Benoit Reillier‘s keynote presentation at the recent Platform Leaders event in London highlighted key Platform Economy trends for 2024. Here is a short summary of the main areas that were covered. 2024 Emerging themes include:
- Platform-powered ecosystems
- B2B platforms
- Circular Economy
- New Tech (AI, web3, metaverse)
Platform Powered Ecosystems are becoming the new norm
When the first edition of Platform Strategy was published in 2017, it was the very first playbook describing how to design, launch, and scale a platform business. Not only were platform businesses relatively new, but very few firms had been able to successfully manage hybrid operations combining traditional value chains and platforms. Those who had—like Amazon with its marketplace combined with its online retail—were often digital natives that were not yet profitable and therefore not seen as market leaders (compared to say Walmart). Yet we saw the potential of these models and coined the term ‘platform powered ecosystems’…
Things have changed quite dramatically over the past few years. We now see a majority of organisations adopting platform thinking in different areas and contexts. Traditional firms are increasingly adding complementary platforms to their existing business to power entire ecosystems. Just take the example of DIY: traditional shops selling tiles, tools, paint, etc. are very much a linear value chain. They buy wholesale and sell retail on and offline. Suddenly they can add lots of things they don’t have in stock thanks to a product marketplace. And then they can add a service platform to connect all the professionals/craftsmen who buy in their shops (plumbers, electricians, architects, builders, etc.) with clients who have projects and need help. Clients don’t buy tiles because they love tiles but because they have say a kitchen to redo so finding the right craftsmen helps them with their projects. Finally, content platforms, for example with videos and tutorials with tips on how to do your floorboard, which one to buy, etc… further add value to the ecosystem and its participants.
Progressively these traditional firms develop the platform capabilities required to orchestrate powerful ecosystems that reach far beyond their original value chain. This is a very valuable skill to acquire since organisations are then able to align their platform strategy with ambitious missions like carbon neutrality. If we stay with the DIY example, a service platform can connect home owners with various craftsmen to insulate their homes as well as with other relevant ecosystem participants such as the Governments for financing and tax efficient grants, surveyors to assess efficiency improvements, etc. in order to offer unique ‘one-stop-shop’ solutions to their clients. These platform ecosystems are not just for the likes of Google and Amazon but are being developed across many sectors and industries by established forward-thinking market participants. We predict that this trend will accelerate in 2024.
B2B platforms are removing inefficiencies at scale
Many platforms started in the C2C world. Think of collectors on eBay. These were often followed by the emergence of B2C platforms (Amazon)… and we now increasingly see B2B platforms being set up between organisations that originally only operated value chains. These B2B developments are not always visible to the public since organisations do not need consumer brands. Their operations are also often focused on vertical markets. These platforms are emerging in almost every sector from chemical products, to agriculture, the food industry, equipment parts, transport, health, government procurement…
These platforms have unique characteristics compared to consumer ones. For example, they have to deal with long sales processes in the case of heavy or technical goods. They are disrupting often inefficient century-old industries and streamlining fragmented markets by offering choice, quality, transparency and convenience to participants. These new B2B platforms are increasingly present and removing inefficiencies at scale in and across many global value chains.
We believe this trend will continue in 2024 and give rise to a range of B2B platforms that meet the requirements of entire sectors of the economy. While some of these platforms may be global in nature (like AliExpress). we also see geopolitical considerations shaping the development of platforms that can be more focused on specific ‘sovereign’ market areas (for example Europe).
The circular economy is increasingly platform powered
Linear value chain models were designed at a time when our economies were predicated upon an unlimited supply of (cheap) fossil energy… with little concern for pollution and waste. Adapting these linear processes to today’s world is no easy task. Yet platforms are uniquely able to power circular businesses that share, reuse, refurbish, recycle things…
A vast majority of platform initiatives we see have a sustainability dimension and we encourage our clients to weave these aspects into their platform design when it is not the case. Launchworks & Co’s founders Laure Claire and Benoit Reillier even wrote a book with Frédéric Mazzella (founder of a car-sharing unicorn BlaBlaCar) that takes readers on this journey… starting from a blank sheet of paper to a sustainable platform with 100 million users.
The circular economy is critically important because for the first time some countries are managing to break the link between their economic growth and their carbon emissions, partly by embracing circular economy principles.
Platforms have a key role to play in this fundamental transformation and we believe the circular economy will be a key driver behind many of the platform initiatives of 2024.
Regulations are here to stay
Up until very recently, platforms were not subject to any specific regulations. They were of course subject to the rule of law, but nothing had been designed specifically for them (unlike say banks or telecoms). They were therefore able to innovate and scale with minimal obligations. Now new regulations in Europe, as well as the UK, the US, and even China are focused on platform businesses and forcing them to introduce safeguards.
Some of these regulations will impact all platforms businesses while others will be focused on ‘very large platforms’ and so-called ‘gatekeepers’. This means that existing platforms will have to adapt to these new requirements. Traditional businesses may also benefit from some of these regulations. In the long run, platform regulations may be beneficial for the sector. If well-designed, they can enhance trust and quality, fostering a more vibrant tech ecosystem.
We believe that these regulations will have far-reaching consequences. They are likely to spur the development of new governance models and compel ecosystems to achieve a level of openness that allows cross-platform message exchanges, the use of apps and content, and movement of items. However, regulations will still help retain some fundamental organisational principles and rules at the platform level to ensure coherence.
2024 will be the first year when platforms will have to demonstrate compliance in Europe and there is no doubt that these regulations will increasingly shape market developments.
New Tech / AI, web3, metaverse
We have seen fascinating new technologies coming online in 2023… GenAI is of course a momentous development and in a few months, ChatGPT alone has revolutionised the way people think about AI, content creation, and the work of the future.
This trend will continue, and accelerate in 2024 as organisations transition from skepticism and experimentation to implementation of these technologies at scale. We completed several AI projects in 2023 and have no doubt that this trend will be accelerating. The way AI can be deployed in traditional value chains and in platforms is quite different and we have updated our platform booster programme accordingly. It will also be fascinating to follow OpenAI’s own platform strategy with the development of its “GPT stores” where you can train and sell your own specialised AI!
While AI will unquestionably continue to be one of the stars of the tech show in 2024, many other technologies such as blockchain—which powered crypto and smart contracts—as well as VR/AR —which powers the metaverse— will begin to be utilised in ways that enhance firm productivity in the short to medium term. These technologies will also start to enable new forms of organisations. For example, we anticipate that experiments with Decentralised Autonomous Organisations using new innovative forms of governance enabled by self-executing smart contracts (that can now be LLM generated) will start to apply to interesting use cases. It’s already happening for open source and also for some commercial initiatives… We predict that some of these new initiatives may well start making headlines in 2024… !
You’ll soon be able to read more on the subject with Laure Claire and Benoit Reillier’s forthcoming new edition of Platform Strategy in the second half of 2024. Do get in touch if you’d like to discuss any of these topics with the Launchworks & Co team.