Thursday, December 13, 2018

Dynamic ecosystems make the decisive difference compared to classic linear business models.

The superiority of third-generation platforms over classic linear business models continued to increase in 2018.

Although the dominance of the USA in the platform world remains untouched at 67 percent, most new B2B platform models are emerging in Asia. Europe plays no role in the platform business, unfortunately also in industries as important for Germany as mechanical engineering, automotive, logistics, electrical engineering or chemicals.
What a "missed" opportunity for our traditional companies, which are concerned with lower transaction costs and the use of digital technology to build a marketplace. This is an old hat and the gap to the modern platform economy is widening!

The magic word is Ecosystem

Modern platform economy enables and promotes interactions in an ecosystem. The success and at the same time the difference lies in the "intelligent" control of the interactions between suppliers and customers.

The ownership and efficient management of as many production factors as possible in the value creation of large companies with a focus on high economies of scale are today even a competitive disadvantage compared to rapidly scalable platforms.
Changes in market mechanisms

Through the establishment of alliances in dynamic ecosystems, markets and their market mechanisms are changed or leveraged. Ecosystems create the decisive competitive advantages over classical platform models. Ecosystems create new value streams and new network effects between providers. While the platforms of the classical providers focus on the customer, in an ecosystem all partners achieve more business than before. By using dynamic ecosystems and alliances, new markets can be modelled and existing mechanisms changed.
In other words, an ecosystem grows because of the network effects between supply and demand. The more partners their customers bring with them, the faster the ecosystem grows. This results in an important shift of market shares from traditional trading and transaction platforms to such ecosystems. This in turn leads to a noticeably more difficult brand or product positioning with classic product and service business models.

The evolution from classical linear business model to platform business model (ecosystem)

In a linear business model, a provider sells a product or service directly to a customer. These models have no direct or dynamic ecosystem influence and suffer from strong competition. As a result, high investments in product, market research, customer demand analysis and the definition of the unique selling point are necessary.

Ecosystems draw their strength from the interaction data and derive new approaches for two- or multi-page markets (including network effects). Only those who can predict how one side of the market will react (e.g. demand) can adapt what will happen on the other side of the market (supplier).

The first generation is understood to mean marketplaces with supply and demand without intelligent interactions and according to the principle of critical mass, while the second generation (share economy) is understood to mean intelligent interactions between supply and demand or sharing of resources, capacities and capabilities.

With dynamic ecosystems, the third generation of the platform economy is established on the basis of complementary alliances.

By using the information economy in dynamic ecosystems, horizontal, vertical and lateral diversifications become much easier to establish. The third generation platforms are thus able to model new markets, change existing mechanisms, and above all have a strong focus on the generation of network effects by more partners and their customers or by partners and the expansion of the portfolio, for example in the form of a consistent API strategy as part of the corporate strategy.