{"id":928,"date":"2020-08-19T06:26:05","date_gmt":"2020-08-19T13:26:05","guid":{"rendered":"http:\/\/themanwhosoldtheweb.com\/blog\/?p=928"},"modified":"2020-08-19T06:26:07","modified_gmt":"2020-08-19T13:26:07","slug":"4-imperatives-of-transforming-from-a-product-based-business-to-platform-business-model","status":"publish","type":"post","link":"http:\/\/themanwhosoldtheweb.com\/blog\/2020\/08\/4-imperatives-of-transforming-from-a-product-based-business-to-platform-business-model\/","title":{"rendered":"4 Imperatives of Transforming From A Product-based Business To Platform Business Model"},"content":{"rendered":"\n<div class=\"wp-block-image\"><figure class=\"alignright\"><img decoding=\"async\" src=\"http:\/\/powerpointing-templates.com\/wp-content\/uploads\/2020\/08\/Change1-300x200.jpg\" alt=\"Change1\" class=\"wp-image-1371\" \/><\/figure><\/div>\n\n\n\n<p><a href=\"https:\/\/flevy.com\/browse\/flevypro\/products-to-platforms-transformation-5191\">Transformation from a product-based model to a platform model<\/a>&nbsp;is a dream for many executives.&nbsp; More and more product companies are now shifting into a platform model.&nbsp; The drive behind such a shift is the huge success of platform companies\u2014e.g., Amazon, Google, and Apple.&nbsp; These organizations started out as a retailer, search engine, and iPod manufacturer respectively, but later transformed into platform models.<\/p>\n\n\n\n<p>However, bringing this transformative vision into reality is anything but straightforward.&nbsp; Research into successful platform businesses reveals that this necessitates a robust approach comprising the following 4 critical phases:<\/p>\n\n\n\n<ol class=\"wp-block-list\"><li><strong>Attractive Product and Customer Base<\/strong><\/li><li><strong>Hybrid Business Model<\/strong><\/li><li><strong>Rapid Conversion<\/strong><\/li><li><strong>Identify and Seize Opportunities<\/strong><\/li><\/ol>\n\n\n\n<figure class=\"wp-block-image\"><a href=\"https:\/\/flevy.com\/browse\/flevypro\/products-to-platforms-transformation-5191\"><img decoding=\"async\" src=\"https:\/\/flevy.com\/blog\/wp-content\/uploads\/2020\/08\/Products-to-Platform-Transformation.png\" alt=\"\" \/><\/a><\/figure>\n\n\n\n<p>Let\u2019s dive deeper into the first two phases of the approach, for now.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Attractive&nbsp;<\/strong><strong>Product and Customer Base<\/strong><\/h3>\n\n\n\n<p>A platform model is not a remedy to resuscitate products that are on a downward slide.&nbsp; It necessitates an attractive product that offers a significant customer base and value to help improve&nbsp;<a href=\"https:\/\/flevy.com\/business-toolkit\/customer-loyalty\">customer loyalty<\/a>&nbsp;and resist rival offerings.&nbsp; The critical mass of customers also allows the platform company to create value for\u2014and attract\u2014third parties that are crucial for the platform to flourish.<\/p>\n\n\n\n<p>Qihoo 360 Technology, a large internet firm in China, commenced its operations in 2006 by selling an antivirus software, 360 Safe Guard. &nbsp;To build a broad user base and to gather customers\u2019 feedback on improving the product, the company started giving away the product free. &nbsp;The company maintained a list of malware as well as a \u201cwhitelist\u201d of programs that were safe for the users.&nbsp; The critical mass of customers allowed Qihoo to:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Quickly identify viruses on scanning computers<\/li><li>Improve the antivirus<\/li><li>Introduce new products<\/li><li>Attract new customers<\/li><li>Create new platforms<\/li><li>Attract 3rd-party software companies to make Qihoo a channel for reaching customers.<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Hybrid Business Model<\/strong><\/h3>\n\n\n\n<p>The notion that an organization has to embrace either a product-based or a platform-based business model is far from reality. &nbsp;Although, both the product-based and platform-based business models need a framework to assign dedicated resources and manage operations, however,&nbsp;<a href=\"https:\/\/flevy.com\/browse\/stream\/transformation\">Business Transformation<\/a>&nbsp;from a product-based model to a platform-based model gets simplified utilizing a hybrid approach. &nbsp;A product-based business model calls for organizations to have differentiated products catering to customers\u2019 needs, to create value. &nbsp;Whereas, a platform-based business model creates value by linking users to 3rd parties and charging fees for using the platform. &nbsp;The focus of Platform models is on:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Inspiring mass-market acceptance<\/li><li>Increasing the number of interactions rather than meeting specific customer needs<\/li><li>Connecting users and 3<sup>rd<\/sup>&nbsp;parties to create competitive edge instead of relying solely on product differentiation (product model).