The right digital-platform strategy (2023)

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Powerful platforms have given digital natives from Alibaba to Amazon global reach and towering market capitalizations. While that’s no secret, these platforms raise difficult questions for CEOs of incumbent companies pushing ahead with their own digital transformations: Should they emulate the frontrunners, join forces with them, or not play at all? Not playing may seem risky in a world where “platforms beat products.”1The phrase “platforms beat products” was initially used by Marshall Van Alstyne in a presentation at the Massachusetts Institute of Technology (MIT) in 2015: “Platform shift: How new biz models are changing the shape of industry,” Boston University and MIT, November 18, 2015. The presentation later became a book Van Alstyne coauthored. For more, see Geoffrey G. Parker, Marshall W. Van Alstyne, and Sangeet Paul Choudary, Platform Revolution: How Networked Markets Are Transforming the Economy and How to Make Them Work for You, New York, NY: W.W. Norton, 2016. Yet building your own platform, in a majority of markets where global platforms are already thriving, may be akin to arm wrestling with a bulldozer.2Jacques Bughin and Nicolas Van Zeebroeck, “New evidence for the power of digital platforms,” McKinsey Quarterly, August 2017.

To better grasp how incumbents and digital-native companies design their strategies to harness the power of platforms, we recently surveyed nearly 1,600 C-suite executives in companies across sectors and key geographies.3The annual survey, conducted in mid-2018 on company digitization, sampled 12,000 global management executives. It was weighted toward larger firms. For more on the data underlying this piece, see “A winning operating model for digital strategy,” January 2019. The types of platforms vary: some were built by incumbents, others are industry focused and operated by third parties, and still others are operated by the well-known global players with big, horizonal platforms. The responses indicate that platforms are spreading in many digital markets and that, in general, a successful platform play by incumbent companies can yield significant performance gains.

As we have described elsewhere, two core digital structures (digital platforms and ecosystems) define the new competition. The first includes global platforms such as Facebook, which allow a range of digital products to be built on top of them—advertising and media marketplaces in Facebook’s case. Ecosystems, by contrast, often start with a consumer need for a service, such as real-time mobility (Lyft, Didi) or lodgings away from home (Airbnb). These provide a space that matches supply with demand—for example, vehicle drivers with ride seekers, and travelers with homeowners. Companies such as China’s Ping An have pushed the model across industry borders, offering customers digital places that satisfy a continuum of needs, from car insurance and real-estate services to advice from doctors. The lines between the platforms and ecosystems are blurring and will continue to blur.

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Incumbents, possibly aware of the difficulty of owning and operating an industry platform successfully, often choose to cooperatewith global platforms and ecosystems to reap the benefits of scale. While strategies that involve signing on to someone else’s platform appear to help jump-start participation, they are also likely to pose risks: thousands of others are doing the same thing, which makes differentiation difficult. And of course, there’s always the question of whether the platform owner will eventually move in on the business of its partners.


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The right digital-platform strategy (1)

Spreading platforms

The first insight from the survey is the extent to which platforms have become an essential part of the business landscape and no longer the domain solely of digital natives. Incumbent companies, including Daimler, Nike, and Unilever, have launched their own platforms as their business models mature, although we found they are only about half as likely as digital natives to go this route (Exhibit 1).4 At the outset, platform plays were most prevalent in a narrow set of industries, such as gaming, software, e-commerce, and credit cards. See Annabelle Gawer, “Bridging differing perspectives on technological platforms: Toward an integrative framework,” Research Policy, September 2014, Volume 43, Number 7, pp. 1239–49. Across products, sectors, and developed economies, we found that a single digital platform prevails 75 percent of the time. Meanwhile, platforms are less common in markets with lower digital maturity, such as pharmaceuticals and healthcare (55 percent), than in retail banking (95 percent). Business-to-business sectors (with a 65 percent platform presence) also diverge significantly from business-to-consumer ones (85 percent).

Not surprisingly, the top reasons these platforms thrive are connected to network and scale effects, in tandem with the desire to secure end-to-end digital services. The most common rationale given by companies that use platforms (31 percent of all companies) is that they make it possible to combine individual services and integrate them into a full-service offering.5Such a strategy can indeed be powerful; for example, ten years after setting up its marketplace, more than 50 percent of total revenue of Amazon’s online retailing arose from its third-party affiliates; see Néstor Duch-Brown, The competitive landscape of online platforms, JRC Digital Economy Working Paper 2017-04, Another significant motivation, voiced by more than 20 percent of respondents, is the desire to develop a bigger base of customers across categories at scale, often with an eye to driving down prices and aggregating related data into a shared, cloud-based utility. Major retailers adopting platforms, hoping to emulate the digital marketplaces of an Amazon or eBay, are well represented in this group of platform aspirants.

