August 29, 2019 by Speakers' Spotlight
How Digital Platforms are Transforming our Economy
Having worked closely with leading global brands on the integration of new business models and emerging technologies, Lital Marom has become a sought-after speaker on disruption, innovation, technology, and new economic models.
She recently answered some questions for us on the impact digital platforms are having on our economy. This includes tech giants like AirBnB, Uber, and Facebook. While traditional business models are still proving fruitful today, it’s platform-based companies that are seeing accelerated growth. Lital spoke to us about why organizations can’t afford to ignore this new business model, and how they can adopt a platform-based model within their own business strategies.
How would you describe the implications of digital platforms for businesses?
The global economy is changing. Although traditional companies are still prominent, growth is coming from elsewhere, largely from the big technology companies.
Businesses must adapt to survive. If a company can’t rise up through digital enhancements, it will likely be pushed into commodity.
Digital platforms enable new forms of business models with the potential to continue to disrupt and transform many industries. In many instances, the rise of the platforms has replaced older, traditional, business models. For example, vacation rental and taxi businesses have been disrupted by digital apps developed by AirBnb, Uber, and Lyft.
In addition to its impact on shopping, consumer activities, and sales models, the platform economy also impacts the workforce, the types of jobs that are available, and the nature of those jobs. Many roles have become digitized or been replaced entirely by technology.
What are the changes businesses need to apply to their offerings?
It used to be that the most important part of a product was its features. But that’s no longer the case, and the largest differentiator is now about a company’s access to data and information.
Twenty years ago, buying a car was based on features: how large was the engine? Did it have a radio? Today, those have become minimum requirements, and the differentiators are more sophisticated. For example, connectivity. Tesla cars are a great example; the ability to recharge is facilitated by the use of real-time data. This creates value that is incremental to the hardware.
Similarly, with a lot of products the value add is increasing with digital capability.
While it’s easy to see how a car can be connected, the same example can be used with non-technological examples as well. Take spices — an utterly simple biological ingredient. But add a technology layer on top by assigning each spice a flavour profile, and then you’ll end up creating a predictive analysis tool to suggest spice pairings, and suddenly you have a connective layer that adds digital value.
How will this impact Business-to-Business (B2B) players?
Business-to-consumer (B2C) markets have already faced a revolution in consumer applications from digital applications, with giant digital platforms like Amazon, Uber, Google, and Facebook dominating the landscape. Now that change is coming to the B2B market. Those who will leverage digital applications and digital platforms will be the ones to prosper.
There are some critical ingredients that companies need for success. Firstly, it’s crucial to be willing to adapt to new ideas, especially ones that aren’t created internally. That requires organizational culture, from the top down, to understand and value the importance of innovation.
Another critical ingredient is the ability to leverage networks of potential partners and collaborators. Many companies don’t have the management capacity to do this well, in terms of the influence they have over external parties (e.g., supply chain partners).
What are the biggest challenges and risks?
Digital capabilities fundamentally change the dynamics of the environment in which companies operate.
- New regulatory constraints: While we still often consider this the “Wild West” in terms of security regulations, governments are starting to catch up. As a result, we expect data costs to rise along with compliance costs. As your platform grows, you must also consider anti-trust regulations ensuring fair competition. More attention will have to go toward gaining customer trust, matching regional policy, and demonstrating data transparency.
- Growth pressures: There is more competition than ever before in the platform economy. Strategists must identity new growth opportunities. Consider searching for opportunities in adjacent marketplaces; like Amazon in entertainment and groceries, Google in autonomous vehicles, Facebook in virtual reality and payments and AirBnb building an end-to-end travel platform (they recently acquired HotelTonight, a booking service focused on last-minute trips to boutique and independent hotels).
- A shift from B2C to B2B: While many platforms are still B2C, there are huge opportunities available in the B2B market. Consider Salesforce, which bought data visualization and analytics leader Tableau for $15.7 billion, in order to better serve their enterprise clients. The challenge will be to create new ecosystems without alienating valuable existing customers.
- Technology disruption: Some large platform companies see AI as the key to future growth and productivity. For others, 5G has the most potential. Will this technology reinforce existing platforms or will it unleash a new wave of players? Of course, success is never guaranteed or immediate. Blockchain, for instance, has yet to make a major impact on platforms, but that may change soon with Facebook’s recently announced Libra financial play and IBM’s use of blockchain for logistics.
- Measuring digital assets: There are also key questions around how companies measure the value of their offering, or understand the market value cap. The digital revolution is creating assets which are extremely difficult, or impossible, to measure. For example, how do you assess the value of user-generated content, or shareability? These don’t show up as tangible assets.
What would you highlight as the key message of your talk “Think BIG and Act FAST”?
It’s easy to claim all innovation needs is adaptive technology, but the truth is that people are limited in how disruptive they let that technology be. If it isn’t integrated throughout the business or supply chain, or isn’t an integral part of the business model, it isn’t really innovative.
Companies need to think beyond the box of their own systems in order to prosper. Where are their connection points, and how do they create value from those? That’s the key to thinking big.
Not only is the world moving faster, but the speed at which major new technology platforms are being created is reducing the downtime between the arrivals of the waves of innovation.
Today, multiple waves of new technologies arrive simultaneously — from the cloud, AI, and AR/VR to more niche projects like hyperloop and supersonic planes. They create many new opportunities in every part of the economy. It’s up to businesses to seize BIG opportunities, and FAST.
A sought-after keynote speaker, Lital Marom focuses on innovation, digital disruption, new economies of scale, growth strategies, leadership in the 21st century and the future of work. She has spoken at TEDx Amsterdam, Mobile World Congress Asia, Interactive Advertising Bureau (IAB), Canadian Internet Marketing Conference, iHollywood, and many industry conferences around the world.
Interested in learning more about Lital and what she can bring to your next event? Email us at [email protected].