So you want to have a digital platform. It’s only natural — all the cool kids do. Billion-dollar startups built around digital platforms are drawing customers, employees, and investors. And despite their relatively short existences, digital platforms such as Uber, Airbnb, Pinterest, and Snapchat are wreaking havoc on traditional businesses.
What differentiates most of these upstarts is the way they create value. They bring together a network of individuals who both create and share in that value. Network businesses have always been around, from matchmakers to real estate brokers, but it’s the move to digital platforms that has led to market-shaking effects. Digital platforms, such as online communication channels or marketplaces, allow for rapid and inexpensive scaling, among other advantages. Digital platforms are grease for the flywheel, facilitating the rapid exchange of value between network participants at near-zero marginal cost.
Organizations that manage digital networks (we call them network orchestrators) are different from traditional product and service providers. They begin with different values, invest in different assets, and choose different leaders. These differences mean that it can be very difficult for an established, legacy organization to build a digital platform. Difficult, but not impossible. Here are three ways it can be done.
1. Use existing tools. Think about this option as digital platform “lite.” Companies that go this route use preexisting digital platform tools to engage their networks. Facebook, Twitter, and Instagram are prime examples of these tools, and all offer opportunities for two-way, collaborative communication.
While the use of these free platforms is widespread among companies today, these organizations went beyond the normal marketing messaging, collaborating with their networks of users and adding more value. This type of digital platform has limitations and isn’t going to transform your organization, but it’s a great way to dip your toes in the digital platform waters.
2. Find a partner or invest. At the next level we have partnering with or taking a stake in a digital platform. This is for organizations that want to diversify to include digital platforms but don’t currently have the skill sets or time to do it themselves.