We all facing this growing pressure of time. In our daily work, in managing product and service life-cycles, as well as constantly considering business model overhauls as they become ever more connected.
We are not in stable markets anymore but increasingly volatile ones. Innovation needs to be at the forefront of the changes occurring and it above all else needs to find solutions to compress its time from ideation to commercialization.
It is through acknowledging that platforms and ecosystems are today’s new order to deliver innovation. Platforms that connect into the customer needs within its broader ecosystem of design, so the innovation needed to be delivered is capable to match those needs. Innovation requires greater collaboration, a process that is connecting everyone involved in the process from discovery, to design, through to the final viable product, to be on the same platform and contributing their part to the final offering.
Let’s explore some of the parts of the new innovation order:
There is a transition occurring that has considerable implications for us all: the rise of the business ecosystem that is driven particularly by digitalization, connectivity, and new, more open models of collaboration. Business ecosystems are influencing core structures and changing the industrial economy. Long-standing boundaries are blurring or even dissolving. There is a new shape of how we undertake business. It allows for co-evolving capacities around innovation, involving many parties collaborating with each other.
Supporting this, we are seeing the rise of enterprise platforms that enable this entrepreneurship so the combined forces of organizations, sharing in a mutual quest for finding new business value can liberate, harness and unleash capabilities in a shared endeavor.
To cope with a demanding customer we need a new integrated innovation engagement platform.
Without a doubt, digital and physical do operate at very different speeds. We not only need a new innovation management system, but we also need a modern engagement platform. We need to compress time to get closer to customer needs they expect to have solutions to today and they want to be involved in the design. This calls for an engagement platform that connects the consumer and their needs into the collaborators who can “picture or visualize” a solution and work together on working through the result, constantly validating this into those consumer needs through the engagement platform.
Equally, there is the need to work increasingly in a collaborative space due to the reality our product solutions are becoming more complex; combining technology, digital exchange, and product and service solutions, wrapped up in new business models and often new channels of delivery. That requires a radically different innovation process design, one based on the use of collaborative platforms to coordinate understanding and bring all involved in the final design.
This growing pressure requires us to find solutions that provide a cohesive and business-focused approach to the new social enterprise, where we seek engagement at scale for multiple arrays of communities and advocates, with data and innovation are at their operating core.
Why are B2B platforms important for your future innovation work?
Technology and digital are rapidly changing our society and our business. We are facing greater connections, increased dialogues from all stakeholders and we need to engage in a constant, even daily basis, with them. The customer is having a stronger voice within the process than ever before, they are influencing design and functions for their product and service solutions.
The customer is influencing the solution provider by sharing expectations and demands. They are far more mobile and freer in their choice than ever before.
B2B platform ecosystems underpin some of the most significant opportunities in the digital transformation of industry and society. To use their potential in full, business leaders and policy-makers must work together and take decisive action.
Today, seven out of the ten of the most valuable companies globally are based on platform business models. These are the creation of digital communities and marketplaces that allow different groups to interest and transact. Apple, Google, Amazon, and Alibaba are stand out versions of platform companies.
McKinsey has suggested $60 trillion, making up 30% of the global economy can be mitigated by digital platforms in 5 to 6 years’ time. Yet today less than 10% of established companies have adopted or investigating effective platform strategies
We are seeing the growing importance of B2B platforms
Over the next decade, one of the most prominent aspects of digital transformation will be the creation of vast, interconnected ecosystems enabled by industrial B2B platforms. They can do this by enabling the “outcome economy”, which will reshape how industries are defined, how ecosystem participants interact, how stakeholders’ needs are met, and how value is created and shared.
In brief, what’s new about B2B platforms?
Platforms work differently from traditional businesses in three important ways:
- Value shifts. Historically, value has been created “upstream” and systematically pushed down the value chain to the consumer. Platform business models create value in an iterative and continuous fashion across entire ecosystems.
