The Fine Art Of Becoming A Platform Company

One doesn’t have to be a technology-saturated startup to evolve to a platform company. Technology, for sure, smooths the way. But just as important is an understanding of where and how to target a platform strategy, versus attempting to spray it across the enterprise.

Surprisingly, 49% of 375 large companies recently analyzed by Accenture do not have a platform strategy at all. But companies should not pursue platform strategies just for the sake of having a platform, the team of Accenture co-authors, led by Ram Ramalingam, point out.

The good news is that it’s never too late to pursue such a strategy. “A business that didn’t start life on the internet is more than capable of rapidly adapting a platform strategy,” the report relates. The goal of a platform strategy is to share costs and risks in major capital projects with customers, suppliers and industry peers. Collaboration can also help participants gain insights for improving their offerings and expanding their market reach,

Ten percent of the companies studied were what the co-authors call “full-platform companies—whose entire business model is based on a platform strategy.” Forty-nine percent had no platform strategies during the period studied, 2019 through 2022.

Of particular interest to Ramalingam and his co-authors were another 41% of companies they call “platform adopters,” who “pursue platform strategies for specific purposes” such as launching new ventures or enhancing customer experiences.

These targeted platform strategies are working out well. Platform adopters generated, on average, two percentage points higher margins than non-platforms companies during the years studied, they found.

Successful platform adopters set out with three goals in mind:

• Create a completely new customer experience.
• Develop new business models.
• Combine business and technology capabilities in unique ways to deliver value and ease of use to all participants.

Innovative thinking that combines parts of the business makes for transformative platform initiatives, the Accenture team relates. They point to the experience of Nike, which employed a platform strategy to aggregate customer offerings and provide a hub for athletes via its Training Club and Run Club applications. “This unique community gives Nike customers a much more sophisticated experience,” they explain. “The platform strategy also goes the extra mile for Nike, allowing the company to capture valuable data insights, offer more personalized products and services, and even decompose existing capabilities and offer them to business partners as individual services such as inventory visibility.”

The bottom line: “ Since adopting its platform strategy, Nike has seen the share of overall brand revenue attributed to its digital business climb from 10% to 24%.”

Resilience to change — an elusive pursuit to the vast majority of companies — is easier to achieve for platform adopters. They “exhibit higher levels of resilience in nearly every measure, including financial discipline, technology, sustainability, sales, and supply chain and operations. This translates into sustainable improvements in everything from operating efficiencies and speed to market to customer loyalty.”

What does it take to evolve into a platform business? For starters, it may depend on a company’s industry or business situation, the Accenture co-authors emphasize. For example, “some industries are more conducive to platform businesses than others due to the presence of multiple user groups and the potential for network effects.” Plus, there may already be existing platform ecosystems within one’s industry sector.

Importantly, organizations should have cultures of openness. “Platform adoption will require people to share their knowledge in an open, networked environment,” the co-authors advise.

Plus, companies pursuing platform strategies should have “an appetite for ecosystem-building,” they caution. “Transitioning to a platform business involves more than just changing a business model; it’s about building and nurturing a vibrant ecosystem of users and partners.”

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