1. How the digital economy relates to the digital business models? 2. What are digital business platforms and how they impact digital transformation? 3. Can Generation C transform your business?

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Digital Business Platforms for the Generation C
“Ultimately, the power of the Airbnb platform is that it
motivates guests to blend into communities,
belong anywhere, and
live like locals.”
Joe Gebbia (Co-founder and Chief Product Officer Airbnb)
By Manuel Vexler
September 28, 2019
The third article in the series covers digital business platforms:
1. preparing the network for multi-cloud connectivity
2. transitioning employees to a digital culture
3. enabling digital customers access
4. converting data into knowledge, and the knowledge into action
In this article we explore three question related to digital customer access:
1. How the digital economy relates to the digital business models?
2. What are digital business platforms and how they impact digital transformation?
3. Can Generation C transform your business?

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In the last article we started with a quote from Peter Drucker, “if you can’t measure it, you can’t change
it.” So, is fair to ask if we can measure the digital economy and how?
Starting with the definition of digital economy, the OECD a 34 ‘mostly rich economies’ group
acknowledged that digital economy still suffers from the “lack of a commonly understood definition.”
(https://tinyurl.com/y3xzag8e). There are many other attempts to define the digital economy. For
example, the United Nations focuses on measuring the digitalization of the existing economies instead
of defining a separate digital economy. So if to measure it, we can use a broader definition of the digital
economy and its relationship with digital platforms (defined later in this paper). A major measurable
factor leading to the growth of the digital economic activities, and its benefits, is hypoconnectivity, the
multibillion connections among people, businesses, data, devices and processes. According to an SAP
study, over 86% of people surveyed said that hypoconnectivity will benefit their enterprises.
A better, and by far, more useful tool for the 75% of the CEOs still waiting to set a digital transformation
strategy is the measurement of digital intensity. Using seven different metrics, digital intensity shows
the extent of digital transformation as illustrated by firms’ investments in “digital assets.” Differential
measurements over time, and among all industry sectors, show the growth of the digitization in
operations, marketing and human capital digital skills according to Calvino (2018). Digital intensity can
complement digital maturity measurements (not covered in-depth here), to gage the timing and right
amount of investment in digital transformation. The following figures illustrate the proposed
measurements.

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The next challenge for the C-suite team is how to choose a digital business model which delivers
additional value and revenues, while minimizing disruption from current operations?
There is a temptation to significantly disrupt current business models in order to achieve a faster digital
transformation. This is easier said than done, as each model presents executives with hard to estimate
risks, hence a non-starter with shareholders and boards of directors. A better course is to rely on
business innovation, by combining existing business models with digital business models to create a
uniquely customized formula.
How this can be done? Considering first the main components of a business model:
• Value chain (how value is created and delivered)
• Revenue model (target customers segments)
• Customer offering (value proposition)
We start with the fundamental changes brought by the digital economy and the supporting digital
technologies such as cloud, IoT, 5G. Value creation has now added the key building blocks of
digitization, such as, big data analytics, artificial intelligence and e-learning (digital upskilling.)
To visualize the changes, we can imagine looking into a ‘digital mirror’, and find out what new
information we can use for building our customized digital business model. We can consider the
information collected from customers and from internal operations.
o Location and traveling direction
o Behavioral (e.g. reaction to adds)
o Health and wellness (e.g. heart rate)
o Financial (e.g. buying patterns)
o Political (e.g. news channels)
o Educational (e.g. online training)
o Social and cultural
o Intelligent industry (digital twins)
o Smart supply chain
o Digital contracts (bitcoin)
o etc.
The digital business model must balance between internal and external digital transformation and
extend, as opposed to completely replace, current business models. Here is a sample of how digital
business models can be used either in current organization structure or following organizational
transformation. In the next section we will discuss in details the platform business model.
Category
Platforms Digital expansion Digital Optimization
Same organization App Store Preventive maint. Internal process
Organization change 2-sided business model New services Data Science Dept.

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A market study by the Economist Intelligence Unit (Accelerating Business, the rise of the next
generation connectivity, 2019) only 14% will change their business model in the next 2 years. This
contrasts strongly with over 53% of respondents which will invest in new technologies, and 46% which
plan to upgrade the network infrastructure. This supports MIT Sloan’s research showing that only 15%
of CEOs are executing a business transformation strategy. Can this be improved, or we need to wait for
the Schumpeterian creative destruction?
Digital business platforms are benefiting from the confluence of two trends: hypoconnectivity and the
network effects. A platform business model focuses on facilitating interactions across a large number of
participants. These interactions could take the form of short-term transactions like connecting buyers
and sellers, or they could involve formation of longer-term relationships, or collaboration to achieve a
shared outcome.
We can look at a digital business platform as multi-sided mass market, where the cost of the
transaction is practically nil, and the users can execute frictionless transactions. The economic model
was explained by Jean Tirole, winner of the 2014 Nobel Economic Prize. In his paper titled “Platform
Competition in Two-Sided Markets.” Tirole, explained how a platform can skew pricing in order to
attract users. For example, Facebook, Alibaba, Google, Amazon and Instagram, offer free services such
as email, voice, cloud storage, and multi-media in exchange for detailed customer social,
demographical and location information. This information is then sold to advertisers which use it to
target consumers. As in the case of digital economy, there is no consensus on the taxonomy of digital
platforms. The following mind-map provides a good summary of digital platforms.
Source: https://www.bptrends.com/digital-transformation-platform-business-model-of-the-digital-economy/
Digital transformation and the impact of digital platforms can be easily observed from the following
analysis of changes in the last 10 years in the most valuable companies. Notably, natural resources and

