It is not only the economy that is shaken up by platforms
Imagine if, just by wiping the screen of your smart phone, you could send a parcel, return library books and fetch the goods you have rented, and do this through a single access point. This sounds like future sci-fi but may become everyday reality before we even notice. This is recognized by the participants of the strategic PVN research project investigating the opportunities and risks of platform economy. The project is led by Professor Ahti Salo of Aalto University.
Platforms are shared resources which function as bases for different kinds of innovation ecosystems. They have been enabled by information technology, which has advanced with tremendous speech and become ubiquitous, but Ahti Salo emphasises that the platforms and the economy built on them are even more than what appears.
'They combine technology business, business models, environment and public power', he says, while Senior Adviser Juhani Strömberg keeps on nodding beside.'
'The past few decades have been witnessing the entry of information technology to all areas of life. Next we will see how most of these areas are going to be revolutionised by it', Strömberg, who has a long career in business behind him, believes.
Mobility as a service
According to Strömberg, one-stop-shop style mailing-return-renting is a good example of how the activities of the platform economy, instead of being completely digital, are hybrids made up of many layers.
'We already have the physical base for the whole system: in this instance, for example, it is the automated parcel network. It would be perfectly reasonable to utilise it in library services, such as Helmet in the Helsinki region, in such a way that for example the most popular books would never turn up on the library's shelves but would circulate directly from customer to customer via the automated parcel network. Other potential services such as online shops and various goods hire and recycling services could use the same network. The consumer would be able to manage it all with a mobile application.'
Layered structure, convenient use and the primacy of consumers' needs are the key elements in the Mobility as a Service project, which has aroused enthusiasm around the world. It aims to combine all the forms of transport into a single service to allow the user to easily select the route that is the most suitable for the needs and pay for the trip with the mobile phone.
'By the way, Finland is the only country where Uber and the local Taxi Owners' Federation, via the influence of the MaaS (Mobility as a Service) project, have been brought around the same table to participate in the development', Strömberg smiles.
In a small country with limited resources, cooperation and common goals are of great importance. According to Strömberg, we now need to carefully select the things in which it is worthwhile to be among the pioneers.
'As a digitally native and highly educated country, it is easy to assimilate the rest if we are very careful.'
We have knowledge, but what shall we do with it?
From Finland's perspective, great opportunities and threats in the platform economy can be found for example in the manufacturing industry. Ville Eloranta, who is preparing his dissertation about industrial service networks, admits that for example steel is difficult to adapt into platform business.
'We should, in fact, consider different industries as platforms. For example in the construction industry material producers could create smart potential to their products for the open network to innovate. This way, the whole life span of the constructions could be leveraged. Then, we would have also other competitive advantages than that of how economical, light or hard the material we can produce is', he stresses.
Another promising area is health care. In the opinion of Eloranta, quite important platform activities could be created around it in Finland because its technical base is already fairly complete.
'More and more people collect data of their own exercise habits and vital functions. But services which are meant for normal users and which would, on the basis of collected data, present concrete suggestions and plans for health improvement and, above all, for avoiding illnesses, are not widely employed even in the United States', he explains.
In the opinion of Ahti Salo, utilisation of diverse data is one of the key issues in the platform economy. For example, Uber not only connect those providing transport with those needing it but the service also accumulates data on the ways people move around. The databases of Finland's health care contain enormous amounts of data. The question is: what could and what should be done with it?
'These data often form the cornerstone for the platforms', Salo points out.
'Before it was thought that applications should be specified beforehand. Now we understand that it is not possible to know beforehand what we want to do on the basis of the data available. For this reason, it is more sensible to provide interfaces on which various new applications can be built. Typical for these applications is the leverage effect originating from networks: the greater the number of the platform users the more functional and interesting it will become.'
Buffers and education
Related to the platform economy, there are many critical issues for the society and the individual. One of these is work and its disappearance. If there is no need to put books on shelves or to supply hotel rooms, what will happen to people who lose their employment? The attitude of the trio towards the future is hopeful – with certain reservations.
'This is not the history's first turmoil', Eloranta reminds us.
'New jobs have always appeared, and I believe this will be the case also in the future. However, in the platform economy the change can be very fast, and, therefore, the institutions must be awake: let the change go ahead, but also provide a sufficient buffer for those who might for some time be treated roughly by the transformation.'
Strömberg thinks that attention should be paid above all to education.
'One of the biggest issues in today's social policy arena concerns the level of basic education. What is it that people need to be able to know and master in the future in order to adapt to fast changes?'
PVN – Platform Value Now: Value capturing in the fast emerging platform ecosystems
- One of the research projects funded by the Academy of Finland's Strategic Research Council. The funding of the six-year project for the first three years is 3.1 million euros.
- The participants in the project are the Aalto University School of Science, the Aalto University School of Business, the University of Jyväskylä, VTT Technical Research Centre of Finland, Imperial College London, International Institute for Applied System Analysis, Stevens Institute of Technology and Wilson Center. The project's research groups cooperate with the Ministry of Employment and the Economy, Digile, SSAB and Tokyo Institute of Technology, among others. During the project, also more in-depth research collaboration and smaller research cases are conducted with several companies from various fields. The project is led by Professor Ahti Salo from Aalto University.
- The aim of the project is to provide ideas and operational models and, in close cooperation with companies and Finnish politicians, solve problems related to platform economy.
- One of the most important tasks of the research project is to find out what changes are needed in the value chain to create successful platform economy ecosystems in Finland.
Professor Ahti Salo
Tel. +358 50 383 0636
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