Platforms for success: Why Nordic needs to embrace digital platforms. Now.By Jonas Wedin and Roger Ostvold

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Digital platforms are critical to the future success of Nordic companies because they generate new revenue streams. And add value to existing products to preserve and protect current sources of revenue. Yet although the region has some of the business world’s leading examples of digital platforms, too many companies are hesitating. Those that continue to do so risk falling so far behind, that catching up competitively may prove impossible.

Most executives believe that the future of business lies in the melding together of business, with industry lines continuing to blur. In fact, according to Accenture research, seventy percent of executives in the Nordics said that digital platforms will reshape industries into interconnected ecosystems. (See “Digital platforms: Our definition.”)

What, exactly, is meant by that? Consider how the music industry transformed through Spotify’s platform. Instead of a multitude of labels vying for distribution in a variety of channels, digital technology allowed the creation of one channel that brings together a variety of industry suppliers for a solution that’s better for the end user: music fans. But despite shining examples from the Nordic region like Spotify and others, too many companies are hesitating when it comes to adopting digital platforms.

For those that continue to hold off participating in these digital ecosystems, competitive risks abound: They’ll spend far too much money doing everything themselves instead of leveraging platforms. And, ultimately, rivals will create a competitive gap that may be impossible to close.

What exactly is a digital platform? Our definition People are talking about digital platforms, and many have different views of exactly what it entails. So here’s our definition: “A digital platform brings together process, people, technology and information into a value network that provides consumers and businesses access to an extensive selection of products and services within and across multiple markets. By enabling multiple parties to engage in networked commerce, digital platforms create a multiplier effect, quickly increasing demand for products and services and generating additional value for various users along with the platform’s owner.”

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Building your platform Digital platforms serve as a critical point of intersection, bringing products and services together into a richer, more personalized experience, while creating value for both consumers and businesses. Platforms exist that respond to virtually any link of a company’s value chain. Although a platform may begin in one category, it can diversify. Here’s what we mean by that. Take Facebook and LinkedIn. They’re information sharing platforms but both are also heavily leveraged by users for sales and marketing. Digital platforms aimed at the product or service value chain can be generic in terms of what products and services they cater to (like Alibaba for sales.)

Apple is one example of a platform play that covers a large part of the value chain on one platform. Developers large and small can use Apple’s platform to develop, test, market and sell the service through the platform. Apple then delivers the service to users and handles developer payment. It’s a service enablement approach that allows smaller players to reach a wider audience not possible before the advent of platforms.

Here are other examples of platforms that coincide with different parts of the value chain:

Fund: Crowdfunding platforms such as Kickstarter and Indiegogo

Develop: Crowdsourcing platforms such as GitHub and Local Motors

Test: Apple

Market and Sell: Many in different flavors. E.g. Hemnet, Pricerunner

Deliver: YouTube, Spotify

Get Paid: Payment platforms such as Klarna and Paypal

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In recent years, Schibsted widened their focus from the traditional media business to other digital plays. Now about half of the company’s revenue is platform based. Their digital platform services include Blocket and Finn.no (online consumer sales sites), Prisjakt (a price comparison service) and Kundkraft (where consumers can shop for low-cost energy). This pivot toward platforms generated an overall revenue growth of about 5 percent during an otherwise stagnant period for the rest of the industry. (Nordic competitors Bonnier and Sanoma have been shrinking by 15-20 percent over the same period.)

The difference is also clear in profitability where Schibsted enjoys profit margins well over 10 percent (from 13 percent in 2015) while Bonnier is around 4 percent and Sanoma is negative.

Schibsted’s platform for success

The cornerstones What are the features—the cornerstones—for building a robust digital platform? Here’s a checklist:

• Open and inviting – allowing participants to join and shape their contribution with ease• Adds value to user - from combining/consolidating pieces from different participants• Adds value to participants - that would be hard or expensive to achieve in another way• Future proof - with commitment to continuous evolvement, development and growth

And of course security and privacy also have to be ensured. So what does it look like when a company builds its platform on these cornerstones? Look at Apple again as one example. The company opened up its iPhone platform to a host of participants—from weather prognosticators to Snapchat and everything in between. While others attempted to control services and content and missed out on opportunities for growth and for extending value to end users.

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Nordic early movers

Beyond Spotify and Schibsted, the Nordic region has a number of early movers when it comes to digital platforms. AltInn serves as an example of a digital platform that is being used for multiple public service reporting purposes. Managed by the Norwegian tax authority, other government agencies can add additional government reporting forms for their specific purpose. It can also be used for distributing information from any government entity to any company or individual in Norway.

Nordic high-tech, telecom and broadband providers are showing signs of moving toward digital platforms. Consider Norwegian broadband provider, Altibox. The company established a cloud-based service platform that allows for the addition of third-party content from partners and wholesalers. In the future, Altibox could move into smart home services (security, remote device control) creating an infinite value chain for other providers that want to link into Altibox’s system.

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Taking the plunge

Now, with the maturity of the underpinning technology, and growing competitive pressure, companies in the Nordic region need to move—and fast—to embrace digital platforms. Executives should make strategic choices about their desired position in the digital economy and determine which platforms best support that position.

• Where can we monetize on our current position, and where should we rather leverage business partners?

• Should we connect to existing platforms or create our own? For large, complex organizations, the correct approach may be both.

• What steps are critical to success, and what capabilities do I need to build, acquire or source?

The management team needs to be brought up to speed on digital platforms and the digital extended ecosystem that goes with it. Analysis needs to be launched to identify opportunities, addressing key questions like:

• Are my products and services increasingly becoming contestable or obsolete? Why?

• How has my industry evolved over the years? How is revenue generated today?

• Are my business and technology capabilities organized in a way that allows me to influence how value is shared and delivered among players in my industry?

• What products and services can I offer through platforms that address the personalized needs of my business partners and end-customers?

• How can I leverage and enrich my corporate data for competitive advantage?

• How do I transform my business to take advantage of, or become the epicenter of revenue generation in my industry?

Finally, companies need to leverage an agile approach to their digital platform strategy. That entails using proof-of-concepts and piloting according to the “try many, fail fast, fail cheap” approach, rather than developing a 95 percent theoretically correct strategy.

Stepping up to platforms

Digital platforms open up a new approach for bringing any number of businesses together in a way that meets customers’ demands. As all industries in the Nordics and beyond shift from one-to-one transactions to composite experiences, the companies best able to participate will see a distinct business advantage, building digital platforms on the cornerstones of value, openness, flexibility and security.

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References

i Accenture Technology Vision 2016 – Nordic results

ii https://www.spotify.com/se/

iii https://developer.apple.com/

iv http://www.schibsted.com/en/About-

Schibsted/Schibsted-Sweden/

v http://hugin.info/131/R/2004940/740409.pdf

vi http://www.bonnier.com/about-us/

vii Annual-Review/Financial-Results/

viii https://developer.apple.com/

ix https://www.altinn.no/

x https://www.altibox.no/

Authors

Jonas WedinRoger Ostvold

About Accenture

Accenture is a leading global professional services company, providing a broad range of services and solutions in strategy, consulting, digital, technology and operations. Combining unmatched 11experience and specialized skills across more than 40 industries and all business functions—underpinned by the world’s largest delivery network—Accenture works at the intersection of business and technology to help clients improve their performance and create sustainable value for their stakeholders. With more than 373,000 people serving clients in more than 120 countries, Accenture drives innovation to improve the way the world works and lives. Visit us at www.accenture.com.

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Contact the authors

Jonas Wedin jonas.wedin@accenture.com Roger Ostvoldroger.ostvold@accenture.com