Research released by Accenture reveals that despite the potential for small and traditional businesses to become successful digital platform companies, as few as 10 percent of startu[s focused on digital platform business models will become profitable independent entities in the coming years.
Accenture’s report, “Five Ways to Win with Digital Platforms,” published in collaboration with the G20 Young Entrepreneurs’ Alliance, assesses the ability of 16 G20 economies to support the flourishing of digital platforms. Accenture’s analysis shows $20 billion was invested in digital platforms between 2010 and 2015 in 1,053 publicly announced deals. More than half of this investment took place between 2014 and 2015.
Yet Accenture notes that only 15 percent of Fortune 100 companies have developed digital platform business models to date. Successful digital platforms will proliferate as small businesses and traditional industries follow the lead set by digital-born platform companies, the report suggests. Accenture identifies five factors critical to sustaining critical mass in digital platforms.
“Digital platforms are not just the preserve of digital born companies, like Airbnb and Alibaba, but are now becoming a default business model in most industry sectors, both B2B and B2C,” said Francis Hintermann, managing director, Accenture Research. “To enjoy efficiencies and high rates of growth, companies will need to transform everything from the way they co-create goods and services with third parties, tailor their offerings to customers, and price them dynamically.”
These are the five factors the report outlines:
- Proposition: Create differentiated platform services that extend beyond the point of transaction; and that support both customers on the demand side and service providers on the supply side.
- Personalization: Target customers through tailored experiences across all channels, using customer data to anticipate needs and offer bespoke experiences.
- Price: Apply new pricing models, such as pay-as-you-go, ‘freemiums’, and subscription pricing to respond to peak demand.
- Protection: Embed trust at the heart of the platform, using both prevention and compensation techniques to attract customers and differentiate the platform.
- Partners: Scale the platform rapidly by identifying digital partners – such as app developers and payment service providers – who can enrich the platform experience and fulfil customer needs.
“Crucially, they will only sustain critical mass by working with digital partners who can deliver the range of functional services that complete the customer experience,” Hintermann added.