Why Legacy Brands Must Leverage Trust To Become Platform Businesses

In less than 25 years, this company secured a 92,24% market share, grew to have a total net worth of $1,4 trillion, and have 4.3 billion users worldwide. As one of the fastest-growing companies in the last two decades, it has one crucial thing in common with other organisations that have seen similar growth, such as YouTube, Spotify, Uber, PayPal, Airbnb, and Amazon Marketplace. 

Google is a platform business.

Facilitating value in the platform value chain

In simple terms, the platform business model is defined as one that “creates value by facilitating exchanges between two or more interdependent groups, usually consumers and producers.” A more detailed explanation of a platform business, according to the book Platform Revolution, is that “the platform provides an open, participative infrastructure for these interactions and sets governance conditions for them.” It’s overarching purpose is, therefore, “to consummate matches among users and facilitate the exchange of goods, services, or social currency, thereby enabling value creation for all participants.”

The platform economy has grown rapidly in both size and significance, since the 2010s. Three main forces have driven this. Firstly, connectivity has been enabled by the rise of smartphones and the internet of things. Secondly, the rise of the cloud has enabled digitisation of business operations. Thirdly, intelligence has become possible through the data created because of digitisation.

Apart from these drivers, technological disruptions have also stimulated the speed and scale of change, coupled with globalisation and urbanisation, which all brought increasing uncertainty to the marketplace. The combination of these external influences accelerated the need for companies to rapidly adapt their business models to stay competitive. Without that willingness or ability to acclimatise, companies would not be able to remain competitive or survive events such as the recent COVID-19 pandemic. 

The complexities of becoming a platform business

The challenge, however, involves so much more than simply understanding the importance of transforming into a platform business. Adopting a platform business model is a complex endeavour, as firms need to challenge their existing business architecture, develop new offerings, adapt value chain structure, establish new revenue models, and modify their resource base.

Often, the spotlight is shone on start-up platform companies. Apart from the fact that a significant share of venture funding is directed at start-ups that run platform business model, these types of ventures have much more operational agility. This is because unlike large corporates, they aren’t operating under the burden of existing systems. What is important, though, is that large-scale businesses aren’t discouraged by this but rather focus on the critical advantage they do have because of their decades-long histories.

Trust. 

Creating a trust-based collective

Gaining and retaining customer trust is invaluable to the future longevity of any business. However, it is becoming increasingly difficult to achieve this. With modern customers being very connected, cynical, and selective, research shows that over 50% of customers now trust companies less than they used to. 

If one takes into account that 80% of consumers consider trust as a deciding factor when it comes to buying decisions and that a 5% increase in customer retention can boost business profits by 95%, customer trust is an invaluable advantage that should be leveraged and expanded upon. The same principle applies to partners and suppliers. Fortunately, platform-based business models naturally lend itself to the power of the collective, often realised through what is called ecosystems.

Platform ecosystems create value by involving different players, communities, activities, and resources. As such, ecosystems exhibit rules and governance mechanisms to involve independent players in pursuing distributed, collaborative, and cumulative innovation. The result is a shift from controlling resources to orchestrating them. Without customer and partner trust, this would not be possible. 

Trust is a potent enabler to successfully integrating customers, partners, and stakeholders in a mutual value co-creation process. For an incumbent company transforming into a platform business, a high trust environment that encourages ecosystem partners to commit resources, time, and effort to innovate around their platform is an ideal business scenario for everyone engaged in the process.

Finetuning the financial space

At Standard Bank, we have learned first-hand how crucial this trust is. With a 160-year legacy, we based our transformation into a platform business on the earned trust of our customers, partners, and suppliers. Although the bank has been a trusted financial service provider for more than a century and a half, this transformation journey was a new path and involved a lot of moving pieces. What’s more is that each entity had to be tuned into our ambition and help realise it by finding innovative solutions throughout the process.

Only by realising this could Standard Bank change the ‘how’ when it comes to providing the right services at the right time for our client base’s evolving needs. Through tech-based partnerships, such as with Salesforce, Amazon Web Services, and Microsoft, and fintech companies, like SnapScan, we are moving ever closer to being ideally positioned to serve clients in a vast amount of financial contexts. 

Essentially, we see our role continuing into the future as being the conductor of a talented orchestra. Just like any good maestro, Standard Bank understands the role and potential of each instrument. Under our leadership and vision, we will continue to orchestrate the many different notes and instrument sounds and bring it all together to create a platform-perfect harmony.

Read more about Standard Bank’s journey and insights into transforming into a platform-based business in the newly published whitepaper, The Platform Organization: Succeeding with executing a platform strategy – A field guide for incumbents.

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