Business Model Innovation For Brand Growth | Module 2

Introduction

This module is made up of 11 parts, each a video presentation of between 2-8 minutes long. In total there are 60 minutes of video content.

Topics covered:

• Why ‘Network Effects’, ‘Learning Effects’ and ‘Data Effects’ are so powerful and how incumbents can generate them to deepen relationships and defend against competitors

• The 10 platform strategies that all incumbents should understand

• The 5 key steps to integrate a platform-based strategy into your corporate, digital, financial and operational strategy.

There are some additional reading materials and a recommended ‘learning task’ to undertake after each video.

Part 1: 5 Key Principles

Platform businesses are taking over the world. Investors prefer them to traditional businesses because they are asset-light and have ‘exponential’ potential. The 5 key principles for creating a platform strategy that can impact a company’s valuation.

Learning task:

• Rate your company today against the 5 key principles. How far are they understood within your company?

What type of base technology do you have in place today which you can leverage to create a platform business model?

Learning task:

• Map your existing systems and tools to the matrix in the video.

• Where are you strong and weak?

• What have your competitors got in place already, or are planning?

Introduction to the 5 key steps. How platform-based business models work and how do they create value. Introduction to ‘Network Effects’ and how Uber exploits them. The 3 key attributes of a successful platform business.

Learning task:

• Consider carefully how ‘network effects’ create value in different ways to traditional economic models. Think about how AirBnB, Facebook or eBay operate. If you have some sort of ‘platform’ in operation today, how far does it match the 3 attributes?

How four different types of ‘Network Effects’ deliver value and create defensibility. How eBay and Facebook operate. The movement towards collaborative online-to-offline platforms, ideal for incumbents.

Learning task:

• Read the accompanying articles on network effects and start to consider what sort of platform you could create.

Platforms leverage networks of participants and other people’s assets. They succeed when they create new value for all participants in their ‘ecosystems’. The opportunity is to incorporate some of these approaches into traditional product-centric businesses.

Learning task:

• Which aspects of the chart does your organisation exemplify?

• How would you explain the differences between produce and platform businesses to your colleagues?

Deep dive analysis on how Amazon re-conceived its business model in 2000 and is now able to create self-sustaining ‘growth flywheels’ built on synergies between all its activities. The financial impact of this transformation.

Learning task:

• Show this video to your colleagues and discuss with them how your company could do something similar.

What traditional businesses can learn from how Apple, Google, Tencent and Xiaomi developed their business models. Method for re-conceiving your role within ecosystems.

Learning task:

• Go through the ecosystem mapping process with your team.

Platforms scale and generate revenue in very different ways. Traditional business plans are not appropriate. It’s critical that finance teams understand the economics of platforms and that plans with different metrics are created.

Learning task:

• Consider how to engage the CFO and finance department on this topic. Get them to go on this course!

Some platform strategies are easier to implement than others. Others have a greater impact. There are many options for incumbents, including M&A, which are described in detail here. But less than 2% of incumbents have an effective platform strategy today.

Learning task:

• Which strategies has your company already activated? How successful are they so far?

• Is there an opportunity to do more or different?

An effective platform strategy should create greater ‘pull’ for the most profitable parts of the core business. But a new organisational structure with new skills and metrics is needed to enable this new overall business model.

Learning task:

• What will be the most profitable/valuable parts of the core business in 3-5 years time?

• What will be commoditised?

The 12 key questions to ask about your current (or planned) platform strategy and implementation, to impact your valuation.

Learning task:

• Rate your current activity against the check-list. How do you score?

• Use the check-list and scoring to engage colleagues across functions: from Strategy to IT to Operations to Finance to Marketing.

You have now reached the end of Module 2: Platform, Network and Ecosystem Know-How. If you have enjoyed the course so far, you can enrol in Module 3: Business Model Pioneers from the Course Catalogue to continue the Business Model Innovation For Brand Growth course.