By Gideon Malherbe, VCI Founding Partner
Digital Platform businesses have dominated market attention for many years now. The internet itself is the ultimate platform of our age and it’s the breeding ground for the evolution and proliferation of more and more digital platforms. Whereas, traditional methods of production and distribution were often limited to “push” strategies, with significant effort and resources placed on forecasting market demand. Platforms actually enable “pull” strategies which are long-seen as potentially more profitable modes of meeting consumer needs.
“Push” strategies can turn profit if they’re efficient and accurate. If they aren’t, more marketing and pricing strategies can help drive demand. But as digitization continues its proliferate course of penetration and shaping of markets, industries, and literally, ways of life, the scene is set to diminish conditions where “push” strategies apply. Concepts like open source and right to Wi-Fi along with the strong focus on user experience are just some of the forces at work here. Other forces are the decreasing costs of digital capabilities like access, storage, bandwidth, and computing power.
The growth rate of global trade is another driving force. Global trade has increased about 7% per annum (about twice the growth rate of global GDP) over the last few decades. Globalization and digitization are operating in concert in a time when everything is being reshaped, indeed the foundations of everything are being reshaped. Deloitte’s Center for the Edge calls this “The Big Shift.”
This reshaping creates an environment where “pull” strategies can thrive. Indeed, the demand signals from real consumers are instantaneous. The response through efficient systems like lean manufacturing and inventory can meet the demand. There are still great opportunities for platform businesses to further engage these dynamics of digitization with broader supply chains and defined “pull’ strategies to expand scale.
For more information or to schedule a consultation, please contact gideon@govci.com
