As traditional value chains morph into value webs, there is an opportunity for companies to build platforms that will serve customers more effectively—and more profitably.

Hardly a week goes by these days without some new privacy scandal involving Google, Amazon, Facebook, Apple or another tech giant. Some of these are simple security breaches where databases of passwords or credit cards are compromised. But many of them show how these platform companies – we call them GAFA as a shorthand – have been tracking their users.

Most of us read these reports and adjust our privacy settings. But I recently read how one journalist decided to opt out of Google’s platform altogether. He asked his IT company to prevent his phone or computer from accessing any of Google’s servers. He says it took them less than half an hour.

Of course he anticipated being barred from Google search and YouTube. And he anticipated some other minor inconveniences. But when he went outside and tried to hail an Uber, he found he couldn’t. Uber runs on the Google platform. So does Airbnb. By blocking Google, he found his ability to do almost anything on the Internet was affected.

For me, this illustrates just how pervasive platform businesses have become.

My colleague, Accenture South Africa CEO Vukani Mngxati, has written about how the Fourth Industrial Revolution is changing how value is created and distributed.

And the key to this shift is the building of successful platforms. When Apple entered the smartphone market to attack Nokia and Blackberry’s seemingly unassailable leads, it did so not with another handset, but with a platform. With its App Store, it successfully branched from selling hardware and software to offering a platform on which ecosystem partners would build apps and services—from media and entertainment to healthcare and home automation. In 2019, it partnered with Chase Manhattan to enter the financial services industry and compete with banks.

Examples are everywhere. Insurance companies are starting to sell on Amazon’s platform using Alexa, Amazon’s voice-activated device. Chubb has partnered with Suning to distribute insurance products to the 230 million customers on the Chinese retailer’s e-commerce network.

The opportunity is enormous. Over 70% of so-called “unicorn” start-ups (those with a $1billion valuation) are platform companies.

Our research reveals five characteristics of the platform economy:

* Convenience. The offerings must be customised to a target market of one. Think Uber and Airbnb, which are selling hyper-individualised trips and accommodation.

* Community. Platform companies allow social interactions and data sharing. Examples of this are crowd-funding and peer-to-peer lending products. An early innovator was PayPal, which offered peer-to-peer payments without the need for banks. Another example is Patreon, which allows consumers of creative products such as podcasts and web comics to pay the creators directly.

* Collaboration. This third C talks about crowdsourcing and an open innovation culture. Websites such as Pexels and Unsplash crowdsource photographs and compete with stock footage companies.

* Curation. Crucially, as we’ve seen, platform companies need to be scrupulous about data protection. Platform companies curate their offerings to create legitimacy and bring more and more players onto their platforms.

* Connection. Part of platform companies’ power is how they connect different parts of their ecosystems. This C is what is driving the Internet of Things to enable technologies like home automation.

We call these the Five Cs of the platform economy. The C of Connection also refers to Omni-Channel capability, where customers can interact with a company in every way they need to. International hardware giant Leroy Merlin, for example, entered the South African market with a “digital first” strategy, giving customers the option of e-commerce and physical stores from Day One.

Builders Warehouse has a call centre, an on-line offering as well as a “Click and Collect” service where customers can order online and collect the merchandise from a store near them.

As the traditional value chain morphs into a “value web” we will see how successful platform companies continue to transform consumers’ lives for the better.