How to thrive in the land of the tech giants

23 · 08 · 2018



Seven years ago (I can’t believe it either) I shared a post on Rebel Thinking that laid out my vision for the aggregated TIME macro-sector. In case you’re wondering, TIME stands for Technology (or Telecom), Information, Media and Entertainment. In the article, inspired by the release of a FastCompany magazine issue which featured four different cover photos, each depicting a famous entrepreneur, I discussed the business model adopted by the majority of these digital giants.

 

Seven years later, digital platforms are in the lead

 

In my original article, I theorised that the companies led by these digital entrepreneurs could prove more successful if they focused their efforts on controlling access to their service, becoming a relevant platform for other service or content providers, or even on managing the content shared on their platform. Let’s use Facebook as an example. They’re able to offer value to users provided those users are connected to the internet (access) through a device (Android, iOS) and are willing and able to either create or consume content. Take that Netflix, Facebook doesn’t have to pay their creators for content.

As time went by, Facebook became the new access gate – providing brands with a platform to advertise their products and services to the users most likely to appreciate them. I concluded my article by admitting that it’s difficult to predict which organisations will remain successful, and which will fail to adapt.

Since then, things have only gotten bigger. Recently, it was announced that Apple had just become the first company ever to be valued at $1 trillion. At this point, most TIME companies are just competing against themselves. One thing is clear, digital platforms are continuing to thrive. In an ultra-connected world, increasingly influenced by the collaborative economy, many smaller organisations and business-minded individuals are willing to create content with the intention of reaching consumers online through platforms like Airbnb and Craigslist. These platforms ‘share the wealth’ with smaller organisations, while retaining some value themselves, well, a few billion dollars worth of value. All the operators of these platforms need is content and they can either convince others to create this content for them (Google, Apple, Airbnb, Facebook), pay for it (Netflix) or develop it themselves (Microsoft).

Take a look at the images above, and you’ll notice a few interesting things start to arise:

  • Facebook has completely lost the battle for access. They tried with Facebook Home, but failed. However, they have mastered the art of convincing others to produce content on their behalf. In reality, Facebook is just an ads platform disguised as a social networking site – an excellent one at that. Now, they’re in the process of evolving from social network to customer relations platform – although they’re not there yet.
  • As a platform, Apple is not doing as well as you might think. They are reportedly trying to get bigger as a mobile ads platform, since their iOS market share is small and 82% of revenue still comes from selling products.
  • Amazon is prioritising multipurpose functionality. Not only are they making more money than Google and Facebook for every transaction on their platform, they could soon be making much more.
  • Microsoft have, by the far, the most diversified platforms. They’re not only strong in the corporate world, they’re also becoming more and more prominent in other areas thanks to recent acquisitions.
  • Google are becoming less relevant as a platform, relatively speaking (in real terms, they’re bigger than ever). While most users would still consider Google the ‘gate to the internet’, the war for access is over and Android has won.

On top of this, we’re on the verge of a massive shift in user behaviour. The big five are readying themselves for battle – AI and voice technology have arrived and they’re going to change everything. They provide users with access even when the user is not actively online. We’re going to be forced to adapt the way we brand and promote our products and services. Unlike SERPs, humans can only take in one message at a time – asking again and again for new options requires more effort than simply skimming through a page of text. And we humans don’t like to do things that require a lot of effort.

 

The digital platform model as a business model

 

The biggest players in the most digitally advanced sectors have massively strengthened their position as digital platforms over the last few years.

 

In 2018, TIME sectors were the most digitally advanced

Some research has been conducted to assess the competitive advantage maintained by platform based businesses (PbB). In a typical PbB, managers focus their attention on creating a platform for content creators (or producers of value, e.g. Airbnb hosts) and then leveraging those external resources, rather than relying on their own.

 

So, if I’m not a part of one of these companies, what’s in it for me?

 

The above image illustrates a Platform Design Toolkit, designed to demonstrate how digitally enabled markets work. Starting with a set of available business resources, the managers in charge are tasked with creating a way for others to access this set of resources – we refer to this set of resources as an infrastructure. Managers provide unbundled access to this infrastructure so that it can be used as a platform with the primary function of empowering and enabling independent exchanges. Third parties can then make use of these unbundled assets to create custom products and/or services in order to solve specific business challenges.

Let me give you an example. In a typical FMCG company there are lots of available resources such as knowledge of consumer habits, marketing capabilities, and the capacity to mass produce products people love. Most FMGCs limit themselves to producing and delivering products to the consumer, hoping consumers will stay loyal to their brand. However, for the millions of consumers who don’t know how to – let’s say – cook, pick out an outfit, or develop their own business plan, PbBs offer a more attractive alternative. An FMCG with tight margins could envision themselves as a PbB, making this underused resource available and helping other businesses build value through their platform. For example, by helping small bakeries keep better track of their products, fashion designers predict trends, or educators guide children in safer play. Meanwhile, the FMCG takes a share of their revenue.

 

The “winner takes it all” effect

 

In 2011, I had no idea who would ultimately win the digital race. Now I know it’s being won by PbBs. That said, I have a new concern relating to the size of these PbBs. Owners of these platforms are constantly entering new sectors, with very little effort, and the most successful digital moguls have amassed billions of users. What hope is there for “mid-sized organisations” trying to reposition themselves as platforms when Amazon is entering the food delivery business, Facebook has started doing micropayments, and Google is entering the retail comparison sector?

That said, I’m an optimist. I would never go as far as Morozov, who believes Google and Facebook are threatening the democratic process. I truly believe that people reward boldness, creativity, intelligence, effort and a long-term vision. I believe in five years I’ll be interacting with companies I don’t even know exist yet, but are led by people with a rebel thinking mindset. These organisations will thrive because they understand that to evolve from a product or service provider to a platform operator is the best way to get ahead in the race for relevance and access.

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Specialised in Digital Consultancy, Marketing and Paid Media. I am particularly interested in how business development can come from the hands of technology and how users are related in all of this. As well as spending years fighting the rebellion at Good Rebels, I've worked with elderly people as an entertainer. Taught children, as well…

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