Platform-Based Business Models: Pivoting in the Pandemic and Beyond


The COVID-19 pandemic has caused significant disruption in the global economy, forcing many businesses to shut down while others have had to face unprecedented challenges. However, some companies have been able to weather the storm by pivoting their business models and leveraging the power of platform-based models, which benefit from the network effect.

Platform-based business models are designed to facilitate interactions between different groups of stakeholders, enabling them to create value for each other. These interactions can take various forms, such as buyers and sellers on e-commerce platforms, or service providers and consumers on sharing economy platforms. With the rise of digital platforms such as Amazon, Airbnb, and Uber, platform-based models have become increasingly popular in recent years.

One of the key advantages of platform-based models is their scalability. Once a platform reaches critical mass, it can grow exponentially without significant additional costs. The platform owner does not need to produce the goods or services exchanged on the platform but instead provides the infrastructure for buyers and sellers to connect and transact. The network effect further fuels this growth as more users join the platform, creating a self-reinforcing cycle of growth and value creation.

Successful platform-based models require a deep understanding of customer needs and preferences, as well as effective gathering and analysis of customer data. During the pandemic, many businesses were forced to rethink their business models to adapt to the changing market dynamics, and platform-based models proved to be an effective solution. By leveraging the network effect, companies could quickly scale their offerings and better serve their customers.

Freshworks, a customer service management platform, has seen remarkable growth with a market cap of $11.9 billion. Established players like Amazon, Airbnb, Google, and Apple have also used platform-based models to capture significant market share. What sets these companies apart is their ability to pivot their business models in times of crisis, leveraging their networks to create new value propositions and offerings.

For instance, when advertising budgets were cut, Spotify started offering original content in the form of podcasts. This move led to a surge in user-generated podcasts and exclusive deals with celebrities, propelling the company to new heights. Airbnb weathered the pandemic by rethinking its platform to adapt to the extraordinary situation, allowing it to recover much faster than other hotels or online actors.

According to McKinsey research, digital platforms could mediate over 30% of global economic activity, amounting to $60 trillion, in just six years’ time. However, only 3% of established companies have adopted an effective platform strategy. This underscores the need for businesses to embrace platform-based models and be prepared to pivot when necessary.

To succeed in a platform-based model, companies must stay agile and be willing to change course quickly. They must also prioritize creating a seamless customer experience and invest in technologies that enable them to gather and analyze customer data effectively. By doing so, they can leverage the network effect to create new value for their customers and drive growth for their businesses.

The COVID-19 pandemic has created significant challenges for businesses of all sizes, but it has also served as a catalyst for innovation and growth. Companies that pivoted their business models to meet changing consumer needs have been able to weather the storm and emerge stronger than ever before. Looking ahead, we can expect to see more companies adopting platform-based business models, leveraging the power of the network effect to create value for their clients and firms while future-proofing their businesses.

Author Details

Subrata Kar

Subrata Kar is a senior executive and business leader in the IT industry with over three decades of experience. In Infosys, he leads the service delivery of ERP package-led technology practice for Energy, Utilities and Communication industry segments. He specializes on ERP , Cloud software products and enterprises in digital transformation. He consults fortune 1000 clients and leads the implementation of medium to large scale ERP / Cloud Applications across the world. He is actively involved in building new enterprise solutions and services at scale. He is responsible for incubating, growing new practices and providing delivery leadership to the global clients. He researches new business models , technology trends and writes & speaks on Enterprise Solutions , Digital transformations and Automation.

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