Digital Platform Strategy

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Framework Primer
Digital Platform
Strategy
Presentation created by
Supplier to
Digital
Platforms
Collaborative
Tethered
Platform Enabled
Tethered
Platform
Fully Tethered
Platform
Hybrid Tethered
Platform

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Contents
 Overview
 Tethered Digital Platforms
 Types of Digital Platforms
 Platform Strategy
 Strategic Considerations
 Templates
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This framework discusses how legacy organizations can compete in the
digitized Sharing Economy and boost their revenues
Presentation Overview
A Platform is a plug-and-play business model that allows multiple participants (producers
and consumers) to connect to it, interact with it, and create and exchange value.
Until recently, most traditional companies could not adapt their established business models to
participate in the so-called Sharing Economy. However, sensors and related technologies are changing
that reality.
Sensors and the Internet of Things (IoT) are expected to connect 20 billion to 50 billion smart devices
and products in the coming years, creating new consumption ecosystems and fresh avenues for
competition through “Platforms” or more specifically “Tethered-Digital-Platforms.”
This presentation provides a framework for business leaders and managers to leverage the power of
Sharing Economy through Platforms. It first discusses the 5 types of Digital Platforms:
We would further deep dive into Tethered Digital Platforms to help leaders develop their Platform
strategy by addressing 3 key strategic considerations, each corresponding to a type of strategy:
 Sensor Strategy
 User Acquisition Strategy
 Digital Platform Strategy
This deck also includes slide templates for you to use in your own business presentations.
1 Supplier to Digital Platforms
2 Collaborative Tethered Platforms
3 Enabled Tethered Platforms
4 Fully Tethered Platforms
5 Hybrid Tethered
Platforms

Contents
 Overview
 Templates

Industrysegment Industrysegment
 Established companies can
compete not just through
their products, but through
the data their products
generate through sensors.
 Managers can access the
worth of their sensor data as
it helps them to identify new
opportunities to compete in a
Platform world and also be
of help to craft an effective
Platform Strategy.
The Consumption Ecosystem activates a Sharing Economy, which comes
alive through a platform—more specifically, “Tethered Digital Platforms”
A sensor is a device that detects and responds to some type of input from the physical
environment.
Tethered Digital Platforms — Overview
The term platform is commonly associated with vibrant ecosystems that connect various set of users. For
example, Uber connects drivers with riders; Airbnb connects owners with renters.
Platforms where a product initiates digitally powered exchanges among
users and third-party providers are referred to as “Tethered Digital
Platforms.”
Tethered
Because their
scope and
competitiveness are
tied to the Product.
Digital
Because the value
generated stems
from sensor data.
Platforms
Because of the
exchanges among
product users and
third-party entities.

A Tethered Digital Platform is made functional via 4 core components—the
Sensor, Sensor Data, the Platform Service, and Platform Users
The last 10 years of IT have been about changing the way people work—the next 10 years of
IT will be about transforming your business.
Tethered Digital Platforms – Core Components
A Tethered Digital Platform has 4 essential components.
Let us try to understand Sensors, Users, Consumption
Ecosystem, and how tethered digital platforms help to
expand businesses through an example.
A light bulb is attached with a Sensor which detects
motion. When someone walks into its sensing range, it
generates data. This Sensor Data can be exchanged
across complementary smart objects or systems in the
room connected through Internet of Things (IoT), such
as window blinds, clocks, or music systems.
 The person, the objects, and the systems involved in
the exchanges are all platform “Users” that combine
to form the bulb’s “Consumption Ecosystem.”
 This ecosystem grows when platform users increase,
more complementary objects are added, or additional
developers join to offer apps to enrich the service.
By assembling these components, a bulb-producing
company extends its product business into a Tethered
Digital Platform that provides a new service.
Platform
Users
Sensor
Data
Platform
Service
Sensor
A sensor tied to the product.
Platform service that is generated
through those exchanges.
Sensor Data generated when
the product is used.
Platform users, for whom
exchanges are orchestrated.

Contents
 Overview
 Templates

In developing a Tethered Digital Platform, there are 5 different types of
Digital Platforms we can consider
To maximize the prospects of its platform services, a company must craft a strategy that
optimizes the scope, uniqueness, and controllability of its products’ Sensor Data.
Types of Digital Platforms — Overview
Business Leaders can select a Platform Strategy after carefully analyzing the inter-operability of their Consumption
Ecosystem.
Supplier to
Digital
Platforms
Collaborative
Tethered
Platform Enabled
Tethered
Platform
Fully
Tethered
Platform Hybrid
Tethered
Platform
 Most effective for
products with Sensor
Data that is not
unique but has a
promising scope and
few restrictions for
sharing.
 Best suited for
products that have a
sensor but lack ways
to generate data
exchanges across
users. Such
products can serve
as data suppliers to
other digital
platforms.
 Best suited for
Data that is unique
and faces few
sharing restrictions
on a platform.
 Works best when the
product company
has access to
unique Sensor Data
but lacks adequate
control to share it
freely across users
and complementary
entities.
 A hybrid strategy
makes sense for
Data that has both
strengths and
weaknesses.