In a competitive environment—with spreading platforms and ecosystems, as well as expanding network effects—speed (first-mover advantages) and winner-takes-all dynamics will become even more important for incumbents to consider.


The right digital-platform strategy (2)

Performance gains

We found that any type of platform play—whether through a company-owned or a third-party platform, and either cooperating or competing with a global platform—can boost earnings above the benchmark level ofnot playing. Companies with platforms had an annual boost in earnings before interest and taxes (EBIT) of 1.4 percent, compared with the 0.3 percent gains of nonplayers. Companies that joined broader cooperative arrangements fared slightly better than those operating their own platforms.

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The performance effects are cumulative, with EBIT improvements adding to early-year gains. Our estimates suggest that over a five-year period, platform players may capture an additional 10 percent in EBIT growth—a company’s 2 percent EBIT growth, for example, would increase to 2.2 percent in year five (Exhibit 2). Although these performance findings should be treated cautiously, since they are based on survey responses (and thus self-reported), they confirm the benefits we found in earlier research. Further studies will help identify underlying factors behind the gains (for example, the first-mover advantages that some early platform users may capture).

More cooperation than direct competition


The right digital-platform strategy (3)

Given the pervasive presence of platforms, a large majority of incumbent companies have decided to establish one, as the first exhibit shows. Most incumbents have chosen to participate by joining industry platforms operated by third parties or by allying with global platforms rather than building their own.

Digging deeper, we looked at whether—as well as how—incumbents that deployed platforms ultimately engaged with larger global ones. We found that most decided either to cooperate with these broad ecosystems or to compete against them (Exhibit 3). The remaining incumbents decided either not to engage with global ecosystems using the platforms they built or shared, or had no platform play at all. The preferred path, however, was cooperation—which stands to reason. Even when a company owns a platform, it may find the competition stiffer than expected. Collaboration can offer greater market strength through the complementary products ecosystems offer. Companies starting off using a narrower industry platform may find that joining with a global player vastly expands their reach to new customers. And with more platforms becoming open source rather than proprietary, that attraction will grow.

Digital platforms have become a feature of the corporate landscape. For incumbents, a platform strategy, pursued alone or cooperatively, is becoming a competitive necessity. Companies that have yet to make their move may find it increasingly difficult to catch up.

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Jacques Bughin is a director of the McKinsey Global Institute and a senior partner in McKinsey’s Brussels office, Tanguy Catlin is a senior partner in the Boston office, and Miklós Dietz is a senior partner in the Vancouver office.

The authors wish to thank Soyoko Umeno for her contributions to this article.

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What is Digital Platform strategy? ›

Platform Strategy Framework

A Digital Platform strategy aims to penetrate the online market by focusing on allowing one segment of participants to benefit from the presence or interaction of others. Traditionally it is supposed that clients can determine their willingness to pay for a service or product independently.

What are the 3 strategies to launch a Digital Platform? ›

With that in mind, here are three keys to a winning platform strategy.
  • Solve actual customer problems.
  • Plan for constant technology and strategy change.
  • Cultivate a strong digital ecosystem.
May 1, 2019

How do you evaluate which digital platforms are right for you? ›

Factors for evaluating digital platforms
  • Look for cost savings. ...
  • Futureproof your content with a flexible, multi-space content ecosystem. ...
  • Content portability. ...
  • Upskilling and training. ...
  • Maintenance operations. ...
  • Tech stack options and architecture flexibility. ...
  • Integrations ecosystem. ...
  • Industry-leading tools.
Mar 22, 2021

What makes a successful Digital Platform? ›

A successful digital platform performs two key functions: Facilitates exchanges of goods, services, or information. Leverages the community to provide enhanced value to everyone within the ecosystem.

What is the best digital strategy? ›

While there is no end-all-be-all “best” digital marketing strategy – search engine optimization, better known as SEO, should be a requirement. SEO is the process of using keywords and phrases related to your business that your ideal audience is searching for.

What are the 3 types of digital platforms? ›

Social media sites like Twitter, Facebook, LinkedIn, and Instagram. Knowledge-based platforms like Quora, StackOverflow, and Reddit. Service-based platforms like GrubHub, Uber, and Airbnb.

