforms: marketplaces, social networks, and developer platforms.
A marketplace is a platform that connects buyers and sellers. eBay was one of the companies that recognized the value of an online marketplace, quickly becoming the go-to digital bridge for consumer goods. Facebook Marketplace and Alibaba soon entered the consumer goods space with their own platforms. Some companies bypass physical goods and focus exclusively on the digital marketplace. The Apple App Store and Google Play are the hottest spots in the digital goods sector, not to mention the Metaverse.
Social networks are platforms that connect people. Facebook dominated the category in his late 2000s, but the sector is still highly competitive.Instagram and LinkedIn are now big players in Micro Focus’ platforms based on photography, business networking and video sharing. It’s a hit.
Developer platforms are a niche for many, connecting developers with the tools they need to build applications. The most well-known examples are the iOS and Android platforms, which provide developers with tools to build apps on their respective devices. However, no-code platforms are rapidly gaining popularity, especially among his b2b SaaS companies. Companies with near unicorn status have become more common to base their entire workflows on no-code platforms like Figma and AirTable.
According to a study published by harvard business review, the categorization of these three platforms will transform nearly every industry by “connecting producers and consumers to high-value exchanges.” This can be observed in real estate where consumers have experienced difficulties, confusion, and expensive logistics over the years.
Untapped Possibilities for Modern Platforms
According to a study published by Grand View Research, the global real estate market was valued at $3.69 trillion last year. Growth is projected at a compound annual growth rate (CAGR) of 5.2% from 2022 to 2030. However, while the industry is large, it is well known that it is fragmented, resulting in an inefficient and time-consuming process for both buyers and sellers. But with the advent of new digital platforms like Unreal Estate, the process is becoming more efficient and transparent.
Unreal Estate founder Kyle Stoner said in an email: But he continued:
Kyle Stoner is the founder of Unreal Estate
Platform businesses like Unreal Estate can often scale quickly and reach audiences around the world. There are three reasons. First, they typically have very low fixed costs, offering considerable cost-effectiveness compared to what is offered in the traditional market. Second, they often retrieve large amounts of user data. This makes it more valuable to users as it can be used to improve the platform. For example, Unreal Estate uses data from his over 30,000 homes sold on their platform to create consumer dashboards with step-by-step guidance for buyers and sellers. This allows AI to enhance the home search experience, providing buyer recommendations and narrowing search scope. .
This has important implications for leaders. First, building a platform business requires a deep understanding of your users and their value. Second, you need to be able to do it quickly and efficiently to reach a global audience. So, if you’re looking to start a platform business, or already have one, follow her 3 tips from Unreal Estate.
1. Focus on users and their value: For example, if you’re building a platform for artists, you need a deep understanding of the needs and values of your artist users. what do they care about? What are their needs that are not being met by the existing platform? If you build your platform with these needs and values in mind, you are more likely to succeed.
2. Execute quickly and efficiently: For example, if you’re building a global platform, you need to be able to do it quickly and efficiently to reach your audience. This means having the right team with the right skills and knowledge. It also means having the right infrastructure in place so that you can scale quickly and efficiently.
3. We use data to improve our platform and make it more valuable to our users. For example, if you’re building a platform for artists, use data to understand what types of content are most popular with your users. We then use that data to improve our platform and make it more valuable to our users.
In summary, as platforms disrupt more and more industries, it becomes more important for companies to understand how they work. Only then will we be able to take advantage of the opportunities that these new platforms bring. As we have seen, platforms are built around core interactions between two or more user groups. This interaction is facilitated by technology that allows users to connect with each other and exchange value. Platforms use network effects to grow their user base and make the platform more valuable to users. Platforms also often enjoy first-mover advantage and natural monopoly status, which companies should monitor.
Platform businesses are changing the way we live and work, and we have to keep up. After all, platforms are the backbone of the collaborative economy, and the collaborative economy is the future of business.
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