In order to scale to meet the needs of digital today, our definition of producers and consumers must change.
Today’s traditional business model is simple. Create products and services that customers want and sell them for profit. In this traditional business model, a company takes on the role of producer creating products and services for its customers. As customers, we assume the consumer role, deciding whether we want to buy and/or use a company’s products and services. The traditional business model pushes products and services from the producer to the consumer. In doing so, the focus is around efficiency and developing relevant processes to make that push cost effective.
Take for example a hotel that a bunch of rooms available to rent to travelers. The hotel company is the producer renting rooms to travelers, which are the consumers. Ten or so years ago, this was the accepted way of finding and booking rooms.
Digitisation has totally disrupted that model. Forever.
Global access to products and services through digital channels has re-defined the market. Companies are struggling to scale to satisfy their customer base using traditional business models. The hard realisation is that one producer, or one company, cannot meet the needs of all its consumers, or its customers . It needs partners. Or put a different way, the creation of value across the business, what the customer wants, must come from multiple producers. The company is just one of those producers.
This has given rise to new business models that enables companies to scale through digital. Instead of the company always being the producer, why not enable other third parties to create value for your consumers.
When your company is no longer the single producer of products and services, you need to dust off those corporate facilitation skills. How you find and empower producers to work within your business ecosystem are new norm challenges. So, it’s less about command and control, and more about incentivise and partner. Through a well managed network of producers and consumer will your business scale have those meaningful interactions. The consumer gets relevant products and services from the potentially many different producers. The company role is to provide the platform upon which to make this happen.
As a traveler, what I’m looking for is a place to stay. Instead of a single host, a single producer, the traveler is a consumer that wants access to multiple hosts. So instead of applying the traditional model of going to a single producer like a Hilton, Hyatt, or Four Seasons, the traveler wants to access to all candidate hosts. The consumer wants access to multiple producers. In doing so, the traveler can better satisfy their needs by working with multiple hosts. This is how AirBnB is winning. It’s in the platform business to facilitate and scale the interations between hosts and travelers by investing to creating the best customer experiences at every step in the process.
Being Platformed
The new model is a simple conceptual shift away from the traditional model where we have multiple producers. However, operationalising a well-managed ecosystem of producers and consumer is non-trivial. The business must grapple with new capabilities, understand network effects, build communities, scale interactions, invest more in delivering amazing customer experiences, better manage agencies, partners and vendors. So, Being Platformed focuses on the design, build and run of platforms that underpin and support thriving ecosystems of producers and consumers.
Where Next?
- AHEAD: Examples of successful companies Being Platformed
- HOME: The start of the Business Platforms series
