Data Streams, a competitive advantage
In today’s digital economy, the success of a corporate business strategy is highly dependent on a business’s capacity to make the most of its data — its generation, use, and exchange. It is not by coincidence that the largest companies by market capitalisation, such as Apple, Amazon, Alphabet, Facebook, Tencent or Alibaba, have established the foundation of their business precisely on this asset. Differently from any physical resource — for instance, cars, energy, or food — the same data can be applied and reused in a potentially unlimited number of applications, and by a great deal of different stakeholders simultaneously, which can be turned into an enormous profit. In fact, physical products such as IoT devices never constitute a core business of a digital-native company but rather serve as sources of data that are used to provide customised services.
Understanding that the real financial potential lies in decoupling economic growth from resource consumption has earned these companies a distinct competitive advantage. Physical products have an inherent risk of becoming substituted, in contrast, data moves with the market itself. Following big tech companies, more and more businesses are now realising that their IoT investment made initially to increase the efficiency of internal processes, in fact, holds an enormous potential to become a key competitive advantage.
The rise of digital platforms
What enabled tech giants to tower above more traditional business models and disrupt entire industries was creating an agile ecosystem of previously separate actors that allowed them to swap anything ranging from services to content to ideas, in an automated way to co-create value. Digital platforms are environments that connect different groups — e.g. producers, providers, customers — and derive benefits from others participating in the platform. According to Accenture, digital platforms are driving the most profound global macroeconomic change since the Industrial Revolution, quickly becoming a competitive necessity and the foundation for new value creation. Back in 2018, the top 15 public platform companies already represented $2.6 trillion in market capitalization. Digital platform examples include service-oriented platforms like Uber and Airbnb, media sharing platforms like YouTube and Spotify, and social media platforms like LinkedIn and Facebook.
The business model that digital-native companies have embraced ensures that the value creation within the network is continuous, fast, and expansive as more data is produced, more players are added, and more business applications are found. Not only, their IT architecture is designed to make the key resource and the basis for digital platforms — real-time consumers’ data — available to multiple internal and external users for a variety of purposes, without system integration costs. Based on data brokering platforms, that is, message brokers or event-driven platforms, digital platforms are built to share large volumes of data streams generated by multiple sources with multiple data users simultaneously and immediately, allowing them to deploy solutions to the market more quickly.
In addition, digital platforms usually have three key characteristics: flexibility, extensibility, and modularity. Since the building blocks constituting the digital platform may change and evolve, an open architecture, which prioritises scale and reuse of common functions, ensures that the company is able to move alongside the innovation itself.
A new rewarding user experience
It seems evident that the future of business is in digital platforms, and companies that refuse to adopt this trend will find themselves increasingly at a competitive disadvantage. According to BearingPoint, asset-light platform businesses are perceived by investors as most likely to generate future growth since the enormous profit they are able to generate can be later re-invested in further R&D and new product development. However, with the digital-native forerunners quickly widening the gap between themselves and the more traditional businesses, the latter may find it difficult to compete. How can new entrants stand out and offer a competing value proposition to consumers? What is an Achilles heel of tech giants’ digital platforms that have the capabilities to offer services across any sector?
As consumers are increasingly aware of the economic value of their data, the compelling and innovative value proposition lies in making the consumers — the legal data owners — an intrinsic and active part of the data value chain. By endowing the individuals with the ability to unilaterally decide which third parties can access their IoT data in exchange for a reward for data sharing, new digital platforms can offer something big tech giants have long lost — bidirectional trust. Whereas it may seem to limit a business’s capabilities, in fact, this approach minimises GDPR compliance costs and liabilities and unlocks the full potential of data. Combined with aforementioned characteristics such as technological openness and flexibility, readiness for future changes in legislation, as well as letting in even newer (individual) actors to the network, means better and sturdier preparation for the ever-changing future and signalling this preparation for potential partners.