In our September column, we highlighted the business model of tech companies as a benchmark to follow.
These platform-based firms—which deploy new ways of connecting with customers driven by personalization and stand out for their high capacity to adapt and innovate—are leading the way in the context of the subscription economy. This path places digital transformation strategy at the core of business evolution. The challenge? Reinventing the core business around data, digital capabilities, and business intelligence. Has your organization tackled this yet?
Platform businesses connect and facilitate interactions between providers and customers while governing these touchpoints. Operating like one of these firms (or at least adopting many of their core practices) is a primary goal for many traditional companies watching digitally native entrants capture market share and disrupt long-standing market dominance. But how can organizations achieve this transformation? As noted in this article, for technology and business digitization to serve as true drivers of innovation and growth, IT must reorganize into flexible, modular, and independent platforms. This structural shift is essential for experimenting, failing, learning, and scaling rapidly.
Platforms focus on enterprise solutions designed to serve internal or external customers and power other integrated platforms. They operate as autonomous entities uniting business strategy, technology, governance, processes, and talent management, empowered to execute at speed. Each platform is led by a platform owner who assumes end-to-end accountability for delivering and operating the solution as a service.
Digital Transformation Strategy
A platform-based enterprise typically manages between 20 and 40 platforms (IT solutions)—each large enough to deliver a major, discrete service, yet small enough to remain manageable. While these platforms exist as distinct units, their ultimate value depends on how seamlessly they interoperate.
Transitioning into a platform-driven organization represents a fundamental operational and cultural shift that must be grounded in a well-orchestrated digital business transformation plan. Key execution steps include:
- Rapidly group company activities and associated IT architectures into a portfolio of 20 to 40 platforms covering customer journeys, business capabilities, and core IT. This taxonomy does not need to be final; it serves as a functional starting point before evaluating the maturity and fit of each platform.
- Establish initial platform and mission control teams. Platform teams should include a platform leader, business stakeholders, technical experts, and functional specialists. The mission control team should consist of 8 to 10 top leaders across finance, IT architecture, and program management to drive strategic allocation, enforce business and technology standards, and coordinate cross-platform initiatives.
- Execute the transformation strategy iteratively, progressing platform by platform with a strict focus on core business priorities.
Digitizing the Business
Transforming into a platform-based enterprise is ultimately a matter of organizational mindset. It requires both the determination to stay the course and the flexibility to adapt based on insights gathered by platform teams.
In the report "The platform play: How to operate like a tech company" by McKinsey & Company, you can explore this topic further and review inspiring case studies.
What other recommendations would you suggest to help traditional companies modernize their operating model to align with tech industry leaders?