Why businesses need a platform strategy in the digital era
PLATFORMS are quickly becoming a competitive advantage that can cost-effectively create value for businesses.
“Platforms are environments, computing or otherwise, that connect different groups and derive benefits from others participating in the platform. The underlying concept covers companies from Google to Facebook to video game platform Steam to Taser (more on that later),” according to the MIT.
Businesses that do not adopt the platform strategy will realize that their expansion plans are less effective and more costly. Consequently, non-adopters will be behind in the digital era.
An Accenture report shows that as much as 88 percent of companies consider digital platforms central to their business strategy.
Regardless of industry, companies will be affected by platform economics. So, it will be good to act quickly in order to avoid falling back.
Here are three reasons why companies need to include a platform strategy to fuel their business plans.
#1 | Growing the network
The network effect is the impact of how entities become proportionately more valuable when they are connected. Its significance can be observed from the success of tech giants the like of Google, Facebook, and Amazon.
A digital platform is able to give businesses a community and that is a powerful tool. Besides letting users feel a sense of belonging, it will help increase the number of users for the business as well. This is a natural flywheel effect of platform strategies.
#2 | Getting ahead of competitors
Competition is always going to be a business concern, which is why it is better to get ahead before others do. Incorporating a platform strategy in the business plan will make it harder for the competition to catch up.
When a digital platform has been established in a market, it is very difficult for a new entrant to participate competitively. A strong user base is a strong point against competitors, even more so than expensive advertising campaigns.
#3 | Foster tighter relationships
A platform strategy includes building an ecosystem of all the things that users need and want. Apple’s products are a perfect example of how a platform strategy can keep users tight with the brand.
If a business acts as a one-stop-center for all users’ needs and wants, it will be hard to move them to another. In that view, a platform strategy can help businesses secure and foster stronger ties with its users. That will definitely raise the retention rate and reduce users churn.
In fewer words, a platform strategy can help a business scale faster and bigger.
Without a well-thought-out platform strategy, a business may find itself increasingly at disadvantage and struggle for growth.
Platform strategies are undoubtedly powerful and pervasive. It is a sure path for businesses to continue their pursuit in the digital era.
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