What are 5 strategies for using digital technology? ›

Becker explored for creating a healthy balance between the use of digital technology and other important activities within the lives of young people and adults.
  • Take a digital technology inventory.
  • Create an intentional focus on downtime.
  • Help children and adolescents develop healthy patterns of screen time use.
Feb 23, 2016

What is an example of a digital strategy? ›

These include artificial intelligence (AI), machine learning (ML), robotics, data analytics, and the Internet of Things (IoT). As these technologies dramatically reshape industries, many companies are pursuing large-scale change efforts to capture the benefits of these trends or simply to keep up with competitors.

What are platform strategies? ›

A platform strategy is an approach to entering a market which revolves around the task of allowing platform participants to benefit from the presence of others. An organization's platform strategy determines how they deliver value to their target audience.

How do you decide which platforms to work on? ›

A lot.
  1. Start with your audience. ...
  2. Consider your company. ...
  3. Research your competitors and others in your industry. ...
  4. Align with your overall social media marketing goals. ...
  5. Understand the different platforms and their uses. ...
  6. Keep in mind your available resources.

What are three key considerations when evaluating platforms? ›

Key Considerations for Evaluating a Modern Data Platform
  • Selecting the right cloud environment.
  • Supporting multiple data types.
  • Separating storage and compute resources.
  • Simplifying data sharing.
  • Extending data applications.

How can I improve my Digital Platform? ›

5 Steps To Improve Your Digital Strategy
  1. 1 Planning your Digital Strategy. The first step in any strategy is the planning process. ...
  2. 2 Increase your reach. ...
  3. 3 Improving your website is crucial to your Digital Strategy. ...
  4. 4 Converting visitors. ...
  5. 5 Engaging with your Audience.

What are the key digital platforms? ›

Platforms such as Facebook, Instagram, Tik Tok, and blogs have now taken over the digital marketing space. Consider the following: The world has 7.9billion people and 5.03 billion of those people use the internet regularly. This means that 63% of the world's entire population can be reached online via digital marketing.

How do you measure the success of a digital strategy? ›

14 Digital Marketing Metrics to Measure Your Strategy in 2022
  1. Total Website Visits.
  2. Traffic by Channels.
  3. Inbound Links to Website.
  4. Number of New Visitors vs Number of Return Visitors.
  5. Interactions per Visit.
  6. Bounce Rate.
  7. Exit Rate.
  8. Mobile Traffic.
Jan 28, 2021

What is the best Digital Platform? ›

Google and Facebook are the superior digital advertising platforms. Surveyed marketers named Google and Facebook as their top digital advertising platforms in terms of both usage and performance. A whopping 87% of respondents use Google, and the same percentage use Facebook.

What is a digital strategy and why is it important? ›

Digital strategy focuses on using technology to improve business performance, whether that means creating new products or reimagining current processes. It specifies the direction an organization will take to create new competitive advantages with technology, as well as the tactics it will use to achieve these changes.

Why are digital strategies important? ›

What is the Importance of Digital Marketing Strategy? Digital marketing strategy helps businesses take over their business peers. It suggests ways to evoke creativity and innovation in product design, development, and promotion, eliminating competition.

What should a digital strategy contain? ›

Either way, a digital strategy should be customer-focused and address ways to improve the company's social media footprint, organic search results, customer engagement and brand recognition. It should also include strategies for reputation management.

How many types of digital strategy are there? ›

The six types of digital strategy.

What are the 6 steps for implementing a digital strategy? ›

6 Simple Steps to Create Your Digital Strategy
  1. Audience. Start by defining your audience. ...
  2. Platform. Once you've identified your target audience, the next step is understanding where they spend their time.
  3. Action. ...
  4. Content. ...
  5. Measurement. ...
  6. Return to the original goal.
Jan 16, 2023

What are digital first strategies? ›

A Digital-First Strategy is a term with a pretty self-explanatory meaning — businesses striving towards organizing in a digital environment. Digital-First Strategy could transform a business in many ways and drive them forward into the all-digital future that is clearly on the economic horizon.

What are the main 5 components of digital system? ›

A computer device is made up of various elements which help in its effective functioning and processing.
There are five basic components which include:
  • Input Unit.
  • Output Unit.
  • Memory Unit.
  • Control Unit.
  • Arithmetical and Logical Unit.

What is digital strategy to achieve goals? ›

Smash 2022 with These 9 Essential Digital Marketing Goals
  • Ensure your digital marketing goals are SMART.
  • Prioritize personalization.
  • Make the switch to first-party data.
  • Boost engagement with short-form social media videos.
  • Implement machine learning to understand your data better.
  • Get on board with metaverse marketing.
Jan 8, 2022

Which company has the best digital strategy? ›

The focus with our digital strategy is revenue.
1. Neil Patel Digital — Best For Content Marketing & Digital Strategy
  • Google.
  • GM.
  • eBay.
  • NBC.
  • Thomson Reuters foundation.
  • TechCrunch.
  • Cheezburger.
  • American Greetings.

