How Legacy Companies Can Pivot to a Platform Model

How Legacy Companies Can Pivot to a Platform Model

In today's digital age, companies are constantly looking for ways to innovate and stay ahead of their competitors. One strategy that has gained significant traction is the platform business model. The companies that have successfully employed this model are often digital natives, operating as multi-sided platforms that coordinate services and reduce friction for customers within an ecosystem or business network.

A key characteristic of platform business models is the generation of large volumes of data from all participants in the ecosystem. This data is crucial for making informed decisions and improving customer offerings. Artificial intelligence (AI) plays a vital role in analyzing and making sense of this data. It is no surprise that the leading platform firms are also world leaders in the application of AI to their businesses.

Interestingly, more traditional firms that embrace AI aggressively are also adopting an ecosystem-based approach. Companies with diverse ecosystems are 1.4 times more likely to use AI in a way that differentiates them from their competitors. These organizations also tend to have a transformative vision for AI, enterprise-wide AI strategies, and use AI as a strategic differentiator.

While legacy companies may not have been born as digital natives, they can still pivot to a platform model by leveraging the power of AI and building diverse ecosystems. There are a few examples of legacy companies that have successfully embraced this transformation. One such company is CCC, which aggregates data and uses AI-enabled decisions to efficiently process claims for its platform. CCC's platform connects 30,000 companies, 500,000 individual users, and facilitates over $100 billion in commercial transactions.

So, how can legacy companies pivot to a platform model? Here are three actionable pieces of advice:

1. Strategize about ecosystem relationships: Identify potential partners who can enhance your offerings and improve customer value. Seek out partnerships that bring valuable data to the table. By strategically building relationships within your ecosystem, you can create a virtuous circle of more customers, more data, better models, and ultimately, better customer offerings.

2. Develop an API-based IT services architecture: To effectively leverage AI and build a platform model, legacy companies need a robust IT infrastructure. An API-based architecture enables seamless integration with external partners and services. This allows for the efficient exchange of data and the creation of innovative solutions that benefit all participants in the ecosystem.

3. Gather and utilize data across the ecosystem: Data is the lifeblood of AI-enabled platform models. Identify the key decisions that AI needs to make and gather the necessary data to train models. Ensure that data is collected from across the ecosystem to gain a holistic view and improve the accuracy and effectiveness of your AI models. This will enable you to continuously optimize your offerings and stay ahead of the competition.

In conclusion, legacy companies can successfully pivot to a platform model by embracing AI and building diverse ecosystems. By strategizing about ecosystem relationships, developing an API-based IT services architecture, and leveraging data from across the ecosystem, these companies can create a virtuous circle that leads to better customer offerings and a competitive advantage in the market. The key lies in embracing innovation, leveraging technology, and continuously adapting to meet the evolving needs of customers in the digital age.