Seeing Now | Beginning to See | On the Horizon
It is time to begin thinking about the platform landscape in 2022 and beyond. If your company hasn’t kicked off its strategic planning process for 2022, it is time to start. If platforms are not on the list of things to assess, they should be.
Platform companies have grown over the past decade to become an increasingly important part of the global economy. The largest platforms have grown to such size and scale they have become likened to infrastructure for the digital economy. Platform companies have become so integral in getting things done it is hard not to bump up against or become dependent on their many and varied services. This is true for the world’s largest companies as well as for startups. Indeed, most unicorns (startups gaining a valuation of $1 billion or more) are platform businesses. One analysis found the ratio to be as high as 70 percent. (1)
Strategic planning
There are a variety of tools that companies use to prepare strategic plans. These include PEST, PESTEL, SWOT, Porter’s Five Forces Analysis, and more.
Some companies prepare detailed economic and product forecasts. Others go further and develop scenarios to explore multiple plausible futures.
Each of these methods is data-hungry, especially if done well. Extensive research is required to identify and understand the evolving platform business environment and what this means for one’s firm. Ultimately, the information must be turned into recommendations that the executive team can use to make better strategic planning decisions.
Ideally, if corporate foresight is done in a manner that is more insightful and faster than rivals, it will yield better strategy and greater competitive advantage.
A simple but effective way to start is by collecting and categorizing trends. These trends can be categorized into three buckets: what we are Seeing Now, Beginning to See, and, finally, what is On the Horizon.
Seeing now
This category should capture developments that are taking place now that have ramifications for the company within 12-18 months. A great deal is happening across the platform economy every week, but a few examples stand out. One is the backlash against big tech, which is largely focused on the world’s largest platforms—Facebook, Google, Apple, and Amazon. Near-term scanning should assess how regulatory, tax, and data measures aimed at the major platforms will play out and with what consequences.
A second development is the significant growth of b2b platforms. There is a wave of new entrants as well as incumbent investments. Some of these incumbent plays represent new ways of serving existing markets such as ABBs eMart marketplaces in Brazil and India. (2) Others take adjacency plays, such as Shell’s platform Oren, which focuses on the mining sector. (3)
A third development is growing competition for “creators”. Many of the big social media platforms have announced special war chests to attract and/or retain top talent. The TikTok Creator Fund, created in July 2020 with an initial $200 million to distribute, is expected to grow to $1 billion over 3 years. In the past several months, Google, Facebook, and Twitter have also announced war chests of their own to incentivize and monetize creators. (4)
These examples are just a start on what would be needed for a systematic mapping. Platforms now touch so many industries, geographies, with implications that cut across economics, technology, politics that teams can expect to spend significant time and effort to identify and analyze present developments.
Beginning to See
This category includes platform emerging developments that will have a business impact over the 18 to 36-month period. One medium-term development comes from the rise of platforms that mint and sell non-fungible tokens (NFTs). These tokens are a blockchain innovation that conveys a license to use digital art, a music file, or anything unique that can be stored digitally. NFT marketplaces are platforms that enable creators to sell blockchain-enabled NFTs to consumers, and consumers to auction or trade NFTs on a growing number of NFT marketplaces, such as OpenSea, Nifty Gateway, super rare, and NBA Top Shot. Participants have traded over $2.5 billion in NFTs in the first half of 2021.(5)
One of the attractions is that NFTs offer significant flexibility in how rewards are structured and delivered. For example, a fan who attends a concert could have a ticket that has an NFT collectible attached to it. These features offer new ways for influencers, artists, creators, and others to join with brands to issue NFTs that are both certifiably scarce and can be traded for valuable items in the digital or physical worlds. Over the medium term, it is reasonable to assume that there will be significant innovation around NFT marketplaces and the way they bundle customer rewards and experiences.
As the sector matures, NFT platforms are expected to move from novel projects, driven largely by crypto enthusiasts, to more mainstream consumers. As this happens, companies will open new opportunities to partner with NFT platforms with important implications for customer engagement and loyalty. By one count, NFTs could disrupt 20 industries.(6)
On the Horizon
This category looks further out to developments that do not immediately impact the business but could be expected to in the future beyond 36 months.
One interesting trend here is the global spread of super apps. At one time, platforms were largely viewed as a powerful force for unbundling services. One classic unbundling analysis focused on the explosion of marketplaces that were picking apart Craiglist.(7) Super apps reflect an opposite trend- rebundling. Super apps combine multiple applications (typically specific service verticals) into one easy-to-use application. For the user having various applications in one app is much more convenient and user-friendly. For the provider, it is a way to deliver more services and attract a much larger base of users. Interestingly these supper apps got their start in emerging markets, namely China, Southeast Asia, and Africa.(8)
There are now early signs that super app ambitions are spreading to developed markets. Just last week, Revolut, Europe's $33 billion fintech, announced it is introducing a travel booking feature. Some see the potential for it to become Europe's first 'super app', integrating multiple apps within a single user-friendly. Revolut has built a user base of 16 million since it was founded in 2015. The company began as a payment platform for spending abroad by attracting customers seeking lower currency exchange fees. The company has since expanded its financial service offerings, such as trading shares and cryptocurrency. In addition to expanding into accommodation, the company has signaled its interest in offering integrations with flights, ride-sharing, and other services.9
Where and how super apps spread could have important implications for many companies within the next three years.
Headwind vs. Tailwind Analysis
After key platform developments have been identified, the next step is to determine the impact on the business. Most developments can be divided into headwinds and tailwinds. The headwinds are developments that create major resistance to growth and performance. Tailwinds are just the opposite. They are developments that provide a favorable boost to the business. The challenge is that every business is different. What is a headwind for one company can be a major tailwind for another.
The team at Reforge, a San Francisco-based tech company that supports startups, showed these differences through an analysis of the impacts of the Covid-19 pandemic.(10) As the chart below shows, some platform companies such as Lyft, Uber, and Eventbrite faced major headwinds. However, other platform companies, such as Zoom, Peloton, and Instacart received a significant boost.
Instead of coding companies, a platform 2022 scanning effort can apply the headwind, tailwind analysis to developments that were surfaced through the horizon scanning. Once this is done, the cards representing the key developments can be sorted into their respective tailwinds and headwinds categories. These then can be displayed in an integrated mapping as shown below.
It can take some time to assemble the necessary information and engage various stakeholders across the organization for key input and vetting. While a consensus will likely quickly form around many issues and their strategic implications for the business, some topics are likely to face significant disagreement. A good strategic planning process should surface these areas quickly so they can be given the proper consideration and analysis.
Next year will be here before you know it. The frameworks outlined here can help kickstart the process of preparing strategic plans for 2022 and beyond with a special focus on the rapidly evolving platform landscape.