The world is in a post-COVID tech winter. Market capitalizations of technology companies fell by $4.6 trillion in 2022, with each week bringing news of Big Tech groups shedding staff. The hype around crypto and web 3.0 also appears to have faded away.

In such an environment some organizations might wonder why the discussion about platforms still matters. Despite the tough trends, almost every stakeholder believes that tech has the power to transform businesses. Companies that use platforms can still come to dominate complete value chains.

The digital revolution is disrupting businesses, economics, labor markets and society. Driven by innovation, platforms have become a part of people’s daily lives in ecommerce, fintech, social media and more. The integration of platforms is poised to become even more widespread.

How digital platforms work

At its simplest, a platform is a marketplace on a common technical stage. Over time it will ease interaction and increase transactions for all players.

Platforms provide a different way to build a business. Traditionally, companies were product-driven, wanting to sell and focus on supply-side economics, scale and lower costs.

Platforms have flipped this equation. They focus on interactions between players and the network, not the product. Less friction in interactions has pulled in more participants and business has surged.

Many of the most valuable companies—Apple, Microsoft, Amazon, Google, Facebook, Spotify and Alibaba—are platform businesses. It is expected that 30 per cent of global economic activities will soon be carried out using platforms.

The platform winners have gained ground in all categories. The underlying economics of these companies is far better than those of traditional businesses. According to an MIT Sloan report, the top 43 publicly listed platform companies had nearly twice the operating profits, growth rates and market capitalizations of the 100 largest firms in the same industries over the past 20 years—with half the employees.

The digital platform strategy

HCLTech works with many customers in a range of sectors and has created successful platforms across a variety of industries. Organizations should follow this blueprint to create a successful digital platform strategy:

1. Define a leader who understands the business, understands technology and can create an incubator within or at arm’s length from the main organization: Company culture must evolve. Teams need to understand enough about the business but must not hold on to assumptions that can hold back progress.
2. Clearly define the platform and what it wants to achieve: This is HCLTech’s first step when it works with new clients. A football club with a fanbase of one billion wanted to directly engage with its supporters via an official app. The platform built by HCLTech has put all aspects of the business in one place, including news, ticketing, partner rights, commerce and live events. Another large customer launched multiple platforms. The intention was to take each large item within its cost base and use a platform to increase activity in that market.
3. Focus on the value exchange and how the platform can lessen friction: Companies such as Uber—“I need a cab now”—have made it far easier for people who want to travel easily and flexibly. Its platform lets riders get a car within minutes.
4. Focus on architecture, culture and governance: Platforms have proliferated but bad intent and poor culture will amplify the negative as well as the positive. Today regulators understand the harm that platforms can cause. Designing a “platform for good” is key to success and growth—good architecture, culture and governance lies at the core of such a design.

HCLTech believes any company that ignores the potential of platforms risks losing out on business and market share.

Ashish K. Gupta was speaking to HCLTech's Mousume Roy, APAC Reporter