The Hot New Business Model & How You Can Build It
When platforms enter your marketplace they virtually always win. That’s why pipeline giants such as Walmart, Nike, John Deere and GE are all scrambling to incorporate platforms into their models.
The good news: Harvard Business Review has highlighted a business model that’s really rocking in today’s economy and outlines why it’s here to stay.
The not-so-great news: movement from the pipeline to platform won’t be the easiest task your organization will endeavor.
Going from this familiar, linear path
To an iterative, expanding ecosystem where the two arrows have double-sided points!
This isn’t your mother’s business model, but it’s creating unprecedented value for organizations willing to adopt it for all or part of their services. And we’ve been privileged to help clients on this journey.
HBR expertly outlined the essential shifts you’d be making (and I’m paraphrasing):
- You’re building a community, creating relationships that never existed, rather than gaining an advantage by controlling scarce assets.
- You’re persuading and facilitating value creation, not controlling or dictating it.
- You’re creating value for a circular, iterative ecosystem, not a customer at the end of a linear supply chain.
Those are some pretty major shifts for most of us. It’s one thing to even begin to envision what that could look like, or take a bold stance to make the shift part of your strategy. But then it’s a “where do I even start?” Here’s what we’ve seen our clients do that make them successful:
Start with the customer, not the business
Anchor the project in a salient customer pain point, not a business pain point. This is the start of “letting go” (facilitating, not controlling) and allowing the customers’ unmet needs to guide your new business model. Spend 4 months understanding the people in your ecosystem and really digging into the pain points that will drive behavior change.
- Don’t tell them what you’d like to build, but instead ask them where they struggle, what matters to them, listen and watch for the clues that highlight their unmet and unarticulated needs.
- Learn what they value, what are they willing to exchange for that value ($ or otherwise).
Create Quick Concepts
Create 2-3 concepts for what that platform circle might look like. Use what you learned about the players in the ecosystem to understand how the value is exchanged. What can your org bring to that? What would you have to build or buy? These are prototypes and should include a 90-day learning plan for how to test “will people engage with it?” and “will this financially work for my organization?”
- Play with the business model the way you see your colleagues in engineering or design play with prototypes. Get off excel and onto a whiteboard to sketch possible flows and exchanges of data and money. They are possibilities to test in the market (for 30 days), not prove in a boardroom.
Test Fast and Cheap
If you get to the stage where you have 2-3 platform concepts, you will feel the urge to either build one of those concepts or shut things down because they are too far from the status quo. Pick a 3rd option: run a 30-day test for $10k. See how much you learn; look for confirming and disconfirming data and see if there’s a nugget worth another 30-day test. (Here’s an example of one we did.)
Curving that familiar straight line of a pipeline model may feel risky. But exploring a potential new service while maintaining the core is worth an affordable, set amount of time, money and effort. Happy platforming!