Sharing is not a question of what to open , but of what to keep closed .
36 DISRUPTION NETWORKS
service approach is often in order for platforms to thrive .
India ’ s largest online bus ticket platform , redBus , serves a case in point . The company started out in 2005 with a vision to take what was an extremely fragmented industry and make it efficient . To do that , redBus had to ensure buy-in from both consumers and bus operators , but it soon came to realize that operators were not comfortable using the software – a fundamental flaw for a platform that relied upon real time seat inventories . To fix the problem , redBus had to provide significant assisted services , including a digital inventory system , to ensure that bus operators came onboard .
Sharing is not a question of what to open , but of what to keep closed .
And platform pitfalls aren ’ t restricted to startups – even Google has had to learn from its emerging market mistakes . When the tech giant launched its advertising capabilities in the United States , its selfserve model permitted people with little or no experience to advertise quickly and easily for the first time using Google Ad- Sense and AdWords . Consequently , Google ’ s services achieved high adoption amongst small businesses , earning the platform significant success . However , when Google tried to introduce the same model to Asia , the outcome was far less impressive .
In Asia , small businesses were not marketing their services on the Internet . Some didn ’ t even have a website . Google realized it had to change its approach , fast . So , instead of targeting small businesses , it started going after ad buying agencies , which would in turn target larger brands . In essence , the agency became the assisted service provider that allowed the end brand to participate on the platform .
What the examples of redBus and Google show us is that , with the right approach , platform strategies do work in emerging markets . So why aren ’ t there more success stories to discuss ? One of the problems for emerging markets is that a lot of the innovation occurring within them happens in the startup space , and startups are funded by venture capitalists . While this may not seem like a cause concern , a lot of venture capitalists in emerging markets – with the exception of China – have previously invested in the United States . As a result , they either try to replicate Western models or overlook investment opportunities in emerging market-specific platforms .
This is one of the main reasons why we see fewer platform strategies in action across the emerging world – but that doesn ’ t mean that potential doesn ’ t exist . In the campaign to seize it , one of the first considerations is whether to create a platform of your own , or participate in an existing one .
This decision involves multiple considerations . Size is indeed one of them ; if your company ’ s capacity and resources are limited , then sustaining a viable platform may be tough . But examples exist that point to the contrary . For example , in Germany many small manufacturing firms are becoming platform companies , and this is because of a second factor : the platform potential of a given industry segment . If a dominant platform does not already exist , then even as a small company , you have the potential to develop your own .
To do so , however , it is important to have ownership over the relationship with the
TO CREATE OR PARTICIPATE ? THE DECIDING FACTORS
1 . Capacity Does your company have size / capacity to sustain its own platform ?
2 . Potential Do other platforms exist in your industry segment ? Is there room for more ?
3 . Ownership Will you own the relationship with platform participants ?
4 . Negotiation Power Can you ensure partners participate on your terms ?
5 . Competition If competition is stiff , do you have the resources to battle it out ?
6 . Value Chain If competition is prohibitive , what elements of your value chain can you open up ?
EMERGING MARKETS BUSINESS SUMMER 2017 ISSUE NO . 3