This document discusses how digital platforms and network effects are driving industry convergence and disrupting traditional business models. It notes that executives expect industry convergence to have the biggest impact on businesses in the coming years. Platforms are enabling new ways of unlocking value from spare resources and user-generated content. Examples like Airbnb and Uber show how platforms can compete against companies that own inventory by leveraging networks of users and their assets. The future may see more industries like cities, energy/smart grids, education, and healthcare transformed into platforms.

1. Kim Hiort Nielsen
The Digital transformation – platforms and network effects

2. What’s putting the world’s
top executives on edge?

3. CxOs expect industry convergence to
have the biggest impact on their
business
Total CEO CFO CHRO CIO CMO COO
70%
60%
50%
40%
30%
20%
10%
0%
Industry convergence
The “anywhere” workplace
Rising cyber risk
The redistribution of
consumer purchasing power
The sustainability imperative
Alternative finance and
financing mechanisms
The sharing economy
Top trends to impact business (in 3 to 5 years)

4. External forces impacting the enterprise (in 3 to 5 years)
For the first time, the entire C-suite selected
technology as the main game changer
Technology
factors
Market
factors
Regulatory
concerns
Macro-
economic
factors
People skills Socio-
economic
factors
Globalization Geopolitical
factors
Environmental
issues
72%
71%
55%
51%
48%
34%
31% 31%
27%

5. The technologies that CxOs expect to
revolutionize business tomorrow are already
in play today
Cloud computing and services
Mobile solutions
Internet of Things (IoT)
Cognitive computing
Advanced manufacturing technologies
New energy sources and solutions
Bioengineering
Man-machine hybrids
63%
61%
57%
37%
28%
23%
12%
10%
Technologies revolutionizing business (in 3 to 5 years)

6. Market disruptions
New markets
New business models

7. InterBrand: Best Global Brands

8. These Grew Fastest

9. These Grew Fastest

10. Platforms = 80 of 115 firms worth $1,000,000,000+
Source: P. Evans, CGE; CB Insights, Capital IQ, CrunchBase, 2015

11. The Product Business Model is Broken

12. The Product Business Model is Broken
In 2009, BlackBerry had nearly 50% market share in
U.S. operating systems, according to IDC. Now: 2.1%
2008 2009 2010 2011 2012 2013
50%
40%
30%
20%
10%
0%

13. 1980-2000 Microsoft Platform Beats
Apple Product
Apple launched the PC revolution but Microsoft licensed widely, built a
huge developer ecosystem, 6X larger.

14. Apple Feb 5, 1996
Michael Dell - ”Shut it down
and give the money back to
the shareholders.”

15. These Grew Fastest

16. Nike Builds a Biz
Platform

17. Network Effects
Value rises as more people use the
platform
Metcalfe’s Law

18. Each Side Attracts More of the Other
eBay Buyers
Uber Riders
Xbox Gamers
Amex CardHolders
Aga Khan Patients
YouTube Viewers
AirBnb Renters
Tesla Car Drivers
Mechanical Turk Jobs
LinkedIn Employees
Android Users
eBay Sellers
Uber Drivers
Xbox Developers
Amex Merchants
Aga Khan Doctors
YouTube Videographers
AirBnb Rooms
Tesla Charge Stations
Mechanical Turk Laborers
LinkedIn Employers
Android Developers

19. In any market with network effects, the focus of
attention must shift from inside to outside the
firm.Reason: You can’t scale network effects
inside as easily as outside.
Source: Marshall Van Alstyne

20. To have an external focus,
you must have an API
strategy.
... this implies ...

21. and growth is accelerating dramatically
APIs represent a new,
fast-growing channel
opportunity
Business
models are
evolving stores (800) ###s web sites web APIs
According to Gartner,
by 2016, 75% of the
top 50 global banks
will have launched an
API platform
By 2016, 50% of B2B
collaboration will take
place through Web APIs.
Sources: Gartner, Predicts 2012: Application Development, 4Q, 2011; Gartner, Govern Your Services and Manage Your APIs with
Application Services Governance, 4Q 2012; Gartner, Open for Business: Learn to Profit by Open Data, 1Q 2012
APIs are a path to new business opportunities
Web APIs are the
new, fast-growing
business channel
Businesses
are Evolving
stores (800) ###s web sites

22. Exposing systems of
record to Mobile
apps
• Enterprises are taking existing businesses into the mobile world. Their data resides on-premise.
For mobile apps to be interesting & useful, they need access to this on-premise data.
• APIs provide a secure and simple way to allow mobile apps to access existing on-premise data.
Accelerate internal
development
• APIs don’t always have to be exposed to the world. Many companies build much of their internal
code in form of APIs, for reusability.
• Result: a library of useful components that can be reused to greatly accelerate app development
Expand the reach of
your business
• Increasingly, businesses are expecting to consume your product/service in the context of other
related services. This means interacting with your business not through your web page or store,
but through APIs
• APIs enable partners, entrepreneurs, developers to build/embed your service into theirs
Build hybrid cloud
applications
• The canonical hybrid cloud app resides in the public cloud, and accesses data that must remain on-
premise for legal, security, regulatory reasons.
• APIs provide a secure and simple way to allow hybrid cloud apps to access on-premise data
Monetize data and
services
• Businesses often have high-value data and services that they can provide and sell to others
• Peugeot (French auto manufacturer) sells their connected car data to external business partners
via APIs, resulting in a new revenue stream
1
2
3
4
5
What are some common use
cases in the API Economy?

23. • Estimate global taxi market
• Estimate market share
• Est. risk adjusted cash flow
• Consider proprietary methods, barriers
to competition
• Value: $5.9 Billion
Aswath Damodaran: NYU
Finance professor, Corporate
Valuation author, Herb Simon
Prize.

24. Bill Gurley: Venture Capitalist,
OpenTable, Zillow, Uber
All true but overlooking
network effects.
Source: David Sacks, COO PayPal, CEO Yammer
Value: $17 Billion

25. Platforms Unlock New Value from Spare
Resources
and User Generated Content
What Changes :: Supply Chains

26. AirBnb sells users’ spare rooms, competing
with hotels that must own them
RelayRides sells users’ spare cars,
competing with rental firms that must
own them

27. Instagram sold for $1B
not because of contributions from 13 employees
but from 30 million users

28. 2005
2013

30. ’’In 2015, Uber, the world’s largest
taxi company owns no vehicles,
Facebook the world’s most popular
media owner creates no content,
Alibaba the most valuable retailer
has no inventory, and Airbnb the
world’s largest hotelier owns no
real estate.’’
Tom Goodwin, Sr. VP of Strategy Havas Media

31. Why are the old competitors
not the new competitors?
Isn’t afraid of …
publishing
broadcast
electronics
cars
watches
delivery
+
but should fear …

33. Disruptions in Pharma
• Empowered patients
• Health Gamification
• Argumented reality and virtul reality
• Genomics and truly personalized medicine
• Body sensors
• 'Do it yourself' biotechnology
• 3D printing revolution
• End of human experimentation
• Medical decision making with artificial intelligence
• Nanorobots

34. What’s Next?

35. City as Platform

36. Energy/Smart Grid as Platform

37. Education as Platform

38. Healthcare as Platform

39. Xellia / Pharma as a platform
Developers
Suppliers
Patients
Universities / research facilities
Assets core but sorrounding by a continous evolving network
Startups/entrepreneurs
Gamers
Manufactors