ICT organizations in Iran, particularly telecom operators have started several investments on physical infrastructures (i.e. FTTX) and modern mobile network technologies (i.e. LTE). But their business models have stood still and such condition has slowed their revenue generation. To solve this problem, ICT managers could rethink traditional business models and develop new ones based on platform thinking.

 

The intensity of competition has risen a lot during the recent years. Every so often, we witness several large incumbent organizations of an industry are surmounted by new entrants. What goes behind this is a major question for C-level officers. Having a glimpse at the story of mobile industry giants like Nokia, Motorola, Sony-Ericsson and LG, compels us to find this question critically important. In 2007, mobile industry giants created 90% of global profits for mobile industry and when the global market was vehemently overshadowed by these incumbents, the sudden rise of Apple iPhone was not regarded threatening. In that time, Apple was a somewhat weak and vulnerable company having less than 4% of desktop operating system market share and nothing related to mobile handset. However, Apple Surprisingly surpassed the giants during the next eight years in a case that it singlehandedly generated 92% of global profits for mobile industry.

This story is beautifully discussed in the work of Van Alystan and associates published in Harvard Business Review [1]. What makes this story very interesting is that it shows the importance of intellectual assets over physical ones in terms of getting sustainable competitive advantages and creating value streams. In that time Apple had a less trusted brand and R&D supports for large scale projects than comparing to its rivals such as Nokia. But what caused Apple to outperform is rooted in the way its C-level managers saw the mobile industry and then developed a business model for winning in it.

Apple C-level managers didn’t see the mobile industry as a one-way (linear) road in which producers made a product and then consumers consumed it. Instead they considered it as a two-way road in which producers and consumers became connected in a wide ecosystem of value creating initiatives. For instance, iPhone handset and its operating system were not deemed as a simple mere product and were believed to be an enabling platform for facilitating the interactions between App producers and App consumers. Just by January 2015, 1.5 billion Apps were downloaded from App Store which led to $25 billion for developers in a cumulative manner.

As specifically discussed by [1] each platform has four players. These players are platform owner, platform provider, platform producer and platform consumer. Platform owner is the principal controller of platform IP and regulates the participation of other players and the standards in which they should bear. For example, if we consider Android as a platform, Google is its owner. A platform provider is an entity in charge of providing interfaces for platforms. For Example, mobile devices and tablets that enable you to work with Android are the various types of a platform provider. A platform producer is an entity that creates offerings (i.e. Apps) from platforms. For example, the company behind TAP30 (an Uber-like app in Iran) can be regarded as a platform producer in Iran since it has developed TAP30’s app for users.

A platform’s users are considered as platform producers because they produce (use) the offerings (apps) developed by platform producers. For Example, All Iranian drivers and passengers who use TAP30’s app for transportation are platform consumers. With little adaptation of [1], the following figure has been depicted to show the four main players of a platform in a neatly interactive way. It should be strongly noted that understanding the interaction within and outside this ecosystem plays a pivotal role for platform strategy.

 

The four main players of a platform
The four main players of a platform

 

So, if Iranian ICT managers decide to get both of the domestic and international competitive advantages, they have to rethink traditional business models and make new ones based on platform thinking. Since platform thinking enables them to understand how to build an ecosystem surrounding their core business and create a virtuous cycle of value creations for their organizations.

 

[1] Van Alstyne MW, Parker GG, Choudary SP. Pipelines, platforms, and the new rules of strategy. Harvard Business Review. 2016 Apr 1;94(4):54-62.

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2 Comments on "The Necessity of Platform Thinking for Iranian ICT Managers"

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Ali Sedaghat
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good points!

Daniel
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In terms of Iranian ICT there looks to be a boom on the way.
More Iranian companies are looking toward market development via IT shortcuts however most of the still need consult in terms of methodology and strategies and as author has stated platform thinking can be solution

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