Industry Insights

The Platform Economy Is Here. Here’s How to Become a Major Player

By Dan Saks / January 15, 2018

Platform Economy Here

Many of today’s most successful companies share one thing in common: They have no inventory. Airbnb doesn’t own any hotels, Lyft doesn’t own any cars, and Facebook doesn’t own any content. Companies like these are thriving for a simple reason—platforms.

For communications service providers (CSPs), many of which have invested billions of dollars in physical assets, this inventory-less business model seems like a much tougher sell. Yet companies in a range of industries, including telecommunications, are pursuing platform strategies. In fact, IDC predicts that by 2018, more than 50 percent of large enterprises will create or partner with industry platforms. That number rises to 80 percent of enterprises with advanced digital transformation strategies.

For CSPs, wrestling with legacy technology and business models may seem like huge roadblocks to becoming a platform company. However, most telecom providers already have many of the key ingredients that organizations need to successfully transform their businesses. Here are three ways CSPs can use what they have to become leading platform companies.

1.) Focus on the customer experience

CSPs already provide customers with products and services they use every day. As such, they’ve successfully created one of the most important elements you need for a successful platform: a large, active customer base. To go to the next level, CSPs can offer additional capabilities from third-parties and drive the all-important network effects that lead to platform success.

However, CSPs need to remain focused on the customer experience. Many companies imagine their platform experiences to be seamless and easy to use. The reality is often more similar to a broken-down car, where the gas pedal is not connected to the engine, and the brake pedal is not connected to the wheels.

Many companies think their platforms are easy to use. The reality is often closer to a broken-down car.

Tech bells and whistles are nice, but they are meaningless if they fail to drive value for the customer. It is crucial to ensure that technology enhancements are well integrated into the customer experience.

2.) Make partnering your default

Most companies, including CSPs, have traditionally focused on building products and systems, protecting them, and using them to gain an advantage. This has defined business competition for decades. Now, the digital economy demands more active engagement with partners to understand the competition and where to find value to deliver to your own customers.

The simple truth is that an ecosystem of partner solutions provides far more value than one company ever could on its own. CSPs that partner well will ultimately beat those that don’t.

3.) Find the value first, worry about execution later

Platforms can provide real value, but only if the business case is clear and there is internal alignment around a digital transformation strategy. If your organization is not on the same page, your platform project will become the latest tech buzzword to fail to meet its potential. Align and find value first, and then execute your transformation plans.

Now Is the Time to Make the Transition

Looking back over the past 60 years, 88 percent of Fortune 500 companies are no longer in business, and thanks to the digital economy the pace of change is accelerating. Today, the companies that will endure—and thrive—are platform companies. It may be a strange new world for many CSPs, but most already have what they need to make the transition. By prioritizing the user experience, engaging with partners, and aligning from the get-go, CSPs will be in the best position to successfully become major players in the platform economy.

Dan Saks is co-founder and co-CEO of AppDirect.

This post was originally published on Telecom Reseller. Click here to read it.