What is a digital platform business model?

Digital drives constant change. We live in dynamic times where speed and agility are becoming an essential part of business DNA; along with the need to navigate uncharted waters with limited resources and without certainty of where to invest to generate future growth.

It’s time to adopt a digital platform mindset. This requires companies to abandon the linear value-chain and expand to multi-party business models that are built on partner ecosystem innovation and collaboration.

The most successful companies in the world are adding digital platform business models to their mix.

A digital platform business model is how an organization enables a business ecosystem to create value and generate revenue. Moving from fixed and linear value chains to multi-sided interactions between the members in the ecosystem cultivates innovation and drives new ideas and offerings.

In a world where few innovations are created solely in-house, the co-innovation model helps you better serve customers, increasing satisfaction and stickiness, and leads to revenue growth, network effect and economics that are far harder to copy.

Digital platform network effects*

Digital Platform Revenue Growth

  • Companies that add more partners, diversify and increase the attractiveness of their offerings attract more customers. More customers attract more partners to join the platform.
  • Network effect can be multiplied and help increase reach if platform partners make these offerings available to their customers. 
  • This leads to a more efficient business as cost of operating the platforms drops, which can then be leveraged to offer more attractive pricing to customers. 

*Diagram based on Amazon's Flywheel

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Digital is changing the rules of the economy; new technologies are emerging at speed, customer expectations are changing dramatically, and new players are disrupting the value chain. While many companies are embarking on a digital transformation journey, each and every industry has its own unique challenges to understand and opportunities to grasp. Read more

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