What are the 3 basic strategies? ›

According to Porter's Generic Strategies model, there are three basic strategic options available to organizations for gaining competitive advantage. These are: Cost Leadership, Differentiation and Focus.

What are the four main strategies? ›

The four strategies are called:
  • Cost Leadership Strategy.
  • Differentiation Strategy.
  • Cost Focus Strategy.
  • Differentiation Focus Strategy.

What factors should you consider when selecting the best platform? ›

So we are hereby sharing some important factors, considering which will make it easy for you to choose the right platform for your eCommerce business.
  • Security. ...
  • SEO. ...
  • Responsive Web Design. ...
  • Supports Multiple Selling Channels. ...
  • Integrations. ...
  • Technical Support. ...
  • Scalability. ...
  • Price.

Which factors are necessary when choosing a platform? ›

12 factors to consider while choosing the best eCommerce platform
  • Hosting and Platform ownership. ...
  • Cost of Ownership. ...
  • Integrations. ...
  • Themes & User Experience (UX) ...
  • eCommerce Platform Speed & Scalability. ...
  • Store Functionality & Ease of Use (Product Management System) ...
  • eCommerce Platform Security. ...
  • Multiple Payment Gateways Support.
Jul 27, 2022

What is the best platform for work? ›

List of remote work software platforms
  1. Google Drive. Google Drive is one of the most popular remote work platforms. ...
  2. Slack. Slack is a communication platform beloved by remote teams and social organizations worldwide. ...
  3. Zoom. For many folks, Zoom is synonymous with remote work. ...
  4. ...
  5. Hubstaff. ...
  6. Todoist. ...
  7. Trello. ...
  8. Basecamp.
Jul 17, 2022

What is an important aspect to consider when evaluating a new platform? ›

To carefully evaluate a solution, you need to craft a detailed evaluation strategy. This strategy should include various aspects such as the tool's technical capabilities, performance of the vendor, and the total ownership cost. You'll also need to factor in your business's unique processes and requirements.

What are the key factors that impact the success of a platform business model? ›

Key Aspects of Platform Business Models
  • Homogeneous supply. Platform business models are characterized by the capture of economic value in the form of transaction fees and become major centralizers, in some cases affecting hundreds of small businesses. ...
  • Communication. ...
  • Collaboration. ...
  • Scalability. ...
  • Asymmetric growth.
Nov 7, 2022

Which describes a platform? ›

Which describes a platform? A platform is a piece of technology that connects people and other technologies together.

What are the challenges of digital platforms? ›

What Are the Biggest Digital Transformation Challenges Organizations Face?
  • Lack of Change Management Strategy.
  • Complex Software & Technology.
  • Driving Adoption of New Tools & Processes.
  • Continuous Evolution of Customer Needs.
  • Lack of a Digital Transformation Strategy.
  • Lack of Proper IT Skills.
  • Security Concerns.
Dec 2, 2022

What is the impact of digital platforms? ›

Digital platforms have the ability to connect people, organizations and resources with the aim of facilitating the core interactions between businesses and consumers as well as assuring a greater efficiency for the business management.

What is a digital platform give examples? ›

Digital platform is any electronic tool for communication includes desktop, mobile, social and email software this covers websites and Social Media - Twitter, Amazon, Wattpad, etc.

What is digital platform in business? ›

What are digital platforms? Digital platforms are an online space where exchange happens between the producers of products, services, and information and their customers. Outside of the customer relationship, it also includes the community of other users that engage with the platform.

What are the different types of digital platforms? ›

What are the types of digital platforms?
  • Social media management. Social networks are the stars of the digital world. ...
  • Marketing Automation. ...
  • Email Marketing. ...
  • Project and team management. ...
  • CRM – customer relationship management. ...
  • Chatbots. ...
  • Digital content management and distribution.
Dec 23, 2021


1. Platform Strategy and the Internet of Things
2. Drive Digital Transformation With Platform Strategies | Info-Tech Analyst Perspective
(Info-Tech Research Group)
3. Platform Thinking Beyond Cross-Functional Teams
4. [Platform Strategy] Lecture 1A: What are Platforms, and Why? #1 Introduction
(Prof. Ling-Chieh Kung)
5. Digital Platform Strategy: Platform Strategies Are Trickier Than They First Appear
(R3ciprocity Team)
6. How Platforms Change Structure and Strategy Marshall Van Alstyne
(MIT Initiative on the Digital Economy)


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