Recording and Q&A now available from the Platform Strategy Seminar 5 October, 2021
At the event Professors Bengt Holmström and Michael L. Tushman shared their perspectives on what it takes to compete in a platform game. Thought leaders Tero Ojanperä and Timo Vuori shared insights from their new book Platform Strategy. The audience also heard exciting transformational stories of KONE and Hilti. The event was organized by the Department of Industrial Engineering and Management at Aalto University.
Opening & Welcome
Associate Professor Robin Gustafsson, Aalto University
How to win with Platform Strategy (starts at 3:47)
Professor of Practice Tero Ojanperä & Associate Professor Timo Vuori, Aalto University
Platforms and AI are vital for European competitiveness (starts at 19:25)
Professor Bengt Holmström, Massachusetts Institute of Technology MIT
How an established industrial company is leveraging platforms in its strategy - Case Hilti (starts at 36:15)
Matias Järnefelt, former Managing Director of Hilti Northern Europe
Creating competitive advantage with AI learning loop (starts at 51:46)
Maija Hovila, Chief Analytics Officer, KONE
Identity, Strategic Innovation, and platforms (starts at 1:04:07)
Professor Michael L. Tushman, Harvard Business School
Questions and answers
Below Tero Ojanperä and Timo Vuori answer those questions received through the event chat that we did not have time to cover during the event.
Q: Build new platform or take benefit of existing 3rd party one?
A:Either option can be a good one. There are several factors influencing which option is better. How likely is your own platform to succeed? How much power can you have in the existing 3rd party platform? Hilti showed a good example of dual-platform strategy: build own by leveraging data from their equipment and leveraging existing platform, Autocad, to expand distribution.
Q: How do you see the role of opening your platform to others in successful digital platforms (like SalesForce Customer 360 platform for application developers)?
A: Opening up the platform often leads to increased customer value. It’s the way platforms expand. Of course, you need to analyze every situation separately, as there can be some risks associated with opening the platform.
Q: Should one start with Business Model Innovation (platform business model) - or begin with building a platform as capability (MVSC - minimum valuable & scalable capabilities)? Especially B2B (manufacturing )?
A: Getting the business model right is absolutely necessary. Usually this requires some iteration and learning from customer reactions. Hence, you cannot completely separate BMI and capability building. Nevertheless, you should make sure you stay close enough to customers and take their preferences and reactions into account as you develop your platform. We reflect these questions also in our course on platform strategies: https://www.aaltoee.com/programs/business-models-with-intelligent-platforms
Q: How do you see the data monopoly of the platforms?
A: Depends on the situation and how companies use their monopoly. Regulation tries to address this question.
Q: You mentioned that the high valuations of platform companies also reflect social value (in addition to reducing information search, communication, and transaction costs, etc); but do these valuations reflect present social value or expectations about the future?
Naturally, they reflect both. The technical problems of Facebook and What’sUp last week showed us how much we rely on them in our communication. It’s a reflection of their current value to the society.
Q: How do you prioritise opportunities to invest in - I am sure there may be tonnes of possibilities that you witness?
A: In our book, we propose a backtracking exercise to address this challenge. You imagine your vision, trace multiple alternative paths from the vision to present. Then you choose the path that provides highest immediate payoff with least effort and investment.
Q: Many companies exploit and explore but the difficulty seems to be in transitioning to exploit the explored. How to make that transition more successful, identity?
A: You need both structural and psychological solutions. In our blog, intelligentplatforms.ai, we describe some of the key psychological approaches.
Q: Is leadership a big hurdle for “identity” as leadership most of the time driven by capital markets & shareholders & incumbent inertia?
A: Leadership can influence company identity, but often it’s also the leaders’ identities that cause inertia in companies. Check in particular this blog from us: https://intelligentplatforms.ai/how-to-re-establish-your-self-esteem-in-the-platform-era/
Q: How do you see the platform economy as one solution to the climate crisis? Are there platform-based climate innovations?
Platforms can organize various business activities more efficiently than traditional models. This can be beneficial broadly. And, of course, platforms enable much innovation that can help in addressing the climate crisis. There are many companies that are building platform based business model to fight climate change. For example, Betolar is building a AI based platform to enable cement replacement with geopolymers (cement produces about 7% of world’s CO2 emissions) and Patchama is an online platform that allows you to review and support forest efforts around the world to offset carbon emissions.
New book on Platform Strategy
Platform Strategy - Transform your business with AI, platforms and human intelligence by Tero Ojanperä and Timo Vuori was published on 3 October, 2021 and is available at Amazon and other resellers.
"This book brilliantly ties together the essential components needed for transforming your business using AI, platform thinking, and human creativity.”
Mårten Mickos, CEO, Hacker One, former CEO, MySQL and Senior Vice President, HP and Sun Microsystem
Read more on current platform research and platform industry:
Platform Business Models Are Transforming Industries – What Will You Do? by Tero Ojanperä and Timo Vuori
- Former Nokia executive Tero Ojanperä believes intelligent platforms could be next success story for Finland
- A blog series Intelligent Platforms on how to harness AI, platforms and human intelligence to transform your business
- Alustatalouden faktat ja myytit | Aalto Blogs
- The human-side of strategy making – Lessons from Nokia and other companies – Tenured Professors' Installation Talk by Timo O. Vuori on YouTube
- How to diversify your business with platforms: lessons from Zoom and other companies – Association of MBAs
Keywords: Platforms, strategy, artificial intelligence, machine learning, leadership, human intelligence, transformation, value-creation, research