How Legacy Businesses Can Compete in the Sharing Economy

Platforms are all the rage these days with many promoting them as a key component of digital transformation. There is much confusion however in what exactly a ‘platform’ is. The terms ecosystems, networks, and marketplaces are often used and confused with platforms. This article does a nice job defining what a platform is, the different types of platforms and distinguishing between platforms and the other terms that are often used.

The article starts by distinguishing production ecosystems and consumption ecosystems:

Production ecosystems are built on linkages within value chains — such as those between suppliers, R&D, manufacturing, assembly, and distribution channels — that connect the parties involved in producing and selling.

Consumption ecosystems emerge after products are sold through linkages enabled by sensor data generated as products are being used.

Established companies know their production ecosystems. But consumption ecosystems, which involve tracking products after they are sold and sharing sensor data with parties outside the value chain, are new. And they require new capabilities.

What is difficult is for legacy companies who have mastered their production ecosystems, to then master their consumption ecosystem. This ecosystem can be served with tethered digital platforms that have four essential components:

A sensor tied to the product; sensor data generated when the product is used; platform users, for whom exchanges are orchestrated; and a platform service that is generated through those exchanges.

The authors then go on to describe five types of tethered digital platforms that legacy companies should look at to see what is appropriate and possible.

For ‘legacy’ companies who have success in their production ecosystem, this article provides some key insights into how they now might transform to address their consumption ecosystem.

Original Article »

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