Launched in 2012, YourStory’s book review The department includes more than 345 titles on creativity, innovation, entrepreneurship and digital transformation. See also related columns The turning point, Tuesdays from Techie, And the clips.
The book provides an insightful overview of the rise of digital platforms and business strategy Platform Strategy: Transform Your Business with AI, Platforms, and Human Intelligence by Tero Ojanperä and Timo O Vuori.
Here are my main summaries from the 200-page guide, also summarized in the table below. See also my notes on Related books balance berth, winning in the digital age, The future’s technology , ultimatum for innovation, digital vision, from asc to exponential, And the machine, platform, crowd.
Dr. Tero Oganbera is the co-founder of the artificial intelligence lab Silo AI, and he is a venture capitalist. Professor Timo O’Furry is a strategic advisor and professor at Aalto University. Both authors are from Helsinki, Finland.
The growth of smart platforms is a recent event — even Steve Jobs was initially reluctant to open the App Store at its launch in 2008 to third-party developers for fear of losing quality control, as Nobel Prize winner Bengt Holmstrom explains in the book’s introduction.
Compared to physical markets, digital platforms offer advantages of speed, size, intelligence, customization, convenience, and risk management. APIs (“arithmetic handshake”) Opening new channels of cooperation between organizations.
“It takes courage and skill to run open platforms,” Bengt warns, noting the complexity and risks of coordinating the ecosystem. Leading companies here include Amazon (API mandated in 2002) and Haier (outsiders can also lead teams of employees to design new products).
“You can create a platform by focusing. Do one thing exceptionally well and then scale,” the authors began, citing Apple and Tesla as examples.
Large established companies have also launched platforms, such as elevator company KONE (Platform for Intelligent Buildings), chemical company Lanxess (Chemicals Market Chemedis), and agricultural manufacturer John Deere (Open Platform for Partners).
In addition to platform-driven network effects and AI-powered learning loops, businesses need Creative insights. “Smart platforms leverage human intelligence, creativity, and courage to take unexpected leaps to expand their offering,” the authors assert.
Essentially, they add, “strategic moves to break categories require human creativity.” Leaders must stimulate employee creativity. These tips and examples are well illustrated in seven chapters of the book.
1. Turning fear into energy
Shifting a company’s strategy to launch a new platform game isn’t easy, and it can lead to leadership paralysis, fear, panic, and denial.
Examples include Nokia’s delay in entering the platform game and avoiding Google’s Android, Microsoft’s acquisition of the Nokia hardware business by Steve Ballmer (later written off by Satya Nadella), early US newspaper websites that were merely copies of the print edition, and early annoyance NASA engineers Open innovation.
Reasons for this fear include losing control, changing the business model, and reducing the space for personal judgment. As corrective measures, the authors advise group vigilance, psychological safety, small early gains, and early partnership communication.
At the organizational level, ongoing participatory communication and capacity building initiatives help employees see the big picture and respond accordingly. With partners, early communication and a clear expression of vision and a sense of momentum are recommended.
Successful examples include Netflix (from DVD to streaming), Tetrapak (parts market), energy company E.ON (artificial intelligence literacy initiatives), and electronic vehicle shipping company Virta (more visibility for partner brands).
2. Friction removal
Causes of friction include the great effort, time, and money involved in activities such as research, which lead to anxiety and uncertainty. “Successful platforms started from identifying industries and processes with high friction,” the authors note.
Using technology, smart matchmaking, fewer decisions, taking advantage of unused assets, and building strong brands can help in this regard. Unwanted behaviors can be discerned through rules of transparency, feedback, and governance.
Examples include power tool giant Hilti (tool delivery and delivery via fleet management), Amazon Prime (faster delivery), Paytm (Payment QR codes), Upwork (grading systems for self-employed workers), and Gubbe (connecting young people with older people). for companionship).
Other practices cited are by John Deere (predictive maintenance), Uber (vehicle location tracking), Flexport (digitizing the supply chain for visibility), Tradelens from Maersk-IBM (blockchain for business visibility), and Airbnb (home damage guarantees). .
3. Create fans
The authors recommend launching a platform hub, followed by experimental engagement and expansion. Experimentation, exploration, and emotional cues help here.
Examples including Amazon (starting with books; recommendation engines), IKEA (Acquisition of Task Rabbit), spotify (focus on streaming rather than downloads), and Facebook (starting on campus).
