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This is essentially what Amazon did 18 years ago — let other people fulfill their customer requirements and rent out their infrastructure to enable it. This results in stickier customers and a lower cost structure funded by others.

Knowledge economy expert Luis Garicano joins IE Business School | IE University

So, GE decided to create an ecosystem of innovators to create digital solutions for customers. The idea was that GE Digital would be at the heart of this platform and generate significant new revenue streams from the platform. You need to boldly re-allocate capital and resources if you want to be able to play in this market.

How To Get Started. So what steps should corporates take to get started?

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Try new approaches, like joint ventures with entrepreneurs, to grab opportunities fast before they disappear and to build up experience and knowledge, he advises. One example is Factor10, an independent corporate company builder, which is working with European energy provider Vattenfall and other incumbents. This model is relatively new but proving very popular.

Hybrid Models. For example, a manufacturer could add a marketplace of spare parts or a platform of complementary value-added services. A retailer could supplement its inventory with a long tail of complementary products. This combination of traditional models and platforms is at the heart of many successful businesses, says Reillier.

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Apple uses a value chain to produce its hardware — raw materials are transformed into phones and laptops that are then sold at a margin. But increasingly the value of the firm is driven by its millions of apps, through the platform app store. They want analysts to start assessing them on the health of their ecosystem — and the margin generated — rather than the number of products sold. Platform 2. Established companies not only have to play catch-up, they may have to leapfrog since some of the best-known Platform 1.

We are at the very beginning of this trend, and probably a few years before widespread adoption, but it is important to keep an eye on this next wave of disruption.

Business model

State of Play. The adoption of a platform model — like Amazon with its marketplace, Apple with its appstore, or Alibaba from birth — should mean a big improvement in financial performance metrics. Chat with one of our students to hear about their experiences firsthand. Additional information, brochures and forms can be mailed to you upon request. Request information.

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