- Non-linear growth. They need to be designed differently. Linear designed systems just do not work, they are slowing down and crippling so much of the creative process innovation requires. Also by connecting up more people capable of adding value into a prospective innovation design generates this “Network effect”. This connecting into a diverse and often highly specialized knowledge can accelerate the velocity of change for how value is created (and past products destroyed) for new innovative solutions.
- Trust. This is a foundational element between market participants, who must understand and apply a core set of principles to govern platform-powered ecosystems. Past traditional competitors might even want to work with you as you see the complementary value between you and this is enabled far better on a platform basis where there is recognized the combination effect delivers to the customers desired needs.
Platforms enable exchanges and collaborations and shorten the time to market for the type of product that is needed today, one that has this technology, service and original product thinking that takes solutions into new highly valued ones, that can transform and change market dynamics that fit with customer desires of connected, responsive, versatile, adaptive and constantly keeping pace with their needs in a collaborative environment.
What is a business platform?
“A business platform is a business model that creates value by facilitating exchanges between two or more interdependent groups, usually consumers and producers”
There are multiple definitions of platforms. Let’s keep it simple here. You share and exchange together on an interoperable infrastructure, fueled by data exchanges. They have the potential for multi-stakeholder interactions. where people, processes, policies and network technology are available to enable value exchanges in a trusting environment.
The dynamics go way beyond one-on-one collaborating. These exchanges can get turbocharged.
The issue is coming to terms with the expansion of your interests beyond your enterprise. The challenge to past linear models all well-managed internally get thrown open. By working within a platform of collaborators you have competitors, customers, and suppliers all contributing new value and radically different insights
We need to appreciate a platform is not just a collection of technology housed in one place (on the platform) it aim is to offer solutions that consumers and producers will value. It can offer an integrated suite of software products, but this use of the word “platform” is a marketing term as it still is a linear business. because their operations are well-described by the typical linear supply chain. These linear supply chains seek to “push” their market model but we are recognizing increasingly that physical assets and employees don’t scale well. Networks do and here the “pull” effect shifts the value potentially significantly and the transformation towards technology and a digital transformation is altering our thinking of investment within organizations.
The idea is to harness greater resources and create scale and growing collaboration in relationships, often called the network effect. The use of a platform is to look to create new markets and opportunities differently, in collaborative environments, that would be unlikely within the one organization, Network effects are the incremental benefit gained by an existing user for each new user that joins the network.
Network effects are a key characteristic that distinguishes platforms from other business models.
The network effect is where increasingly more users engage with or on a platform, then the more attractive the platform becomes to potential new users and to those learning and extracting from the platform exchanges. When more users attract more users, a dynamic is created that in turn triggers a self-reinforcing cycle of growth.
Let’s quickly explain here: There are two kinds of network effects: direct network effects (where more users attract more users) and indirect network effects (where more users of one side of the platform attract more users on the other side of the platform). Platforms can be two-sided, as in the case of freelancers being matched with projects. They can also be multi-sided, as in the case of media platforms, which serve viewers, content providers, and advertisers.
Today we are seeing investors see platform investment having greater potential than the linear models due to this scaling and networking effect as innovations emerge that have “hard to replicate” effects.
Platform business models aren’t new, they are going all the way back to early marketplaces, bazaars and auction houses in ancient Rome, where you needed this two-sided environment to trade.
Today’s new order is investing in platforms and ecosystems to accelerate the innovation need
Platforms require a network of partners, collaborating and contributing their expertise into exploring and exploiting new solutions, tapping into this inter-firm knowledge flow and experience with innovative solutions, ones that are more aligned to customer needs, solving challenges and managing the growing complexity these are having. To get to this, organizations need to open up, seek out collaborations across a wide spectrum of contributors that can combine in very different product design.
We need to harness the capacity of learning through the competencies for new knowledge acquiring. We need to replenish the internal diminishing stocks of knowledge with a constant flow of new knowledge. This comes from outside, it comes through networks, relationships and collaborations increasingly built on ecosystem and platforms.