Editor’s note: This article comes from the WeChat public account “Made” (ID: xingshu100), created by the author, 36 krypton released with authorization.
After information technology enters the 5G era, traditional business models will encounter greater challenges. Innovation and transformation seem to be the only way for enterprises to develop.The platform, a business model considered to change the world, is “swallowing the entire world.”
What is a platform?It is a business model based on value creation interaction between external suppliers and customers. Its primary goal is to match users and create value for all participants through the exchange of goods, services or social currency.
So, is the trend of platform economy with AI technology empowered?How do traditional enterprises deal with platformization?Where is the future of platform revolution?
Qu Fang interview with Sankit
Qu Fang, the founder of the specially invited Xiaohongshu, interviewed the co-author of Platform Revolution, Sangkit Paul Qiu Dali, to discuss the answers to these questions.
Sankit Paul Qiudali
Co-author of “Platform Revolution”
01 Is the platform economy the trend?
What role will the platform play in the future?What are the advantages and disadvantages of the platform economy?
Sankit: Many platforms now start to create new job opportunities for individuals. On these platforms, algorithms not only determine your job opportunities, but also determine the terms of the job.I have done a lot of research in this area at the International Labor Organization, and found that platforms that encourage standardization and commodification work will exploit workers, and those platforms that encourage specialized work will empower workers.
The algorithm not only determines the job opportunity, but also determines the terms of the job
Taking a driver platform such as Uber as an example, many work terms are determined by the platform, such as how much the driver on the platform charges passengers and how much should be paid to the platform, and a lot of information is not given to the driver in advance.In this way, while the work is commoditized, the platform controls the terms of work, which ultimately leads to the exploitation of workers.For more professional jobs, such as designers or developers, the platform is more empowering them.Therefore, when we study the platform for future work, this is the most critical consideration.
What role does AI play in the platform strategy?
Sankit: The goal of any platform is to ensure that producers and consumers can participate and interact so that both parties can connect to the platform and connect with each other.In essence, it is to create a new mechanism that allows you to predict the needs of future users.
On the one hand, the data requirements when the platform starts will decrease.In the past, if you wanted to connect to users, you need to continuously get data from them, which is quite troublesome for users.But as the model becomes more complex, the machine can get more information from the data to better predict what the user will do next.
On the other hand, AI also affects interface technology.The machine can recognize pictures and videos without user input, which makes the interaction easier.
Not only the matching technology is changing, but the input technology is also changing.In the past, many platform models relied on a large amount of data input by users. The typical example is LinkedIn. Every time a user logs in, they will see the prompt “You still have 50% of the information not filled in”. It is the data input that created LinkedIn.powerful.However, this situation will change in the future. The use of models based on past data can predict future trends and reactions, and fewer scenarios require users to continuously input data.
Big data model
Of course, AI also brings new challenges.I think the platform is largely centrally managed. It is owned by a company and its role is to concentrate more power in the hands of a company.This will have some negative effects, and we need to take measures to govern this, either with a better, distributed AI management system, or government supervision.Try to break the platform and allow companies to open the data around the platform to ensure that data and power will not be concentrated in a company.
What is the ultimate role of AI in platform commerce?Is it just a tool for improving efficiency, or can it respond to more general needs?
Sankit: China’s Baidu is a good example.The traditional media business was initially centered on the accumulation of media editing, such as Yahoo.Later, it evolved into an algorithmic feature driven by page ranking, such as Google.But Baidu has accumulated AI content and achieved great success.This shows how much artificial intelligence has affected the media platform.
Baidu can also intervene and attract users in an effective manner when the content is released in such a huge amount, fully demonstrating that artificial intelligence is effective in identifying users’ interests and providing them with relevant content.
What changes will the platform economy bring to global trade?How should traditional enterprises deal with platformization?
Sankit: With the rise of platforms, global trade is shifting to a model that supports more platforms.I think there are two reasons. One is that the supply chain is getting shorter and shorter. The trade in the past was production in the eastern hemisphere and consumption in the western hemisphere. However, with the development of technology, many manufacturing industries have returned to Europe.
The second is that many trades are being transferred from traditional supply chains to platforms such as Alibaba. Small companies no longer need to go through the complicated application process to participate, as long as they are on the platform to participate in global trade.Therefore, countries must now rethink global trade strategies, and platforms will play an important role.
For example, my usual place of residence in Singapore, thanks to its unique geographical location, it has become a trade-centric country.As more and more trade turns to platforms, traditional trade that depends on geographic location will decrease, and more trade will tend to be “virtualized.”To study the platform strategy of a country like Singapore in future global trade, one must think like Android.
To study the platform strategy of a country like Singapore in future global trade, one must think like Android
Why is it Android system instead of iOS system?I think iOS is like a kingdom, a company trying to own the entire supply chain. This is the “kingdom model.”Google successfully developed the Android system, but did not manufacture mobile phones.It opens the basic operating system to major mobile phone manufacturers while controlling core data such as maps.The combination of openness, control and neutrality has made Google a platform for the mobile phone industry.
Singapore’s attempt to own the “kingdom model” of the entire supply chain is not appropriate. It needs to learn from Android’s “success” and establish a unique control point like Google Maps.While Singapore’s main control point for future global trade is its fintech capabilities, it has created a sandbox that encourages many foreign fintech companies to come in.
Why is FinTech so important?Because all trade requires a lot of capital and insurance, if you have the best algorithms and learning models to predict who should be funded, then you can become the center of the future of global trade.
