Oct 14, 2012

Intermediary platforms require a different mindset

I a previous article I discussed Why platforms can be so disruptive as an intermediary in the ecosystem.
In this article, I want to dive a bit deeper into the mindset it takes to think in terms as Platforms, as opposed to thinking in Projects.

The illustrations I use here are based on disease management opportunities in the healthcare industry, but I am quite confident, that the same thinking will apply in other domains and industries as well.
Typical thinking in traditional companies is that we want to build services like disease management services around our own products. These are value added services to further differentiate our product from our competitors in the market.  The good thing is, we do start from the need of a patient or a physician.  Unfortunately, then we tend to bring it down to a level that it helps the patient or the physician only in case they are using our products.  That way, it becomes an added value service around our product, but it is not a platform solution for the management of a disease or diseases.

So, what thinking do we need to change if we want to come up with platform solutions, instead of projects with around the pill services?

1. Think about all patients, all diseases, all products, not just yours.
That means we have to give up thinking of it as a competitive advantage for our products.  It has to become a solution for the industry, the healthcare ecosystem as a whole.  E.g. The MS-vault application is a platform targeting all patients, all diseases, all treatments.

2. Move beyond the data of our enterprise into managing the data of the world.
The data we will collect is not only treatment and outcomes data about patients treated with your products.  We will collect detailed information on the patient's evolution. In the future this will be based on continuous monitoring devices in your body-area-network that connect through a communications hub (smartphone?) to a cloud database.  Now, we are suddenly not talking about the number of patients you can recruit in a project, we are talking eventually about billions of people who's health data is continuously monitored in a huge database.  This is a whole different dimension from what we tend to work with as our own data sets.  Now we move to database sizes that companies like Google and Facebook are able to deal with.   That is truly big data.  When such a big data database starts to grow, the value of the data becomes immense to research organizations and payers in the healthcare industry. The value of the data gathered, in many cases will be the basis for the business model.  Of course, privacy and confidentiality of patients and caregivers needs to be protected.  E.g. Patientslikeme

3. Be open to competitors.
If we want to build the platform for the world, we need to be open and fair to all players in the ecosystem, including our competitors.  That will not be the case if we look at it as a sustainable competitive differentiating service around our own products.  The ecosystem will accept keystone players, but doesn't like dominating players who absorb the whole value chain without leaving much room for the other players.  As an important player in the ecosystem, the best chances here may be to form a consortium of players to jointly build and govern such a platform.  E.g.  GHX as a logistics platform between the healthcare suppliers like Pharma and Medical Devices companies on the one hand and Hospitals and Pharmacies on the other hand, was formed by a consortium of companies from the beginning on.

4. The platform has to have its own business model.
It needs to be able to generate revenue and profits on its own, independent of sales of traditional products.  In many cases, the value of the platform will lie in the intermediary services it can offer between the various players in the ecosystem and in the data it can capture as enabler of the ecosystem.  The intermediary platform has to capture part of the value chain in the ecosystem, but ideally leave enough value in it for the others to participate in it.

5. The charging model will most likely be based on a cost per transaction.  E.g. a click-through on an advertising campaign.  It will not be based on high value B2B contracts that gets negotiated by account managers in a lengthy process (fundamentally without creating any value to the ecosystem).  Key is that the entry cost to get started should be very small and every individual user with a credit card should be able to start using the service.  Volume discounts can be published and either you take it or you leave it.  Apart from keeping the entry barrier small, this concept is important to allow for fast growth, without having to put an army or account managers in place.

Obviously, it takes companies in the ecosystem with a mindset of encouraging new business models next to their existing product lines.  Or, what we see more often, is that these new business models based on platforms for the ecosystem, come from newcomers in the ecosystem - typically IT companies or start-ups.