Digital Transformation Game Plan

Chapter 14. Digital Platforms

Digital transformation is often associated with a goal to become a digitally enabled platform business. The concept of platform business has captured the interests of many business executives across different industries. Some of the most successful companies in the Digital Age are platform businesses (or API business): Apple’s iTunes, Alibaba, Amazon’s Marketplace, Salesforce, Uber, and Airbnb, just to name a few. A platform business is a nonlinear business model connecting ecosystem participants.

The platform could be a marketplace that connects the supplier and consumers to each other like Amazon, Uber, and Airbnb. Or, it could be a community that allows users to interact with one another socially like Facebook, Twitter, and Google so that advertisers can benefit from reaching a large audience. The platforms create value through the network effect wherein benefits to all sides increase exponentially as the number of participants increases. It can also provide a foundation for other participants in the ecosystem to go faster; for example; Salesforce and Amazon providing client relationship management and fulfillment capability for small- and medium-sized businesses to quickly get up to speed and focus on their core value creation.

Connecting ecosystem participants is not a new concept. Marketplaces have existed throughout human history, from ancient bazaars to modern shopping malls, where merchants and shoppers meet and trade. Newspapers have also ...