<\/li><\/ul>\n\n\n\n<p>For example, Apple converted itself from a product model to a platform model within a year after the launch of the first iPhone.&nbsp; Initially, Apple reacted defensively to any hacking attempts and precluded 3<sup>rd<\/sup>&nbsp;party apps on the iPhone, but then decided to create an open platform, and launched the App Store. &nbsp;The hybrid model and platform mindset created additional income streams and significant revenue for Apple.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Rapid Conversion<\/strong><\/h3>\n\n\n\n<p>To make a product and business model profitable, the conversion of product users into platform users is of utmost importance.&nbsp; To enable this, an organization needs to develop its platform in such a way that it should present enough additional value for the customers to adopt it and become its users.&nbsp; Three key elements are critical to accomplish this:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Deliver adequate value<\/li><li>Launch connected products consistent with the brand<\/li><li>Allow 3<sup>rd<\/sup>&nbsp;parties to perform upgrades<\/li><\/ul>\n\n\n\n<p>If the platform does not offer adequate value for the customers they are not going to embrace it the way they do to a great product.&nbsp; Similarly, addition of new offerings that are coherent with the brand has a strong correlation with new platform adoption. &nbsp;New offerings gain traction from a firm\u2019s image and strengthen the brand further.&nbsp; Likewise, allowing 3<sup>rd<\/sup>&nbsp;parties to make upgrades, improve product offerings, and develop the platform further helps in rapid conversion, additional revenue, and growth.<\/p>\n\n\n\n<p>Interested in learning more about the phases of the approach to&nbsp;<a href=\"https:\/\/flevy.com\/browse\/flevypro\/products-to-platforms-transformation-5191\">Products-to-Platforms Transformation<\/a>?&nbsp; You can download&nbsp;<a href=\"https:\/\/flevy.com\/browse\/flevypro\/products-to-platforms-transformation-5191\">an editable PowerPoint on&nbsp;<strong>Products to Platforms Transformation<\/strong>&nbsp;here&nbsp;<\/a>on the&nbsp;<a href=\"https:\/\/flevy.com\/browse\">Flevy documents marketplace<\/a>.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Are you a Management Consultant?<\/strong><\/h3>\n\n\n\n<p>You can download this and hundreds of other&nbsp;<a href=\"http:\/\/flevy.com\/pro\/library\/frameworks\">consulting frameworks<\/a>&nbsp;and&nbsp;<a href=\"http:\/\/flevy.com\/pro\/library\/consulting\">consulting training guides<\/a>&nbsp;from the&nbsp;<a href=\"http:\/\/flevy.com\/pro\/library\">FlevyPro library<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Transformation from a product-based model to a platform model&nbsp;is a dream for many executives.&nbsp; More and more product companies are now shifting into a platform model.&nbsp; The drive behind such a shift is the huge success of platform companies\u2014e.g., Amazon, Google, and Apple.&nbsp; These organizations started out as a retailer, search engine, and iPod manufacturer [&hellip;]<\/p>\n","protected":false},"author":3,"featured_media":929,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[633,277,634,630,245],"class_list":["post-928","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized","tag-business-model","tag-business-transformation","tag-hybrid-business-model","tag-platform-business-model","tag-transformation"],"_links":{"self":[{"href":"http:\/\/themanwhosoldtheweb.com\/blog\/wp-json\/wp\/v2\/posts\/928","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/themanwhosoldtheweb.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/themanwhosoldtheweb.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/themanwhosoldtheweb.com\/blog\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"http:\/\/themanwhosoldtheweb.com\/blog\/wp-json\/wp\/v2\/comments?post=928"}],"version-history":[{"count":1,"href":"http:\/\/themanwhosoldtheweb.com\/blog\/wp-json\/wp\/v2\/posts\/928\/revisions"}],"predecessor-version":[{"id":930,"href":"http:\/\/themanwhosoldtheweb.com\/blog\/wp-json\/wp\/v2\/posts\/928\/revisions\/930"}],"wp:featuredmedia":[{"embeddable":true,"href":"http:\/\/themanwhosoldtheweb.com\/blog\/wp-json\/wp\/v2\/media\/929"}],"wp:attachment":[{"href":"http:\/\/themanwhosoldtheweb.com\/blog\/wp-json\/wp\/v2\/media?parent=928"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/themanwhosoldtheweb.com\/blog\/wp-json\/wp\/v2\/categories?post=928"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/themanwhosoldtheweb.com\/blog\/wp-json\/wp\/v2\/tags?post=928"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}