I’ve been writing about a concept called The Platformed Enterprise, which defines how customer-centricity actually works within highly successful organizations. The basic concept is aligning the entire business around shared outcome-based value creation (value externally with customers and partners, plus value internally through top-and bottom-line revenue improvements.)
First, a refresher on key concepts
Yes, platform is becoming an overused term, but we need to re-introduce it within a new context that liberates it from the sole domain of digital and marketplaces. The fundamentals of platforms have been successfully implemented not only in the operating models of the likes of Amazon and Apple, but also in traditional companies like John Deere.
A platform provides the rules and standards for any ecosystem to function in a unified fashion for strategic advantage. That means it can be applied to any ecosystem, whether it’s millions of IoT devices, a marketplace, or an organizational ecosystem (because nearly every business on the planet, even if relatively small, is an ecosystem with a lot of moving parts.)
Too much emphasis is being put on platform-based business models (PPBMs), which are transactional experiences focused on bringing complementary parties together on a platform to exchange products and services for money and other forms of value (ie. data). Its core benefit is scale and top-line competitive advantage through network effects. Nearly all conversations about platforms focus here (“how to be the next Uber of your category!”), but this is only half of the success equation.
Barely discussed are platform-based operating models (PBOM) (ie. how you work),which strategically orchestrate all elements of an enterprise ecosystem – people, processes, strategy, org structure, technology, regions, etc. – around differentiated, sustainable value creation, ie the core value proposition. Typical operating models aren’t optimized for ecosystems; they’re optimized to enable every separate department, business unit and region to linearly produce their own separate outcomes.
Success today depends more on your operating model than a snazzy new business model.
Your operating model must align with your business model
The below graphic defines the relationship between platforming an experience (vertical axis) and platforming the operating model (horizontal axis). The level of maturity defines how widespread and consistently an organization is applying platform principles externally and internally to drive massively efficient growth and scale. On the low end, traditional businesses are siloed internally and deliver fragmented experiences externally. On the high end, I'll credit Peter Weill with his term of ecosystem driver (although I have some fundamental disagreements with his model, it's a useful concept that can be applied internally and externally.)
An experience is what you deliver. The operating model is how you work. Focus on the latter, and you’ll improve the former every time. Combine both and you have found the holy growth grail of highly efficient, compounded scale.
The transformation that’s truly needed is to break free of the current way we do business into a new, more future-ready operating model that delivers more freedom, flexibility and agility. Without this step, any snazzy new digital or CX investment will end up as lipstick on a pig and fail to accomplish your goals.
The five traits of the platformed enterprise
What’s under the hood of the above graphic is a maturity model of each layer of the Platformed Enterprise – Strategy, Experience, Operating Model, and Technology (more on that here) – against the five traits.
The first three are at the heart of every high-growth customer-centric business, and should look familiar if you joined my Customer Centricity webinar last year:
Value -- Laser focus on an aspirational, outcome-based value that serves as the unifying principle for the entire organization and extended ecosystem
Clarity -- how clear is the value externally, and how clear is it for every employee in the organization to deliver on that value (ie. "line of sight" to customer outcome)
Coherence -- the degree to which the organization acts like a coherent system for value creation instead of a collection of siloed components.
The next two build on that foundation to achieve platform-based efficiency and scale:
Optimization, which builds on this concept of shared value. I’ve written before that the right strategy serves as a compass and a sword, allowing organizations to cut away anything that isn’t directly driving the outcome-based value you’re trying to create. Apple and Amazon both do this ruthlessly well in different ways. Check out this article from McKinsey on how this concept is applied within high-performance product teams; we’re simply expanding the concept to apply to the entire organization.
Replication to drive massive scale; once you’ve got the platform DNA defined, you can replicate like a beneficial virus. On the vertical axis (Experience) this takes the form of replicated assets: instead of owning a car fleet, Uber used the platform to massively replicate ride production. Likewise, Amazon’s platform replicates product development, and AirBnB replicates rooms. But wait, there’s more. On the horizontal axis, Amazon replicated and productized its own technology architecture into AWS, and its core competencies in logistics and warehousing into Amazon Services.
In my next post I’ll dive more deeply into these three and highlight how Amazon and Apple both deliver on all six attributes in very different ways.
Questions and comments are appreciated!