Marco, what is the platform economy in brief?
The platform economy is an economic and social set of activities facilitated by platforms. Platforms create value by facilitating exchanges between two or more interdependent groups, usually consumers and producers, allowing them to interact and transact in an ecosystem.
What’s the opportunity the platform economy presents?
It’s obvious to everyone that Amazon, Airbnb and Uber are extremely successful companies. What’s not obvious to everyone is that they’re platform businesses, what exactly a platform business model is and why it is so powerful.
According to McKinsey, companies pursuing platform strategies are set to generate more than $60 trillion in revenue by 2025 (30% of global corporate revenue). Yet, only 3% of established companies have adopted an active platform strategy. So there is a clear first mover advantage in a winner-takes-all scenario.
Are there any indications that things are beginning to change?
Look around: even your local health club nowadays makes much of its money not by what it sells but by facilitating the interactions or transactions of others – just like farmers’ markets or stock exchanges already do. So, everyone can create a platform and have a chance to succeed. The pie is big enough for everyone to win.
Whatever your business is, you are or you will compete with or build on top of existing platforms.
But this game needs to be played with platform rules.
You have trained more than 250 people in public and private sectors, including Fortune500. What have you observed and why training on platform economy is needed?
Unexplored potential to discover platform opportunities lies in many fragmented value chains, above all in B2B (Business to Business activities) and in industries where the uptake of digitalization is still very low, like the healthcare and energy sectors. However, this potential is not capitalised well enough.
Top management in companies across industries often lacks tools and frameworks to convert products & services to minimum viable platforms. They are unaware of the specific metrics that must be used to track the Return on Investment from running a platform business and how these metrics differ from traditional linear businesses.
What’s the biggest misconception you came across from people willing to create a platform?
First, platform economy is wrongly considered a technology domain only. This is very much the case of the Nordic countries, which are very high-tech oriented. They are missing the human factor – platforms are not just a suite of software products. It’s not a push strategy, it’s a pull strategy.
Second, established companies often approach platform building with traditional competitive dynamics that do not work well in open ecosystems. The current understanding of platforms is still heavily rooted in the industrial age mindset. On the contrary, platform business models require leaders to shift production from inside the company to letting outside users transact in an ecosystem, with the aim of capturing part of the exchanged value.
What are people struggling the most with and what’s a common mistake in building a platform?
Growing initial supply and demand on a platform, building an engaged community of users and a strong network effect can at first be a challenging task. Platform entrepreneurs often make the mistake of trying to build both supply and demand side of a platform simultaneously. Rather, they should identify the hardest side and focus on getting that side first, which means most of the time subsidizing that side’s participation to the platform.
If supply is scarce or difficult to come by, getting those suppliers on a platform will very likely also drive demand. If there is less demand than supply, collecting the demand side to one place will make building supply easy.
What will student learn in your course?
They will learn a design & validation framework to create their own platform and fine tune a sustainable business model around it. By using a set of tools and live examples of effective platform strategies, they will learn how to launch and monetise digital marketplaces.
Together, we will build a roadmap with step by steps actions to validate their platform ideas and test them with a prototyping approach. This course will equip students with actionable tools and techniques that can be immediately applied to their existing or future venture.
If you are still interested to join Marco’s class, it is possible by contacting Xamk International Coordinator email@example.com
Read more about the summer term at https://www.xamk.fi/en/education/summer-term/.