This is not enough. Singapore is trying to create new tools to empower the trade management and port management of SMEs.It also issues licenses to foreign countries, which is equivalent to the Android system that Google issues to mobile phone manufacturers.Singapore is a fairly neutral participant because it is relatively small, which is conducive to achieving a good platform strategy.Even if a large country has many professionals to develop new technologies, it must be regulated to allow them to enter the market before they can be tested. This is also one of the factors that promotes the development of technology in smaller countries.
02 Facing the general trend of platformization, how do traditional enterprises respond?
Most of the companies you mentioned just now are Internet companies, that is, the new economy, so how do traditional companies use platform thinking and strategy?
Sankit: In fact, there are many good examples of traditional companies, such as the weather forecast company that provides weather information for the iPhone.The first step it took to the platform was to no longer just obtain weather data from weather stations, but to obtain it from every sensor in the world, and established an Internet of Things platform.
The next step is to find brands like Pepsi and Mercedes to make them aware that the weather has a great impact on sales. After comparing the sales data with the weather data, they can calculate the relationship between them and predictSales.Finally, it successfully created a weather-driven advertising platform and accumulated a large amount of sales data in different industries. It now makes more than 25 billion phone calls a day, which is quite fruitful for a company that has only been established for five years.
More and more traditional enterprises are turning to platforms. Is this the general trend?
Sankit: The shift to the platform is basically a change in the mode of business operations.The traditional business model is to sell products or services, that is, the pipeline model, which is based on large-scale manufacturing and mass media.Large-scale manufacturing helps to reduce costs, mass media helps to reach huge markets, and linking the two with the global supply chain is the operation of traditional businesses, but today the situation is changing.
Mass media is replaced by customized media, mass production is replaced by Internet-connected producers, you no longer need a global supply chain, just an AI that knows how to match producers and consumers.Because of distributed manufacturing, customized and personalized consumption, and AI to determine which consumers manufacturers should match, the platform is becoming increasingly important.
AI matching boosts platform development
Therefore, platformization is not just a trend, but also the result of the emergence of new models after the basic model of the traditional pipeline model is changed.The traditional enterprises in the Fortune 500 do not want to stop their traditional business to build a platform, but want to build a platform around the original business.
What challenges will these companies face when they transition to a platform?
Sankit: Unlike startups, the biggest challenges facing traditional companies are threefold:
First, traditional companies, especially listed companies, need to complete quarterly results, but platforms often need a large user base to start generating profits.Moving from a traditional business to a complete platform business is not easy. Once you decide to start, you need to create a good roadmap and plan a transition cycle.
Second, the reason why most platforms succeed is not that they do 100 things right, but do other things after they have successfully captured the user.The idea of traditional companies is that if you have the resources, you can do anything, which also lays down the potential crisis of failure.
Third, the indicators are also very different.Doing platform business not only values money, but also value creation. For example, user participation is also an important indicator.
Traditional company platform transformation faces challenges
Is the core of the platform business creating value?
Sankit: I think that fundamentally speaking, platform metrics are two things. One is the failure rate of interaction, ensuring that the interaction between producers and consumers is successful.For example, if I open Didi and find that there is no car, this interaction fails.Because demand is ready, supply is not ready.The second is user loyalty to the platform, that is, user stickiness.
03 The future of platform revolution
What are the main differences between the Chinese and American platform businesses?
Sankit: The US platform model is fundamentally different from China, India, and other Asian countries.In the United States, many platforms come from Silicon Valley, where there are generations of talent, mentors, and investors who have created an entire ecosystem of talent capital and knowledge.In China, the rise of platform companies is not supported by talent and entrepreneurial ecosystems, and more importantly, it has a huge local market.In this market, we have been able to train and create powerful learning models about user behavior, and then we can take our business to other countries.
Take Alibaba as an example, instead of launching its own platform in different countries, it provides support for the original platforms in these countries.For example, Ant Financial has invested in payment services in other countries, migrated them to Alibaba Cloud, and then used its analysis engine in China to develop loan services in these countries to enhance payment companies’ ability to locate and resolve fraud.
Therefore, the expansion of Chinese companies is very active. They have billions of user data, which is a huge advantage. Other countries, including the United States, do not have this advantage.India also has a similar model to China. The biggest difference between it and the US model is the analytical model that is enabled by the huge market.
How will the platform change in the next five to ten years?
Sankit: I think that a major direction for the future development of the platform is those industries that have not been digitized. These industries will be transferred to the platform business, such as logistics, supply chain, energy, public utilities and medical care.Taking the logistics and transportation industry as an example, with the rise of blockchain and distributed technology, the entire transportation cycle from the point of shipment to the end can be digitized on a single blockchain. This is the first time we have seen end-to-endEnd cycle.
Digitalization of a single blockchain
How should the platform reform of traditional enterprises begin?
Sankit: I think the most important thing is to start by focusing on core assets. To understand what core assets you can build around the platform?What are the advantages now?Can we start digitizing and build platform business on this basis?
Walgreens, one of the largest pharmacies in the United States, has done very well in this regard.The company was originally a traditional company that sold drugs for profit, but it has now successfully transformed into a health management platform.In the past five years, they have developed 200 million users, including 50 million active users, which is a great achievement for a traditional company.
Let’s see how it is done:
The first stage is to focus on your core business and start digitizing user behavior from the pharmacy.They have established a “loyalty program”, and they will be rewarded for joining this program, so many people are attracted to participate.And the platform has a large amount of user purchase data to understand their health.
The second stage is to build a platform around data.In addition to buying medicines, you can also get rewards for using fitness apps. In this way, a data sharing relationship is established between the platform and third-party applications, thereby gaining a deep user base.
With such a large amount of health data, Walgreens has now established a telemedicine platform to connect patients with doctors.
Sankit Paul Qiudali waits
Machinery Industry Press