Platforms Overrunning Traditional Pipeline Businesses by Human Capital Alliance Inc
by Alvin Aguilar ResearcherEdwin Sim
looks at how platforms are transforming business strategy.
Apple, Uber
and Airbnb are overrunning incumbent product-push pipeline businesses by
exploiting platforms and leveraging new rules of strategy.
In a recent
Harvard Business Review article, “Pipelines, Platforms and the rules of
strategy”, the authors said in today’s digital internet environment, scale
trumps differentiation.
“Platform
businesses bring together producers and consumers in high-value exchanges.”
Platforms – major assets
In contrast
to traditional product pipeline sales organizations, platforms chief assets are
information and interactions, the sources of the value they create and their
competitive advantage.
Using these
innovative digitally-enabled concepts, HBR said Apple conceived the iPhone and
its operating system as more than a product or conduit for services.
“It imagined
them as a way to connect participants in two-sided markets – app developers on
one side and app users on the other – generating value for both groups.”
Network effects
As
participants on each side increase, network effects, which are central to any
platform, begin occurring.
Apple
conceived iPhone and its operating system as a conduit that could distribute numerous
products and services.
By January
2015, the company’s App store offered 1.4 million apps and had cumulatively
generated $25 billion for developers
Critical lessons
Apples success
in building a platform business within a conventional product firm holds
critical lessons for companies
across industries.
Firms that
fail to create platforms and don’t learn the new rules of strategy will be
unable to compete for long.
Major environmental change
Today all
businesses must understand that platform businesses such as Uber and Airbmb
bring together producers and consumers, are gobbling up market share and
transforming competition.
Moreover,
traditional pipeline product-selling businesses that fail to create platforms
and learn the new rules of strategy will suffer.
Today’s new rules
With a
platform, a business’ critical asset is the community and its members’
resources.
Its strategy
shifts from controlling to orchestrating resources, from optimizing internal
processes to facilitating external interactions, and from increasing customer
value to maximizing ecosystem value.
Read: The
New Environment
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Created on Dec 31st 1969 18:00. Viewed 0 times.