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Today, Every Business Must Transform Itself Into A Platform

2016 November 30
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by Greg Satell

In 2001, Microsoft CEO Steve Ballmer declared war on the open source community. He called Linux a cancer and argued, essentially, that anybody who used open source resources in their was putting their business at risk. He even went as far as to urge the government not to support open source projects.

From Microsoft’s point of view, it was an understandable position. After all, its dominance of the industry was dependent on protecting its intellectual property. Yet a decade later, it open sourced Kinect, one of it’s most popular products ever. More recently, current CEO Satya Nadella declared that Microsoft loves Linux.

It was an startling shift and one the entire industry has long embraced as well. The reason why is simple: In a connected world, open beats closed and nobody can truly go it alone anymore. That’s why every business today must transform itself into a platform that connects to ecosystems of talent, technology and information outside the boundaries of the firm.

Ecosystems Of Talent

In the late 90’s McKinsey declared the war for talent and argued that, in a knowledge economy, having the right people is even more important than having the right strategy or technology.  Recruiting and retaining the “best and the brightest” became a corporate mantra because, it was thought, if you didn’t you wouldn’t have the skills to compete.

Yet the high flying consultants never stopped to ask, “What skills?” Not so long ago, people who could code in HTML, Flash and PHP were valued highly. Today, however, those who can work in Python or Ruby are more sought after. Other skills in specialized or proprietary technologies, like iOS or SharePoint may only be needed for short periods of time.

That’s why talent platforms have become so popular. On Upwork, for example, companies can find a wide range of specialists who can do everything from UX design to Facebook marketing. Toptal offers a similar service, but focuses on “rockstar” developers with highly advanced skills.

Open source communities themselves can be an effective platform to access skills. For example, when Google open sourced TensorFlow, one of its executives told me that it allowed the firm to access great talent across the world. “Since we made the decision to open-source, the code runs faster, it can do more things and it’s more flexible and convenient,” he said.

Ecosystems of Technology

It used to be that if you wanted to access technology, you had to sign on to somebody else’s proprietary platform. You couldn’t just buy an IBM mainframe, you had to adopt their operating system, application software and so on. Microsoft dominated the PC world for years, determining what capabilities you could access. Oracle and SAP played the same role with enterprise software, controlling the ecosystem through the database.

To understand how things have changed, take a look at Mendix, a company which has built a platform to power digital transformation and allows you to pull in resources from anywhere, including Amazon’s AWS, Microsoft’s Azure and IBM’s Bluemix. The interface is so simple and easy, that line managers can fully collaborate with technical staff to create applications.

So, for example, let’s say you wanted to build an application that could monitor machines in your factory, respond to voice commands and verify users. No problem. You can access Amazon’s IOT platform to integrate sensors, pull speech recognition and voice identification from Microsoft and access IBM’s Watson to help you make decisions based on the data.

A decade ago, even the world’s most sophisticated companies wouldn’t be able to access these capabilities at all. Even if they could, it would entail hiring teams of expensive consultants to spend months working to integrate the technology. Now, it can be done so easily that even non-technical teams can participate in designing solutions.

Ecosystems of Information

Amazon is the 800-pound gorilla of e-commerce. In 2015, it accounted for a full 60% of US online sales growth. One of the reasons that it is able to so thoroughly dominate is, as the largest e-commerce company on the planet, it has access to more data on consumer behavior than anyone else.

BloomReach is a platform that gives traditional retailers a fighting chance. It offers its clients high performance technology that rivals Amazon in sophistication and, just as importantly, it allows them to access more data than they ever could by themselves, which empowers them to derive important insights about what their customers want to buy.

To understand how it works, consider the challenges a retailer faces during the holiday season, which can account for as much as 50% of annual sales. Customers ordinarily shop by searching for general terms, such as “bicycle for 14 year old boy.” Ordinarily, a store like Toys “R” Us, could base results according to sales in its stores, but not much else.

However, by being able to access data from across the web, the company can generate landing pages that showcase the most popular brands, colors and styles and those pages can be updated as trends in the marketplace change. In effect, BloomReach helps even the playing field with Amazon.

Competing in A Networked Economy

It used to be that companies gained competitive advantage through optimizing their value chains. By building up proprietary resources and negotiating power with customers and suppliers, they could leverage power in the marketplace. Those incremental gains would then lead to greater competitive advantage, creating a virtuous cycle.

Yet today, it’s no longer about the resources you control, but those you can access and that’s no longer dependent on building market power, but by widening and deepening connections to ecosystems of talent, technology and information. So you can no longer think about your organization as a collection of tangible and intangible assets, you need to treat it as a platform.

Consider that Google, with all of its technological wizardry, open-sourced its machine learning tools to access talent it didn’t have. Or that even tech giants like IBM, Microsoft and Amazon need to distribute their products through open platforms. Or how major retailers like Toys “R” Us, Neiman Marcus and Williams Sonoma need to use BloomReach to learn about their customers.

Clearly, power has shifted from corporations to platforms and that means we have to think differently about how we compete.

So rather than thinking in terms of capturing markets, managers today need to think about unresolved problems in the marketplace and what resources they will need to access in order to solve them. Competitive advantage is no longer the sum of all efficiencies, but the sum of all connections.

