2020 // VALUE CREATION IN THE DIGITAL AGE - MONOPOLISATION, NETWORKING OR DOWNFALL! (pt. 1 of 2)

Why German small and medium-sized enterprises (SMEs) must act now and how digital platforms can help!

Platforms are the central business model of the digital economy.

Seven of the ten most valuable companies are now operating as interaction managers between supplier and consumer. Because platforms have many competitive advantages over traditional linear companies, they are also becoming increasingly popular in business-to-business (B2B) markets. Unlike the consumer business, where Amazon and co have long dominated every area of life, the race for digital platforms in B2B has only just begun.

The traditional players have a good chance to win against the tech giants with their own platforms.

Why and for what companies is the entry into the platform economy essential today and what are the alternatives?

Digitalisation is increasingly changing the traditional economic systems. All industries are now affected - and are experiencing its profound impact. The way value creation is conducted in the digital age is increasingly based on linking software with hardware.

This is based on two strategies: One the one hand the monopolisation of value creation through control and ownership of the central elements, and on the other hand the intelligent networking of value creation elements in increasingly complex ecosystems.

Tesla impressively demonstrates how the former case works. All key technologies and important components are owned by Tesla, everything is centrally controlled by software. What Tesla buys from outside are commodities - only standardized bulk goods in the classical sense. Of course, this requires a broad know-how, a lot of capital investment and also a portion of luck when choosing the long-term corporate strategy.

Only very few companies are able to feature this. German medium-sized companies may possess valuable industrial knowledge, but financial resources are limited and luck is difficult to plan.

The preferred method for SMEs in particular should be the participation in a networked creation of value!

Networked value creation takes place in so-called digital ecosystems on a global level.

The role models are mostly US and Asian companies in the B2C segment - such as Amazon, Uber, Alibaba or Ping An Insurance, which have established successful business models by intelligently networking producers with consumers, as well as tangible and intangible products. This logic is increasingly becoming crucial for success in the B2B segment, or one is facing the downfall (see Kodak case).

And there are already prosperous role models from Germany, including the steel trader Kl?ckner, which has developed a digital marketplace for the steel market that already generates sales in the billions (€). Another case is the polymer manufacturer Covestro.

What does this mean for SMEs?

In order to continue to play a leading role in international markets in future, they need to finally become active and 1) question the traditional mechanisms of value creation and 2) adapt to ecosystem networking.

In part 2 we will light up the following points:

-What does the networked creation of value in digital ecosystems mean exactly?

-Who benefits from ecosystems?

-Platforms as a starting point for digital ecosystems

-What do medium-sized businesses need here to be successful?

My colleagues Christian Boettcher, Sebastian Wolters and Inga Stange are doing outstanding work. Years ago they started to build successful and sustainable platform businesses with midsize companies in Europe.

And I encourage you to look into the Competence Center Platforms & Ecosystems.

At the CC Platform and Ecosystems offsite (Jan 2020) with the best team to challenge new platform and ecosystem frameworks: Carolin Adam, Nicole Jakisch, Isabell Gollmer, Lukas Nielen, Paul Staiger, Peter Herz, Philipp Maier, Robert Sebald, Hilger Voss, Dominik Schleicher, Konrad Schwarz, Jonas Beck.

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The Competence Center (CC) Platforms & Ecosystems from etventure bundles all competencies (Customer Focus & Agility, Defensibility In Business Ecosystems, Championship for Digital Platform) for the age of networked value creation. It not only develops strategic design and target definition, but also implements these with clients - primarily from the B2B sector of various industries. Furthermore, the CC enables companies as well as external and internal employees to realize their own platform-based projects with a variety of methodical tools and approaches.

Author:

Sebastian Wolters, Management CC Platforms & Ecosystems

Sebastian Wolters has carried out numerous strategy and implementation projects across industries. He is living his passion for challenges related to platform-based business models in the Platform Competence Center, which he co-founded with Christian B?ttcher. His focus: Empowering organisations In a networked world!

Co-authors:

Christian Boettcher, Head of CC Platforms & Ecosystems

Christian and his team develop user-centric platform business models and strategies for digital ecosystems. His new heart project is the Platform Competence Center, which he has established together with his colleague Sebastian Wolters.

Inga Stange, Expert Platform Value 

Inga is part of the Competence Center Platforms and Ecosystems at etventure. As an expert for Platform Value, she takes care of all topics related to networked value creation. She is convinced that more value can be created together - of course not only in terms of platforms.