Other examples mentioned are peloton (starting with bikes and cycling lessons, then running and yoga with multi-language instructions), Tesla (Continuous improvement via software updates; problems resolved by users on its Facebook community page), and drop box (Growth through referrals).
“Let the community do the talking for you,” the authors advise. Community admins can help here, via online and offline interactions.
4. Create a learning loop
AI-powered learning loops are key to creating a virtuous cycle of insights and predictions. Data preparation herein involves processing incomplete, erroneous or corrupted data.
Examples include Tesla (Automotive data collection and updates over the air), Australian Explosive Company Eureka (improving blasting results), Uber (Surprise Pricing), a Danish engineering company rambol (Water Quality Prediction), the Spanish energy company Repsol (Active drilling).
The authors advise that “the rules for how data are shared and the rights of each partner are extremely important.” Explainable artificial intelligence is another emerging concern in this field.
“It is not enough to innovate internally. The authors urge that you need external partners to create compelling services for your customers.
APIs help create such an ecosystem of partners virtually and automatically, as seen by Google (Google Maps), OpenTable (Uber booking) and John Deere (transfer of data from farmer equipment).
KONE has leveraged its APIs for hotel service robots and elevator calls to enable partnerships with Robotise (delivery robots) and Blindsquare (a navigation app for the blind).
The authors advise “Developing APIs as Products and Defining a Business Model”. This includes product owners, roadmaps, connection plans, and lifecycles for internal and external APIs.
Companies need to know what to charge, when, and how much to use the API. Objectives, metrics, and governance models are key here to develop appropriate platforms for the future. “Security, privacy, and quality audits are part of the process,” the authors add.
Other examples are Finland’s OP Financial Group (in-house APIs), Skyscanner (revenue sharing with apps and websites), and Apple (developers conferences). Leaf and Stripe contains the first API samples.
6. Human creativity
A fascinating chapter shows how creating the unexpected and taking disruptive leaps calls for conceptual insights from creativity and thinking outside the box.
The authors advise steps such as trend tracking, measurements from other industries, What if Thinking, team diversity, spaces, creative activities, external partnerships and acquisitions.
Examples include Uber (going from limousines to regular cars, UberRush, UberEats), Amazon (launching Kindle, Alexa, AWS; acquisition of Whole Foods), Disney (launching its own streaming service), TradeLens (by Maersk and IBM), and Apple (from iPhone to smartwatch).
A useful framework for assessing a company’s strength is Jay Barney’s VRIN (Valuable, Rare, Incomparable, Not Replaceable). Alternative uses of strengths should also be considered, eg. Tesla (from car batteries to home and solar energy).
These strategies include a mixture of internal and external thinking, and even the acquisition of companies with platform capabilities. Examples of such acquisitions include Visa (Plaid), Target (Shipt), and Facebook (Instagram and Chainspace).
7. Organize around AI
This provocative chapter proposes the use of artificial intelligence not only for processes and data, but also to reformulate the organizational structure.
This includes assigning tasks, forming teams, and changing communication. Examples include Sensoneo (designing garbage collection methods) and Futurice (matching patients with doctors and even furniture companies).
“AI can see everything at once and all the time,” the authors note. This ability can help to better coordinate basic operations. Other uses could be to design messages based on the employee’s communication style.
AI can be effective and free from bias to some extent. Despite the endogenous capabilities of AI, there must be a role for humans to make the final decision. Having an explanation interface or building human confidence in AI can help here.
Other scenarios include digital twins of factories and even humans, for example. Finnair (to deal with flight congestion), Nestle (factory in Juuka), Hilti (Building Information Modeling).
The book ends by showing how although the Nokia phone business has not survived the platform era, the company has transformed itself into the world of 5G networks. Several of its employees have moved on to work on platform strategies at other companies such as Goldman Sachs, Thomson Reuters, KONE, Google, and Hilti.
In summary, the book presents compelling case studies and frameworks for organizational business transformation using platform strategies (see more resources at Online companion). The stories and references will be useful for the first aspiring startups on the platform as well as the established companies diversifying in the platform space.
YourStory also published a pocket brochure Entrepreneur Proverbs and Sayings: A World of Inspiration for Startups As a creative and motivational guide for innovators (downloadable as apps here: apple, Android).