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The power of platformsNew strategies for innovation in a digitalizing world

BOOK PRESENTATION

based on 2-year research on digital platforms

Maurits Kreijveld, October 2014

Trends

• Globalization– specialization, consolidation, horizontal and vertical

integration

• Digit-all: – ICT, 3D-printing, genomics, crowdfunding, sensors, ...

• ‘Democratizing’– social media, DIY, cocreation

• Societal challenges and systems transitions– social innovation, sustainability, healthcare

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New innovation dynamics

• Cocreation of innovation:– networked– changing combinations, adaptive,

fluid– big and small enterprises, citizens,

makers, public-private partnerships

• Requires: coordination, speed, flexibility, openness

• In summary: needs … platforms

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Platforms

• Ecosystems of cocreating innovators, big and small

• Multiple and high-speed innovations, disruptive

• Components:1. Technical: standardized building blocks that can me

modified and rearranged2. Economical: marketplace, multi-sided markets3. Social: shared culture and values, contracts,

standards, governance

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Architecture

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Integration

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Dynamics

• Platforms combine:– Collaborative innovation– Network effects: ‘the winner takes it all’– Economies of scale and scope– User participation: consumers become prosumers,

user data is an asset.

• Usage and access are key: – Stimulate usage via sponsoring (‘free to consumer’)– Platform providers are in control– Innovation culture: open or closed

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Platforms are on the rise

• Everywhere, because of digitalizationICT, manufacturing, logistics, automotive, journalism and media, publishing, education, enterprise ….. Uber, Airbnb and .. IBM, Amazon

• Different types– Consumer: leveraging the crowd, sharing economy– Industrial: mostly technology based, standards– Public: worldwide, public-private, open source … e.g.

The internet

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App stores (Ch2)“This deal is less about the devices themselves, and more about the Windows Phone platform. In order to have any relevance in this new era, Microsoft must develop a strong ecosystem - at 4% market share, it still has a long way to go.”

Market research Frost & Sullivan in response to the takeover of Nokia by Microsoft , Sept, 4th 2013

• Apple, Google Android, Microsoft, Mozilla OS, Ububtu OS, Tizen … The winner takes it all?

• American ICT companies took over market leadership from European companies with a superior platform strategy

• These platforms are spreading to new areas such as payments and banking, automotive, healthcare, gaming …

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Healthcare (Ch3)The lack of standards and interoperability is hindering innovation in healthcare services

• Sensors (e.g. wearables) and Big Data: new entrants to the healthcare market

• Need for exchange of data, user participation• Platforms on the rise: Apple HealthKit, Google Fit,

HealthSuite, HealthVault,…• Finland: Active Life Home platform for healthcare,

medicine and home automation

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Smart energy meter• The energy production market is changing rapidly• The Dutch government decided to introduce a smart

energy meter in every house. This should help reduce the energy use in every household.

• But instead, it could have promoted the establishment of an energy platform that would help stimulate innovations and give rise to new products and services.

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3D-printing (Ch4)3D printing will revolutionize manufacturing

• 3D designing and 3D production techniques are developing rapidly. The market is maturing.

• Companies such as Stratasys and Autodesk lead the way by establishing integrated platforms based on hardware, software and marketplaces.

Crowdfunding (Ch5)“Crowdfunding will never be an alternative to regular financing”

Gerrit Zalm, CEO of ABN AMRO, Volkskrant 16 nov 2013

• Providers such as Symbid and Kickstarter are extending their services and curation of their platforms

• Will crowdfunding platforms become the new banks or will hybrid companies arise?

• Legislation is facing challenges to deal with the ambivalent nature of crowdfunding, being both social and financial

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Agriculture (Ch6)

• Genomics is changing the innovation model of potato breeding.

• The use of DNA techniques, leads to new specialization, new players.

• Power shifting from the field (famers) to the lab (breeders, biotech companies). Tendency to a more closed innovation.

• New platforms could also foster collaboration among small and medium sized companies

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Innovation strategies

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Ten lessons1. Open up2. Scale up

3. Foster partnerships and developers4. When necessary: reduce clutter

5. Show leadership6. Share (within the ecosystem)

7. Leverage users8. Promote use (‘free to consumer’)

9. Curate (quality, reputation)10. Evolve quickly (open-closed)

Challenges

• New competition from new entrants from different markets

• Monopolistic behavior‘the winner takes it all’

• User lock in:because of the tight integration of products and services

• Disruption: of markets, rules, legislation

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Read the book

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For more information please visit:

wisdomofthecrowd.nl/english

or contact me:

wisdomofcrowd [at] gmail.com

Kreijveld, M. (2014). De kracht van platformen. Nieuwe strategieën voor innoveren in een digitaliserende wereld. Deventer, Netherlands: Vakmedianet Management. ISBN: 9789462760264

The book was nominated for ‘Book of The Year’ by the Dutch Association for Certified Management Consultants (CMC)