Turner conducted research on the rise of online platforms as a business model within the financial sector. We spoke with 40 executives and managers about their efforts toward platformization—the transformation toward platform models. We also asked them why they are pursuing this path and what their experiences have been. Based on these interviews and our expertise, we offer ten recommendations for executing a platform strategy.

Recommendation 1. Start with your strengths

It is essential to understand your organization’s core strengths and build on them. Only then can you choose whether to develop your own platform and/or join someone else’s platform as a vendor. A good starting point for this is the organization’s mission, vision, and values—in other words, the organization’s “The Big Why.” What are its underlying motivations and driving forces? Does the intended platform strategy align with these?

Next, analyze the organization’s “strategic capabilities.” These fall into two categories: hard and soft qualities. Hard qualities include the structure, the performance management system, the processes, and the technology. Soft qualities include the culture, behavior, and the style of leadership and collaboration. Based on this, determine: Do I have the right qualities in place to implement the desired platform strategy?

Recommendation 2: Know your ecosystem and CHOOSE

To determine in which markets you have sufficient potential to set up your own platform, you need to understand the various value chains in which you operate. Your unique position in the value chain determines the market potential. Who are the players? What is the relative power of each player? Who sets the terms in that chain, such as location and price? How easy is it to position a platform between them? What unique position can you occupy?

So, map out your ecosystem and determine what unique value you bring to it. Include all parties in the ecosystem that are involved in a particular value chain—or an “experience chain”—related to a specific service or event. An example is buying a house. This doesn’t start with a mortgage, but with players other than financial service providers. Your platform could, for example, aggregate data to make decisions easier. Or it could skip a few steps in the chain. Or it could offer a better experience. Take a step-by-step approach. This way, you can weigh the market potential of your own platform against the market potential of connecting to others’ platforms. And you can choose: my platform or yours?

Recommendation 3. Develop an agile strategy

For your strategy to succeed, you need clout, Agility, and speed. This applies to any modern Strategy Execution challenge, but especially to platformization. Because there are so many variables that determine a platform strategy—and these are unpredictable in advance—you need an agile platform strategy. The choice between “my platform or yours” isn’t set in stone. Entire bookshelves have been filled with writings on the concept of Agility. But what makes a platform strategy and the strategy-formulation process agile? Previous research by Turner identified twelve key factors that determine agility: from the effective allocation of time and resources to working in parallel and iteratively. Build this agility into your strategy and test it. A “challenge” session can be a good way to do this.

Recommendation 4: Explore Revenue Models

In our research, we found that it is particularly difficult for established organizations to wait for revenue from a platform. But to give your platform a chance to grow, you need to stay focused on that valuable interaction and not rush to monetize it. Trust that, if there’s valuable interaction, it can be monetized. It’s just not clear yet how. This can only be figured out through trial and error. Explore the possibilities for monetizing such a platform and experiment with different Revenue Models. As a general rule, offering matching and access for free is often a smart way to generate positive network effects in the early stages. At a later stage, you can, for example, charge fees for premium features. Users first, monetization second.

Recommendation 5: Communicate it from the top down

To implement a platform strategy, you really have to champion it from the top. We’ve already seen that established organizations need to start thinking and working differently. Moreover, the shift to a new business model often means cannibalizing the existing one. Such a shift requires courage, a clear vision, and a mandate at the highest level. It is therefore essential to make the platform strategy a top priority in every sense of the word. Let top management embody the strategy, because if they don’t change their mindset, how can they convince others? If management doesn’t believe in it, no one will. It may sound obvious, but without a strategy that has broad support, any execution is doomed to fail.

Recommendation 6: Selection and Balance

To make a platform strategy feasible, you need to launch a series of concrete and coherent projects. It’s wise to distinguish between projects with short and long lead times, and between projects with high and low (failure) risks. Between projects that merely implement improvements to the existing business model and projects that focus on fundamental innovation. We always emphasize a balanced project portfolio with initiatives for improvement (type 1), renewal (2), and Innovation (3).
For many organizations, simply choosing between projects is a challenge in itself. Yet it is important. Nothing is more detrimental to execution than maintaining many change projects running in parallel. For established organizations, a platform strategy is almost always a Type 3 change: a shift to an entirely new revenue and business model.

Recommendation 7: Organize it separately

When designing a platform or integrating with another platform, it’s usually better to organize the effort outside the existing structure. It’s a drastic measure, but it helps build momentum and prevent old-school “market stall” thinking. This is especially recommended for large, established organizations, where thinking and working in silos slows down initiatives. Place platform initiatives under their own team, give them their own name, and perhaps locate them at a different site. This way, you can go full throttle and reach a higher, second gear for your Type 3 initiative. You should, however, maintain some connection to the existing organization so that the initiative can eventually be reintegrated. And whether you organize it completely separately or semi-separately, you must always be able to think in two speeds within such a structure. We call this the Two-Track Approach—a schizophrenic way of managing. It’s complicated, but ultimately it yields the best results.

Recommendation 8: Start with IT

Setting up a platform on your own often requires significant changes and investments in IT. It can be tempting to wait until you know exactly what role you play in the ecosystem—until your strategy has been thoroughly tested. However, it’s often wise to start with the IT side first. Without a solid infrastructure, you simply won’t be able to execute your platform strategy at all. Start with your target architecture: what IT capabilities and services will you need in your platform organization down the road? Then compare it to your current IT landscape and determine the necessary investments and your roadmap to get there. Start today, because reality is always stubborn. Even if you choose to connect to other people’s platforms, you’ll likely have to implement major changes.

Recommendation 9. Collect, measure, and experiment

To consistently provide that unique, valuable interaction on your platform, you must be able to adapt continuously. After all, the ongoing quest for the ultimate customer experience and the evolution of your competitors never stop. An agile strategy is the foundation; responding creatively and through trial and error to existing and latent customer needs is what leads to the “BREAKTHROUGH.” To achieve this, the impact of all changes to processes, algorithms, and propositions must be made measurable. This requires the consistent collection and analysis of all possible data regarding every individual interaction. Successful platforms continuously experiment using so-called “hard” customer data. This is different from “soft” customer data, such as opinions from focus groups or reviews.

Recommendation 10: CHOOSE 20% strategy, 80% execution

Strategy begins with words; successful execution begins with actions. Previous research by Turner showed that many organizations focus solely on the allocation of people and resources during Strategy Execution. That isn’t wrong in itself, but the proper use of time is an equally important Success Factor. It’s easy to get lost in conceptual thinking, so making execution a natural habit is the real challenge. Therefore, cut your business planning in half, limit yourself to just one A4 page per platform initiative, and develop and implement these initiatives iteratively. Track this for a year and compare it with previous results.