How digital platforms transform business: strategy insights from author Timo Vuori

In this interview, platform expert Timo Vuori shares examples, frameworks, and tips for leaders to leverage platform business models. Here are some takeaways.

How digital platforms transform business: strategy insights from author Timo Vuori

Wednesday December 07, 2022,

5 min Read

Tero Ojanperä and Timo O Vuori are co-authors of Platform Strategy: Transform Your Business with AI, Platforms, and Human Intelligence. It is not just Big Tech firms that have launched platforms, but also traditional businesses such as KONE, Lanxess, and John Deere.

The authors present a seven-step framework for leaders to transform their businesses via platform strategies (see my book review here). The steps are: turn fear into energy, remove friction, create fans, create a learning loop, open with APIs, leverage human creativity, and organise around AI.

See also YourStory’s Book Review section with takeaways from over 350 titles on creativity, entrepreneurship, innovation, social enterprise, and digital transformation.

Professor Timo O Vuori is a strategy consultant and professor at Aalto University. Dr Tero Ojanperä is co-founder of AI lab Silo AI, and a venture capitalist. Both authors are based in Helsinki, Finland.

In this insightful interview, Timo shares insights on trends in the platform space, success tips for business leaders, and useful online resources.


Edited excerpts from the interview:

YourStory [YS]: What are some common misconceptions about platforms that you still come across in the market?

Timo Vuori [TV]: Some managers continue to think they can fully control their platform, even though most value is created by unleashing external innovation.

This can be a scary thing for some leaders, as they must trust that third-parties will generate value, often in ways that are difficult to quantify in advance. Furthermore, they must motivate the third-parties to engage with the platform, as they have now formal power over them.

[YS]: In the time since your book was published, what new examples have you come across of digital platform businesses?

[TV]: The research on platforms is currently moving very fast. Personally, I consider a study by Joachim Stonig and colleagues in the Strategic Management Journal (2022) to be the most inspiring.

It describes how an established product firm in the aluminium die-casting industry started creating a platform around its core product. They separated the product for a digital platform and modularised their product.

They also created an open strategy process. In this way, they were able to engage multiple partners. It shows how platforms create possibilities to ever more industries.

[YS]: How important are disciplines like design thinking in understanding customer journeys for developing platform solutions?

[TV]: They are very essential, as platforms are much about eliminating friction. That is, firms must understand what is effortful for their customers and design their services such that it is as seamless as possible for the customer.

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[YS]: How important is it for platforms to achieve massive scale, or is there value in sticking to niche markets?

[TV]: It depends on the scale. To the extent that network effects and data network effects are activated, scale tends to be beneficial. However, that does not mean that all new business areas add value. 

[YS]: We are also seeing the ‘dark side’ of tech, and backlash against some of the larger social media platforms. How can platforms effectively balance business pressures with ethical considerations?

[TV]: This is a major challenge. Fortunately, we are seeing more and more leaders and scholars address this issue. One good example is the book Cloud Empires by Vili Lehdonvirta (MIT Press).

[YS]: When companies collaborate to create platforms, who owns the knowledge and intellectual property that is generated?

[TV]: It’s always a matter of negotiation. For example, the Finnish tech industry association has created a template for data sharing contracts. But obviously, companies should consider what’s possible for them and how it impacts their long term prospects.

[YS]: It is still hard for established incumbents to move away from hierarchical control to collaborative co-creation. What are some ways to effectively change this mindset and habit?

[TV]: Learning about the new possibilities and examples, while experimenting in a step-by-step fashion. Other helpful are practices such as identity work, which we discuss here.

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[YS]: Tell us about some of your activities in platform space these days.

[TV]: We both have been helping several companies initiate and refine their platform offerings through private engagement, and with Tero also as a board member. Meanwhile, our research on platforms continues actively and we are working on several research papers.

[YS]: How was your book received? What were some of the responses you got?

[TV]: People have liked the combination of technology and leadership aspects in the book. It seems it gives leaders clear ideas of how to take things forward. 

[YS]: What is your next book going to be about?

[TV]: I’m probably going to focus on the emotional side of strategy making, which has been the core of my research agenda during the past 15 years.

[YS]: What is your parting message to the startups and business leaders in our audience?

[TV]: Turn fear into energy, but remain focused and disciplined!

Edited by Megha Reddy