– Greg

4 Responses leave one →
  1. DK group permalink
    December 25, 2016

    Microsoft CEO Steve Ballmer argured that open platform is a kind of cancer in 2001, but the current CEO Satya Nadella shows his interest in open platform which could indicate the trend of open platform is coming now. There are several advantages of open platform which have been mentioned in this article. First, open platform allowed the firm to access great talent across the world, and firms could find a wide range of specialists who can do everything. In China, firms could also build a plaform which aims to provide talent for firms to do whatever they need. In recent years, there are many jod application platforms established such as 58city, 51job and Liepin. They prove the ecosystem of talent is applicable in China. Ecosystem of technology allows you to use resources from anywhere and put them together for your tasks and avoid the monopoly of big companies such as Microsoft and IBM. This kind of platform is just start to develop in China and we could define it is applicable or not. Ecosystems of Information provide information of customers and visitors for firms to help them in business. China already has information system in recent years, Baidu could collect information from viewers and provide search results which is more suitable for viewers, Taobao could also do the same. Because of different cultures between foreign students and Chinese, it is different for foreign students to adapt to new life in when they come to China in the first time. To solve the problem, it is useful to provide them with a platform that helps them have a better experience in China. The platform can be a website, which offer them chance to exchange information and chatting with Chinese people. These information makes them have a deep understanding of Chinese culture and contributes them to adapting to pace of Chinese life. In addition, some communities in universities are also a platform for foreign students to gather and share information. Many Chinese students are willing to communicate with foreign students in communities and English Corner in order to improve English. These Chinese students always share information such as the place where is a good eating store or tourist attraction. The information from the platform guides a better way for foreign student to live in China. IN conclusion, platform plays an important role in this project.

    [Reply]

  2. Efron permalink
    December 25, 2016

    (1) How useful is the article
    Firstly, the author points out that human resource is important to the company and the project should focus on how to link the talent. Secondly, the project should build a proprietary platform to share the technology. Thirdly, the ecosystems of information integrate the information of customers and show the customers the products they may interest in.
    Today, business power should shift from corporation to the platform. It is the most important thing. Running the business could not by al0ne, companies should participant in eco-system, solve the problem and try the best to gain resources.

    (2)How applicable is the idea form the article in China
    In this article, the author argues that in a connected world, every business today must transform itself into a platform that connects to ecosystems of talent, technology and information outside the boundaries of the firm. From my perspective, these ideas are partly applicable for Chinese business to adopt.

    Firstly, ecosystems of talent are important for Chinese business. In a knowledge economy, managing talent ensures a company having a competition advantage in a market. Therefore, hiring more talent and retaining talent from all over the world is significant for Chinese companies to compete with others.
    Secondly, ecosystems of technology is another aspect which Chinese business can learn from it. In the past, if one wanted to access technology, he had to sign on to somebody else’s proprietary platform. If Chinese business could develop one platform which can provide to Chinese people it will be a success. For instance, Chinese companies like HUAWEI has made a great success in mobile phone, if other companies could also achieve a success which will lead China a major status in technology.
    Last but not least, Chinese business should pay more attention on ecosystems of information. As the largest e-commerce company around the world, Amazon has access to more data on consumer behavior than anyone else. In China, the most success e-commerce company is Alibaba. If Alibaba could learn Amazon to consider more consumer behavior and develop, it will be another success business all over the world.

    In conclusion, for all Chinese business, they should treat their organization as a platform which has connections to ecosystems of talent, technology and information. Then these connections will transfer into competitive advantages.

    (3) Other comments
    a. There can be more introduction about open source communities, and specific introduction about open-source.
    b. How to maintain a competitive advantage in a networked economy?
    c. The article gives some successful examples of three main points that we should pay attention when we make the project.
    We need know the current market circumstance and use the key points into business.

    [Reply]

    Efron Reply:

    Comment from Group : Lanz.
    group mates: Xu Erfeng (Efron) 12752438
    Shen Jialun (Gallon) 12752275
    Zhang Shuqi (Flora) 12752566
    Zhu Lan (Gatt) 12752782
    Wu Yilei (chloe) 12752667

    [Reply]

  3. 徐 苑乐 permalink
    December 25, 2016

    Class 2 Group: 葫芦娃救爷爷
    Through this article, it is vital for business transform itself into a platform. With the development of technology, connection is necessary for current business, and the open source can not be ignored.
    (1)How useful is the article to our project ?
    The article through several aspects to state the significance for business to have a platform, which includes Ecosystems of talent, technology and Information. Nowadays, open source software is becoming more and more popular during our daily life, People can require the material without the limitation. The free use of a great deal of knowledge is beneficial for students to search information. Business can also share resource on the internet. As for our group, many platforms called Baidu Cloud and Wechat can provide for students to share information through projects. For instance, one student upload a profile in a Wechat group and other students in the group can download it to the mobile phones. Then, all the students in this group can have a discussion about the topic online. This platform is very useful for students to have a communication.
    (2)How applicable is the idea from the article in China ?
    In China, many companies want to find a platform to require information to know others’ successful experience to choose the right way. Open resource is very important for some major corporation to help middle and small-sized enterprises to seek better development. Some firms in China also build the platform of sharing information in a free way. For instance, Baidu has a good performance, people can acquire various of information in a free charge. It can also provide companies with ways of talent search and current technology and economy information.
    (3)Other comments
    Nowadays, middle and small-sized enterprises are seeking for a platform where they can share their results to others in the same field, and open resource is important for them because it will lead employees to consider more when they make decisions. However, open source also is as harmful for companies to some extent. Anyone can use other’s opinions without any permission. This action may lead to copyright, and may be considered illegal. So companies should strengthen the internal policies against copy and try to let all the employees understand the reasons for not copying from others.

    [Reply]

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