![]() ![]() ![]() Nimble companies that seize the opportunities presented by the platform economy can gain an advantage in their core business and beyond. He says several were established many years ago and have successfully handled digital evolution. Michael Cusumano, professor of strategic management at MIT Sloan and co-author of The Business of Platforms, has researched more than 400 unicorns (companies that are worth more than $1bn) that have platform businesses. That said, adopting a good digital strategy can allow companies that began in the analogue age to reap rewards. “Digital natives” - companies with a digital-first model such as Netflix, Google and Uber - are now household names. While not purely digital, businesses such as the Amazon marketplace are the most visible success stories. ![]() How effective is the platform model? In 2019 a team of academics from MIT Sloan School of Management, University of Surrey and Harvard Business School, found that the top 43 publicly-listed platform companies had nearly twice the operating profits, growth rates and market capitalisations of the 100 largest firms in the same businesses over a 20-year period - with half the workers. They benefit from the network effect, so providing greater value to more users. Successful operators use digital platforms to foster reliance and loyalty. Customers are increasingly comfortable with buying goods and services online, reinforcing the move from physical to digital transactions. In scale and significance, the digital economy is now impossible to ignore. Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter. ![]()
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