Sep 9, 2012

Technology Platforms can enable new intermediaries with disruptive power.


Since our world is becoming more and more information rich and information dependent, information technology can become the enabler to aggregate information services in new platforms.  And such platforms can have a very disruptive influence on the business ecosystem.  These platforms can not only facilitate transactions, but actually have the power to take over the governance of the business ecosystem.  This platform which is aggregating and governing services, is symbolized with the green ball in the figure.
Where is this disruptive power coming from?

In many business ecosystems, intermediaries have existed for a long time.  Intermediaries are bodies (traditionally typically organizations) that enable the interactions between suppliers and consumers.

The Post is an example of such an intermediary, as they provide the same service of delivering mail or packages from anyone to anyone.  It is not hard to see what e-mail platforms like hotmail, gmail and MS-outlook have had as an impact on the postal services, who see their market shrinking like ice in our period of global warming.
Bookshops were the intermediary between the book publishers and the consumer, and it is not hard to see what Amazon is doing to them.
However, we are only just seeing the beginning of the disruptive power of technology when used as platforms to aggregate services and bring new governance structures in the business ecosystem.  Why is that?

  1. Reach and speed.  Information can now travel with the speed of light and billions of people on this planet can be reached through the internet and interacted with.  Radio and TV have been one-way non-transactional only.
  2. Power of information.  Having all transactions going through a single platform, makes that this platform can collect a huge amount of very valuable information, that can be transformed and sold as insight in the market.
  3. Power of the customer.  Customers may have the chance to rate, review and share experiences they've had.
  4. New business models including the power of "Free".  We see more and more platforms appearing that provide services for free to the consumers and that make their revenue indirectly from somewhere else in the ecosystem.  It is hard to continue selling something at a cost to the consumer when they have the choice to get equivalent solutions for free (e.g. perhaps in exchange for allowing advertising).
  5. Standardization of the service.   When the service is provided trough the platform, it will reduce the possibility for the vendors to differentiate their offerings through their services.
  6. Lower entry barriers for new market entrants as they don't need to build all these services themselves any more.  They can use as of day one the exact same services as the market leader.  And what's more, they can reach the same global market also as of day one!
  7. The platform becomes the governance tool.  The platform owner can set the rules and determine the price of the service.  Think about the app developers that need to give 30% of their sales through the Apple platform to Apple.  

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