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The emergence of Platform-led enterprises

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By Arun Meena, Founder & CEO, RHA Technologies

What is the common link between self-driving cars, artificial intelligence, quantum computing, mobile proliferation, and cloud computing? They are all either already the foundation for Platform business or are going to be the germinators of many in the future.

Scalability, connectivity, resilience,and flexibility are the inherent characteristics that have enabled Platform businesses to become the driving force of today and perhaps future market Gorillas. The huge market valuations enjoyed by tech majors are a testimony of this reality. And unlike the breakup of AT&T,Platforms will be difficult to contain.

Deloitte analysis bears out that “platforms represent a transition from a traditional “make one, sell one” model to that of a network orchestrator, a “many make” model. The market values companies that are network orchestrators, with an average revenue-to-market-capitalization ratio of 8X versus 2X for service providers and 1X for asset builders.”

According to McKinsey, “Platforms focus on business solutions to serve clients (internal or external) and to supply other platforms. They operate as independent entities that bring together business, technology, governance, processes, and people management and are empowered to move quickly. They are run by a platform owner, who takes end-to-end responsibility for providing the solution and operating it like a service.”

The challenge and the opportunity for businesses in India and globally is to survive and leverage these Platforms on one end and be the creator of a Platform business on the other. No business will be able to survive being completely untouched by any Platform.

The Indian stack of JAM (Jan Dhan, Aadhar, and Mobile)is the Indian government’s Platform for businesses that is acknowledged globally, and already all Indian businesses are touched by it.

The opposition being faced by Google in terms of future In-app monetisation and the connected 30% fee is the challenge for organisations leveraging the opportunity provided by the Android Platform-business. Apple faces similar struggles, and such issues will be a constant for Platform business life. The Platform owners constantly need to juggle between maximising their profitability vs maximising the Platform impact and value.

Reliance Jio and Reliance Retail are other examples of emerging Platforms from India. These are results of deep pockets. However, there is no reason why a Zomato or Swiggy cannot become Platform businesses. Similarly, there is space in healthcare, EV batteries/charging, agri-produce, banking, cargo, and nearly every sector that we interact with.

The foundation of all Platforms rests in their tech underpinning. The underlying architecture needs to be flexible, open, scalable and resilient enough to adapt to different ecosystem players and clients’ need. It needs to be able to incorporate emerging disruptions. The scalability and peak load handling capabilities need to be immense, and the business head needs to be fully invested in the technology capabilities and its growth.

According to Zinnov, platforms can be categorized into 5 distinct kinds based on their utility:
a) Insights Platforms – designed to deliver deep insights to the organization. Example includes Palantir
b) Technology Infrastructure Platforms – are mega platforms on top of which other platforms are built. Azure, Alicloud, AWS are prominent examples
c) Consumer Platforms – are the most common platforms which we use in our everyday lives at an individual capacity. The likes of Uber, Lyft, Netflix are examples
d) Service Platforms – allow for seamless delivery of services to consumers and businesses. Example includes Tesla’s on-demand platform that updates the features of their electric power train, infotainment system, and other parts of the car
e) Asset Platforms – provide visibility and control of physical assets and workforce. Thingworx is a prime example of an asset platform that helps large manufacturers manage and automate their factory operations

Platform business needs rapid scaling for establishment, profitability, and future relevance. It needs to have the willingness to sacrifice revenues for reducing friction and lubricating dependence of key audiences.

Platform building starts with defining the platform vision. Clarity is required on what value will be added to which audience. This will have a bearing on the type of solution that will be offered and how it will reach the market. The other big question is the desired and possible velocities to monetisation and the method to be adopted. Provided that the above passes the test of validating all assumptions and listing possible challenges – the business needs to next focus on building the Minimum Viable Product (MVP). Once the MVP is ready, the journey to Platform’s growth and hopeful success begins. This requires patience and persistence with flexibility of mindset and collaboration as a key strategy.

What are the implications for businesses that will not become Platforms? Is their existence meaningless / insignificant? Obviously not, look at the example of PayTM taking the battle to Google and being a catalyst for the possible creation of an alternate Platform.

Away from the above-cited conflict situation, all other businesses need to first accept the reality of dominance and the need for Platforms. They need to hone themselves into Platform-riders. All businesses need to ensure that their existence is neither dependent on a single Platform nor on a single value proposition to counter existential threats.

For success and growth as Platform-rider businesses,they need to be riding multiple Platforms. The retail brands are already doing so by riding multiple eCommerce Platforms, in addition to developing their own online sales strategy. They will also need to strengthen their presence in community Platforms like Facebook and not limit themselves to transaction Platforms of eCommerce marketplaces.

The technology implications of managing life as a Platform-rider begins with ensuring that the founding team has a tech co-founder. They need to ensure that the business is able to leverage the multiple transactions between different users, buyers, or suppliers across different Platforms and Platform-kinds. They need to be active on the cutting edge of incorporating the latest tech advancements to ensure increasing relevance for Platforms.

VU Televisions is a good example of being able to leverage the latest TV trends to ensure that they are increasingly valuable to Flipkart as the ecommerce Platform. Additionally, VU is successfully able to manage the challenge of Flipkart owned TV brand by strengthening its leverage of Amazon and the offline retail network Platform.

If you have an interesting article / experience / case study to share, please get in touch with us at [email protected]


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