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telecom companies lost their place in 2018, while digital platform companies took their places. Also,
traditional banks were replaced by fintech.
Source: https://tinyurl.com/y6kk4p9h
For the last section we will look how customers and consumers which both drive and react to the
digitization of the business. We call this the Generation-C, or Gen C, where C means (hyper) connected
consumers. Generation-C is a behavioral or psychographic group rather than a simple demographic
group. Hence the typical marketing segmentation based on age, gender, economic and educational
categories don’t apply. Gen C had brought a rapid and complex change in the economy, cutting across
generational and soci0-economical lines and creating a new ‘virtually connected social fabric with its
own rules, acceptable behaviors, and global symbols, like .
Marketeers now recognize digital marketing as a separate, and still evolving, science. Starting with the
digital environment, where there is a very close, mostly indistinguishable integration of physical and
virtual worlds. Adding hypoconnectivity and digitization created an environment where values,
practices, behaviors, and habits fundamentally change. Gen C, either acting as consumers, or as
employees, became the major factor in companies developing strategies and executing on digital
transformation. Gen C is also the engine behind, digital platforms. The following figure shows how Gen
C acts as a self referenced consumer group, influenced primarily by their self-organizing network. The
space in this paper doesn’t allow us to provide a full portrait of Gen C and the role of the influencer in
digital marketing. You may find more information about Influencer-Marketing, as illustrated below, at
https://tinyurl.com/y6djqpa2

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Let’s address the question if Gen C can digitally transform your business? There are many examples
where the answer is YES! In effect many industries are in the middle of some or another form of digital
transformation. Many of these digital transformations’ activities are focused on digital technologies, an
approach that leads to frustration about low return-on-investment (RoI.)
In the final section of the paper let’s look at the Gen C impact on the business is both from inside-out
and from outside-in. From an inside-out perspective, the businesses must develop digital tools to
measure and communicate with Gen C. For outside-in, businesses must allow Gen C to participate, in
real-time in setting the strategy and products and services direction of the company.
A common tool for measuring digital transformation s the digital maturity survey. While is important to
know where a business is on its readiness along its digital transformation journey, the only
measurement that matters is financial. This is, how much digital business a company has conducted,
what percentage of the total business and the year-on-year performance. In other words, the proof is in
the financial reports. One example of inside-out digital transformation is the port of Hamburg:
Europe’s second-largest port, opened in 1189. It calls its digital transformation “Port 4.0.”

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Here is how it is described at the ‘Digital Networking’ conference run by Port of Hamburg Marketing in
October 2018.: “underwater drones, autonomous trucks and paperless Customs clearance….By fusing
facility, weather, and traffic conditions with vehicle availability and shipment schedules, the Port
increased container handling capacity by 178% without expanding its physical space.”(source: Digital
Transformation in the International Journal of Social Science and Economics Invention ISSN: 2455-6289
https://tinyurl.com/y3qxv8q7)
An example of outside-in digital transformation is Instagram, which started as a picture and video
storage app following in the steps of Foursquare. By listening, and sometimes clashing with its Gen C
followers, Instagram (now a Facebook company) transformed itself in the faster growing influencer in
fashion and more recently in music. One reason of its success, is Instagram’s openness to its Gen C
customers. An example, is the fast response, and apologies, after a Gen C rejected attempt to change
the scrolling on its pages (December 2018.)
As a digital platform, Instagram allows companies such as San Francisco-based fashion brand Everlane
(https://www.everlane.com/) to mix user generated content with its own content. The firm has over
700,000 followers on Instagram. Another significant phenomenon, is how Instagram changes the role of
celebrity endorsement. The platform is increasing the roles of influencers, previously unknown users,
raised to the status of Gen C opinion leaders, with hundreds of thousands of followers. Gen C finds the
influencers more authentic and transparent than the highly paid celebrities.
In conclusion, enabling customer access and establishing a close relationship with the hyperconnected
Gen C, is a must in creating and executing on a customized digital transformation strategy.
There is no single magic formula, and there is no one size fits all!