Digital platforms are now among the most important and influential companies in the world. Airbnb in accommodation, Amazon in retail, Haier in home appliances, or Uber in transportation, countless platforms have created new ways to connect supply and demand more closely than ever before.
Disruptive companies like these—typically unicorns—upend traditional business models and create new ones within them. As a result, they’ve changed how we live, work, and play—and in the process, they’ve changed industries like healthcare, education, transportation, and real estate.
In this rapidly changing environment, leaders understand how platforms operate and diverge from traditional business models—critical knowledge for strategists who want to compete in today’s platform economy.
Transition from traditional to platform models
In a world where customer needs and expectations are constantly evolving, a linear value chain is no longer fit for purpose. Therefore, to remain competitive, businesses must adopt an agile approach to creating value based on a continuous cycle of experimentation and learning. This means moving away from a linear value chain to an iterative and dynamic model: the platform.
Platforms are unique in their ability to create value by connecting various stakeholders including users, developers and businesses. This ecosystem allows for a constant flow of feedback and data that can be used to improve the user experience. For example, Haier has developed an open platform that allows third-party developers to create applications and services for its products, which has been incredibly successful. The company now has over 100 million users and over 1,000 developers building apps for its products.
In the past, businesses mainly depended on closed systems that controlled all aspects of the value chain. However, this may not be feasible in today’s fast-paced, collaborative economy – platforms can create value by connecting people and resources in new ways, emphasizing collaboration and peer-to-peer interaction. For example, Airbnb connects people looking for a place to stay with people who have a place to share. Uber connects people who want to drive with drivers who have cars.
Huda Khan, a professor at the University of Aberdeen, said in an email that “these platforms provide value to users by connecting to each other.” “They are very scalable and open, which allows them to reach critical mass quickly. And they’re built for two-sided markets, meaning they can create value for users and developers. This is why “platforms are becoming the dominant business model across industries,” according to a study published by McKinsey.
Platforms that make an impact
There are three main platform classifications: marketplaces, social networks, and developer platforms.
Marketplaces are platforms that connect buyers and sellers. eBay is one company that has realized the value of the online marketplace, rapidly growing in popularity as a digital bridge for consumer goods. Facebook Marketplace and Alibaba soon joined the consumer goods space with their own platforms. Others bypass physical goods and focus only on the digital marketplace. Apple App Store and Google Play are the leaders of the mind in the field of digital goods, excluding Metaverse.
Social networks are platforms that connect people. While Facebook enjoyed dominance in the category in the late 2000s, the sector was and still is highly competitive. Instagram and LinkedIn are now serious killers with their micro-focused platforms based on photo, business networking and video sharing.
Developer platforms are convenient for many by connecting developers with the tools they need to build apps. The best-known examples are the iOS and Android platforms, which provide tools for developers to build apps on their respective devices. However, no code platforms are rapidly gaining popularity, especially among b2b SaaS companies. It has become common for companies fighting the unicorn situation to base their entire workflows on codeless platforms like Figma or AirTable.
According to his research Harvard Business ReviewThese three types of platforms “bring together producers and consumers in high-value exchanges” will enhance each industry. This is observed in real estate, consumers have faced problems, confusion and expensive logistics for many years.
Ready for the untapped potential of the modern platform
A study published by Grand View Research last year valued the global real estate market at $3.69 trillion. In the year A compound annual growth rate (CAGR) of 5.2 percent is forecast from 2022 to 2030. However, no matter how large, the industry is notoriously fragmented, resulting in an inefficient and time-consuming process for both buyers and sellers. However, with the advent of new digital platforms like Unreal Estate, the process is becoming more efficient and transparent.
Kyle Stoner, founder of Unreal Estate, said, “I started Unreal Estate because I was sick of seeing people paying ridiculously high fees to brokers when they didn’t have to.” But, he continued, “I knew there had to be a better way, and I was determined to build it.”
Platform businesses like Unreal Estate can scale quickly and reach a global audience for three reasons. First, they typically have very low fixed costs, resulting in high value for money compared to traditional market offerings. Second, they often contain valuable user data—which can be used to improve the platform, making it more valuable to its users. Unreal Estate, for example, uses data from more than 30,000 homes sold on its platform to create a consumer dashboard for step-by-step guidance for buyers and sellers — allowing AI to enhance the home-search experience, such as providing buyer recommendations and narrowing the search radius. .
This has huge implications for leaders. First, to build a platform business you need to deeply understand your users and what they value. Second, you must be able to do it quickly and efficiently to reach a global audience. So, if you’re looking to start a platform business, or if you’re already running one, here are three tips from Unreal Estate to help you out.
1. Focus on your users and their value: For example, if you’re building a platform for artists, make sure you deeply understand the needs and values of your artist users. What do you think about? What needs are not met by existing platforms? Build your platform with those needs and values in mind and you’re more likely to be successful.
2. Execute quickly and efficiently: For example, if you are building a global platform, you need to be able to reach your audience quickly and efficiently. That means having the right team in place, with the right skills and expertise. It also means having the right infrastructure in place so you can scale quickly and efficiently.
3. Use data to improve your platform and make it more valuable to your users. For example, if you’re building a platform for artists, use data to understand what content is most popular with your users. Then use that data to improve your platform and make it more valuable to your users.
In conclusion, as platforms disrupt more and more industries, it’s critical that businesses understand how they work. Only then can you take advantage of the opportunities these new platforms offer. As we have seen, platforms are built around core interactions between two or more groups of users. This interaction is facilitated by some technology that allows users to connect with each other and exchange value. Platforms use network effects to grow their user base, making the platform more valuable to users. And since platforms often enjoy first-mover advantage and natural monopoly status, businesses should keep an eye on them.
Platform businesses are changing how we live and work, and we need to keep up. After all, platforms are the backbone of the collaborative economy, and the collaborative economy is the future of business.