Why do organizations spend so much money trying to get things done with technology but fail so often? According to Geoff Parker, the Charles E. Hutchinson ’68A Professor of Engineering Innovation and executive director of the Master of Engineering Management Program at Dartmouth College, technology is widely available but not utilized properly, with the necessary data often locked in silos.
An expert on digital transformation, Parker observed the swift rise of platform-based businesses – companies that use technology to connect people, organizations and resources in an interactive ecosystem in which amazing amounts of value can be created and exchanged – like Amazon, Google and Facebook after the dotcom bust of the early 2000s. He and his co-authors were ahead of their time when they published the 2006 article for Harvard Business Review (HBR), “Strategies for Two-Sided Markets,” followed by their bestselling book “Platform Revolution:How Networked Markets Are Transforming the Economy and How to Make Them Work for You” in 2016.
Parker has since harnessed the theory and frameworks for two-sided markets powered by network effects to help non-platform companies successfully convert to a platform model to better compete in their industries.
“Platforms have become an incredibly powerful, lucrative and important phenomenon across the global economy,” says Parker, who was named one of Thinkers50’s top 50 management thinkers in the world in 2021. “Product-based businesses that have not yet converted to a platform model may realize the opportunities they are missing by asking themselves, ‘Do we want to make money by selling stuff or by facilitating transactions?’”
While the most recognizable platform businesses like YouTube and LinkedIn are consumer-focused, through his current research with the MIT Initiative on the Digital Economy, Parker says a shift is coming. Pointing to companies like Salesforce and SAP, he calls B2B platforms “the next emerging area for platform competition.”
Rethinking Supply Chains in the Digital Era
When discussing supply chains, most think of the long-chain models built decades ago and designed for the lowest cost. Those systems, however, were not prepared for today’s issues which include pandemics, war and climate change, among other global challenges. In this environment where IT and operations departments have converged, Parker says leaders must embrace a digital approach to supply chain management by using the data many organizations have already been collecting for years.
“There are no purely physical supply chains anymore,” explains Parker. “Every physical system is supported by a data system, and vast amounts of data exist for things that move, like ships and trains. Those data need to be harnessed and put to work. By aggregating that data to build digital supply chain systems, organizations can create routes that factor in a large variety of variables. Embracing a digital approach to supply chain management enables leaders to design for factors like lower emissions routes as well as formulate contingencies for unplanned disruptions like geopolitical flare-ups.”
Embrace Modern Value Creation, Close Digital Literacy Gaps and Prosper
Parker urges leaders whose business is embarking on digital transformation to recognize the fact that, more and more, value creation is coming from outside of firms, not inside. By linking different sides of customer networks – such as audiences and advertisers – and embracing the “inverted firm” production model, executives can employ powerful new forms of modern value creation. By closing their own gaps in digital literacy, leaders can take control of their organization’s destiny without exposing internal strategy.
“Don’t outsource the intimate parts of your business such as your users’ actual use cases,” Parker cautions. “To effectively harness technology and make use of data to successfully deliver value, you have to know what you don’t know.”
As more organizations undergo digital transformation initiatives, it’s vital to ensure technology and data, which is often locked in silos, is properly utilized. Stern Strategy Group connects you with renowned thought leaders whose insights, strategies and management frameworks help organizations fuel growth and disruptive innovation to better compete in a constantly changing world. Let us arrange for these esteemed experts to advise your organization via virtual and in-person consulting sessions, workshops and keynotes.