“Platform” companies now dominate markets, fundamentally disrupting how value is created … time for a business model revolution

June 2, 2019

Platform businesses have radically disrupted the traditional business landscape. Not only by displacing some of the world’s biggest firms, but also by transforming familiar business processes, consumer behaviour and value creation, and altering the structure of major industries.

The world’s 6 most valuable companies run platform business models. None are European. 60% of the ‘unicorn’ billion dollar start-ups are platform businesses. Only a small proportion were born in Europe. Europe’s share of the world’s top 100 public companies is declining in both number and value.

  • 6 of the world’s 6 most valuable companies run platform business models. None are European.
  • 30% of global economic activity is predicted to be mediated by platforms in 10 years’ time.
  • 60% of the ‘Unicorn’ billion dollar start-ups are platform businesses.
  • 92% of executives believe their current business models are not economically viable through digitization.
  • 2% fewer than 2% of incumbents have an effective platform strategy today.
  • 85%+of corporate digital investments generate zero/negative EVA.

Seven of the world’s ten most valuable companies are platform businesses. None of them is European. 60% of the ‘Unicorn’ billion dollar start-ups are platform businesses. Only a small proportion were born in Europe.

Europe’s share of the world’s top 100 public companies is declining in both number and value.

Why? The US and China have adopted – faster and at greater scale – advanced digital business models based on ‘platform thinking’. These leverage the full power of software and hyper-connectedness. They work in very different ways to traditional business models and outperform them on all measures of growth and value.

While platforms are commercially very powerful and disruptive, they increasingly have significant socio-economic impact too: on trade flows between companies and countries, on jobs and the nature of employment, and the way they exploit personal data.

From a commercial point of view there is a real danger that Europe falls behind the US and China in preparing for the emergent 4th Industrial Revolution*. Currently we are not translating our lead in scientific research into the same levels of economic value.

At the same time, Europe has an opportunity to take a lead in creating fairer social frameworks in which new digital business models can thrive.

To respond effectively to the opportunities and threats, European business leaders, investors and policy makers across all sectors must quickly understand – in much more detail – the new concepts, technologies and skills underpinning advanced digital business models and platforms and learn how to manage, incorporate, co-exist and/or compete with them.

The most successful companies invest heavily in incorporating platform services into their business models.

Platform businesses outperform all others on growth rates, return on assets, margins and valuation multiples. Europe currently has only a 4% share of this market.

Apple became the world’s first $1 trillion company by investing in a platform-enabled business model

Europe is falling behind in adopting advanced digital models. It’s champions are not increasing value at the same rate as the US and China.

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