The Platform Business Model
INNOVO is the New Global Commerce, a platform business model where Buyers and Suppliers cooperate to create and share savings - and make a difference.
What is a Platform Business Model
B2C companies like UBER and Airbnb have used a new, revolutionary business model to disrupt their industries at lightning speed:
The Platform Revolution
Following incredible success in B2C markets, this Platform Revolution is about to explode into B2B industries. If you are an established business in any industry, then the Big Bang of the Platform Revolution is about to hit you. Who would have believed that Google would pose a disruptive threat to the automotive industry?
What makes the Platform Revolution so incredibly powerful? It is not a particular technology, although disruptive digital technology enables it. Instead, it is a completely new business model. The power of this Platform Business Model makes it inevitable that first movers will rapidly apply its disruptive power to your industry to seize market share. (See Network Effect Powering INNOVO)
The Platform business model has been set out by Van Alstyne, Parker and Choudary in the Harvard Business Review, April 2016.1
INNOVO has developed a particularly advanced Platform Business Model for B2B industries across all goods and services.
The traditional ‘pipeline’ business model used in nearly all B2B industries.
“Pipeline businesses create value by controlling a linear series of activities—the classic value-chain model. Inputs at one end of the chain (say, materials from suppliers) undergo a series of steps that transform them into an output that’s worth more: the finished product.” according to Van Alstyne, Parker and Choudary.
This traditional approach to business has two very costly areas of waste:
- Conventional sales and marketing to win new clients suffers from conversion rates of only 1% - 5%. Suppliers don’t know when a new customer is in the market to buy so 95% to 99% of their sales and marketing approaches are at the wrong time.
- These very high selling costs also leave the supplier with wasted spare capacity that is too expensive to sell. (See Problems that INNOVO Addresses)
INNOVO’s new Platform Business Model is revolutionary because it brings Buyers and Suppliers together in a community founded on cooperation. In return for telling Suppliers when they are ready to buy, Suppliers share some of their savings in wasted selling costs and wasted spare capacity with Buyers and the Platform. Savings offered through INNOVO currently average: 6% wasted selling costs + 9% wasted spare capacity = 15%.
Although INNOVO’s free platform can be used by Buyers and Suppliers on their own, bigger organisations are likely to want to engage consultancies in order to execute INNOVO’s deployment as quickly and effectively as possible. In the same way that app developers leverage the Apple and Android platforms to win new customers, so the consultanciesare able to leverage the new B2B platform to win many more new clients.