By William Mzimba, Chief Executive of Accenture South Africa and Chairman of Accenture Africa
Many companies, whether they realize it or not,have already taken steps to embed themselvesinto the digital ecosystems that will drive their growth in future. However, the pace of adopting new digital platforms for doing business needs to increase – especially in Africa. These platforms are business models that create value by facilitating exchanges between two or more interdependent groups, usually consumers and producers.
According to the Wall Street Journal platform companies are major drivers of innovation as the top companies set the standards for the digital transformation taking place around the world. Traditional companies are challenged to keep up or risk being left behind. As platforms become the new normal for how business is done, African companies must seize this opportunity to begin to build a new digital value chain.
Already, more than a quarter (27%) of the executives Accenture recently surveyed report that digital ecosystems are transforming the way their organizations deliver value. And we found that 81% of executives say platform-based business models will be core to their growth strategy within three years. The mandate for leaders is to capitalize on new relationships, building a network of digital partners that will not only enhance their existing business, but also allow them to forge their way into newly emerging digital ecosystems.
What we are seeing is that entire ecosystems of customers are aggregating around several new digital platforms, and businesses are more motivated than ever before to take advantage of these entry points. Communication platforms like WeChat and WhatsApp, and Artificial Intelligence intermediaries like the Google Assistant, Alexa, and Siri represent distinct ecosystems delivering unprecedented access to customers – and businesses are flocking to them. A couple of examples include Hyatt Hotels, which uses Facebook Messenger to let guests do everything from booking and checking existing reservations to ordering room service during a stay, while Capital One bank developed a ‘skill’ for Amazon Echo’s Alexa, allowing people to check their accounts and pay credit card bills via the Echo device.
It is little surprise that the trend two of our Tech Vision 2017 study highlights that in the State of the Cloud survey95% of respondents reported using public,private, or hybrid cloud technology,while theCIO Strategic Partner Index run by the IDC reportsthat 29% of IT leaders are spending more thanhalf their IT budget on external providers. Each platformcommitmentmeans easier futureengagement withother companieson the platformusing the sameinfrastructure.
However, of the 176 platform companies included in a recent report, The Rise of the Platform Enterprise: A Global Survey led by Peter Evans and Annabelle Gawer and sponsored by the Center for Global Enterprise, Asia has the largest number with 82, 64 of which are in China. North America has 64, with 63 in the US. Europe is a major consumer of platform services, but it’s home to relatively few platform companies –27 spread across 10 countries, 9 of which are in the UK. It is concerning Africa and Latin America have a number of small platform companies, only 3 of which have met the $1 billion valuation threshold for inclusion in the survey.
More African companies need to decide which ecosystems to join and which roles to play as the technology changes are only the beginning.
How do African companies begin to close the gaps? An important way to get moving on this journey is to conduct an audit identifying how many internal andexternal platforms you are using and the goalsfor their use. Identify and address unnecessary overlaps.Determine the platforms your organization most relieson, as well as those that most depend on you. These arethe ecosystems where your organization should hold itsstrategic and market strengths.
Over the next 100 days, look to essentially develop a comprehensive strategy to establish the foundation for your platform business model and ecosystem. During this phase you should appoint a C-suite sponsor to oversee a team that is responsible for championing your new ecosystem and digital partnership strategies. Then ever the next year, leadership should have achieved comprehensive understanding of the new rules of business, developed a platform business model strategy, and started to test it with the launch of a small pilot program.
Companies should keep expanding the conversation: for instance, in the first 100 days have a strategy summit withyour closest partners to understand their goals for thefuture. Uncover shared goals and commit to developinga strategic plan for achieving them together.
Consider your organization’s future through the lens of thebiggest disruptions shaping your market, from inside andoutside your industry. Craft the ideal role of your companyin this future, and develop a shortlist of partners who canhelp make it a reality.And remember to develop metrics to quantify the results of ecosystemparticipation.
Many global brands are already taking the boldsteps needed. The digital ecosystem is, for instance, totally redefining what automakers do. Rather than just building cars, they’re engaging with customers throughout the vehicle lifecycle, directly managing software upgrades, diagnostics, and safety. In the insurance industry, pulling down driving data from connected car platforms has enabled new services such as pay-per-mile insurance with newcomers like Google and Metromile to challenge the industry status quo. The opportunities are endless, no matter what industry you are in.
General Motors kicked off 2016 witha $500 million investment into ride-shareplatform Lyft. The move gave GM the inroadsto launch their Express Drive service, anexclusive offering for successful, but car-less,Lyft driver applicants to rent a car directly fromGM and get to work right away. The programwas remarkably successful in the short term,opening a new line of business for GM: by July,30% of new Lyft drivers were requesting anExpress Drive vehicle in their sign-up.
In addition to partneringwith Lyft, GM also made a $1 billion-plusacquisition of the autonomous vehicle softwarecompany Cruise Automation, and anotherbillion-dollar investment in building anautonomous vehicle testing facility in Detroit.
This shows how platforms are rapidly becoming the central hubsfor the rich and complex digital ecosystems thatcompanies want to access.Consider the fact that 70% of ’unicorn’ startups(over $1 billion!) are platform companies. Other companies such as personal car-rental app Turo and group dining experience Feastly have introduced their own offerings, as have dozens of start-ups, each with their own angle and offering. LiquidSpace, which lists offerings in more than 500 cities across the US, Australia and Canada, offers a platform for renting workspaces and meeting rooms by the day or hour.
In South Africa, a good example of a company embracing the platform economy and reaping rewards is Discovery Vitality, while Discovery’s proposed bank is another example of the evolution of this concept into other exciting sectors. The retail market for consumer goods in SA received a shot in the arm in 2015 when Kalahari was merged with Takealot, with the technology platform cleverly harnessed to drive growth since then.
Remember the sharing economy brings people together through technology to exchange or rent access to goods and services, so entrepreneurs are building this economy by leveraging emerging digital technologies to meet customer needs in new and disruptive ways.
Digital and mobile technologies have combined with public support to create a host of opportunities to transform the way government manages the infrastructure it has already acquired. For instance, through MuniRent, six local governments in Michigan are already renting equipment to and from each other.
How African companies and governments react to this change brought about the platform economy will define their prospects going forward. The platforms they use will serve as the pathways to the new digital economies that will drive growth and jobs across the continent. They will form the pillars of entire value chains in the future and so African companies need to ensure they make these decisions wisely – and fast because there is no doubt that the digital partnerships African companies make today will determine how successful they will be tomorrow.
Platform economy is one of the topics to be discussed at the Accenture Innovation Conference taking place on 17 October in Johannesburg.