Before the turn of the twenty-first century, the most successful businesses on the planet were true specialists. Whether they were in finance, automotive, retail or energy, most major firms succeeded by producing a handful of products or services and selling them to a well-established customer group.
But in the last 20 years, a new business model has taken over. Today’s most valuable firms don’t just produce goods – they connect customers to the things they want. Welcome to the age of the networked business.
This new approach to business has completely changed the rulebook. Instead of a transactional relationship, platform firms build ecosystems that give customers a series of connected products, services or experiences. And at the heart of this ecosystem is a positive feedback loop powered by the platform economy’s most valuable asset: data.
Making a successful platform business is all about turning data from a cost into a source of value, says George Marcotte, Managing Director, Accenture Applied Intelligence Lead UK and Ireland. “You may think you’re in a certain type of business, but in reality you’re also in the data business,” he says.
Marcotte points to the examples of Google, Amazon and Microsoft as firms that used data to identify a huge marketplace for cloud services – matching up their spare capacity with untapped customer demand. “They’ve all taken what is effectively a big cost centre for them and turned it into a profit centre,” he says.
“The point of the network is to aggregate demand and supply that is fairly disaggregated,” Marcotte says. And this isn’t just a hallmark of big technology companies. Even the mining industry is becoming more networked, with mining firms opting to source and aggregate scrap metal demand so they don’t have to resort to capital-intensive resource extraction.
So how should firms make the jump towards becoming a platform? Marcotte says that they should start by identifying new products and services that are adjacent to their core products. “Internally, there’s a bunch of data that firms have that’s trapped in siloed databases,” he says. By letting data scientists and strategic thinkers loose on that data, firms can identify patterns about their customer behaviour to infer needs that they may not be servicing.
Firms should start by asking themselves who the customers they want to attract are, and what those customers’ needs are. Once those customer needs have been identified, it’s time to put a new product or service that meets that need to the test. Here, speed is absolutely crucial. “As long as you can rapidly ideate and test something, you get a sense of what’s working and what’s not,” Marcotte says. The key here is to test new products quickly, and use data to figure out what’s working. One company Marcotte worked with tested 60 new financial service propositions in five years, even though it wasn’t in the financial services space at all.
And the more businesses experiment with exciting – and relevant – new products, the more likely it is that they’ll bring new customers into the fold and deepen their relationship with existing customers. “When you have a good quality digital product, service, or experience, everyone benefits – whether they’re old or new customers,” Marcotte says. By using data-driven experiments, firms can quickly get a handle on the kinds of products that might resonate with existing customers and help them reach new people altogether.
This ability to quickly test new propositions is a hallmark of software companies, with weekly – or even daily – update cycles that enable firms to trial new ideas quickly and throw out the ones that aren’t working. And once they’re in the marketplace, good new products tend to find a home, he says – pointing to the example of FirstHomeCoach, a startup that brings together solicitors, mortgage providers and insurers into one platform, reducing the hoops that people need to jump through to get on to the property ladder.
When it comes to buying a home, people usually find themselves steered towards products and services that it’s difficult to get excited about. But by embracing the platform approach, FirstHomeCoach has inverted this relationship and turned home buying into a coherent experience rather than a series of prosaic purchases. “Their perspective is: when you want a home, what you want is a home – you don’t want a mortgage,” Marcotte says.
But if other firms want to make the jump to becoming a platform, there’s only one way forward, Marcotte says: experimentation. “The pace of advancement is really driven by your ability to test and industrialise at speed.”
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