In determining which platform is optimal our situation, we should consider
3 key attributes of Sensor Data—Scope, Uniqueness, and Controllability
A hybrid approach sits in the middle of our framework and is suitable for products with
Sensor Data that has both strengths and weaknesses.
Types of Digital Platforms — Platform Strategy Selection
There are 5 different platform strategies that can be reviewed against the 3 key attributes of Sensor Data (Scope,
Uniqueness, Controllability), while keeping Hybrid Approach at the core.
Source: How Legacy Businesses Can Compete in the Sharing Economy, MIT Sloan Management Review, 2020
Collaborative platform Full platform
Supplier to platforms Enabled platform
Hybrid
approach
Sensor data
controllability
Sensor data scope uniquenessLow High
High

Now, let’s compare the 5 types of Platform Strategies to determine
the best fit for our organization
Growth opportunities depend on the scope and uniqueness of a product’s Sensor Data and
how much control a company maintains over that data.
Types of Digital Platforms — Comparison
The following framework acts as a quick reference guide for Platform Strategy Selection.
Supplier
to Digital
Platforms
Collaborative
Tethered
Platform
Enabled
Tethered
Platform
Full
Tethered
Platform
 Participates in third-
party platforms as a
supplier.
 Runs a subplatform
on a larger or more
powerful third-party
platform.
 Runs a platform on
behalf of customers.
 Runs a platform
directly.
Underlying
principle
 Blends two or more
platform types.
Example  Delta Faucet
connecting to Alexa or
Google Home.
 Whirlpool offering
replenishment of
refrigerator items as a
feature of Alexa,
Google Home, or Nest.
 Intuit enabling
customers to exchange
data with banks and
suppliers via its
accounting platform.
 Elsevier running a
platform for measuring
research productivity.
 Whirlpool running its
own platform and a
subplatform on Alexa.
Platform
ownership
 Not yet a platform.  Owned by product
company but shared
with a stronger
platform.
 Owned by product
company’s customer.
 Fully owned by product
company.
 Owned and shared.
Ownership of
sensor data
 Handed over to mother
platform.
company.
company’s customer.
company.
 Owned and shared.
Hybrid
Tethered
Platform

Contents
 Overview
 Templates

Our first Platform Strategy is Supplier to Digital Platforms—this strategy
leverages a third-party to exchange data
A viable product and business model won’t guarantee success. It is also important to
convert users of your products into users of your platform.
Platform Strategy – Supplier to Digital Platforms
PLATFORM STRATEGY
Supplier to Digital
Platforms
CORE PRINCIPLE
 The underlying principle of Supplier to Digital Platforms is to participate in third party
platforms as a supplier.
 This strategy is best suited for
products that have a sensor,
but lack ways to generate
data exchanges across users.
When there is limitation to
generate data exchanges
across users, a third-party
model works well.
 Such products can serve as
data suppliers to other digital
platforms.
OWNERSHIP OF SENSOR DATA
 The sensor data is handed over
to the parent platform.
PLATFORM OWNERSHIP
 This is not yet a platform.
EXAMPLE(S)
 Faucet maker Delta has introduced voice-
activated products that take commands from
Alexa and Google Home for its operation.
 The faucet does not orchestrate any exchanges
on its own but is a component for Amazon’s and
Google’s platforms.
DESCRIPTION

The second strategy uses a Collaborative Tethered Platform—this is a
“sub-platform” on a broader third-party platform
Integration, scalability, and ease of exchange are vital criteria of any collaborative platform.
Platform Strategy — Collaborative Tethered Platform
CORE PRINCIPLE
 Underlying principle of Collaborative Tethered Platform is to run a “sub-platform” on a larger or more powerful third-
party platform.
EXAMPLE(S)
Consider Whirlpool’s sensor equipped refrigerators that capture
data on stock levels of items like milk and eggs.
 Using this data, Whirlpool can orchestrate exchanges among
refrigerator owners, grocery stores, and delivery services to
replenish goods
 However, Whirlpool is not alone in its data access. For example,
Amazon could have access to the same information through its
Dash ordering and delivery service or when a refrigerator user
asks Alexa to refill low-stock items
 One option Whirlpool has adopted: collaborating with Alexa.
Whirlpool orchestrates exchanges through its own platform, but it
also offers its services as part of Alexa’s broader platform
Whirlpool thereby avoids direct competition with Amazon. Amazon,
meanwhile, may find Whirlpool’s sub platform attractive as an
additional Alexa feature.
 Sensor data is owned by the product
company
PLATFORM OWNERSHIP
 Owned by the product company, but
shared with a stronger platform
 Tiered partnering allows companies to
participate in Sharing Economy when
the sensor data exchange is “not”
unique and have few restrictions for
sharing.
 This approach is most effective for
products with sensor data that is not
unique, but has a promising scope and
few restrictions for sharing.
DESCRIPTION
PLATFORM STRATEGY
Collaborative
Tethered Platform

The Enabled Tethered Platform is a client-owned platform—both the
platform and sensor data is owned by the client
Shifting from a product mindset to a platform mindset can be downright counterintuitive—
indeed, several of the firms discovered new platform opportunities almost by accident.
Platform Strategy — Enabled Tethered Platform
CORE PRINCIPLE
 The underlying principle of an Enabled Tethered Platform is to run a platform on behalf of
customers.
 Sensor data is owned by product
company’s customer
PLATFORM OWNERSHIP
 Platform is owned by product
company’s customer
EXAMPLE(S)
Intuit offers accounting software to small businesses
that can collect sensor data, such as on their inventory
and working-capital levels. The clients, however, own
the data.
 Intuit enables its clients to exchange their data with
banks, lenders, or suppliers to help coordinate their
short-term loans or material supplies needs.
 The clients choose which entities can access their
data, while Intuit facilitates the services.
 Intuit’s platform enhances its revenues through
premium subscriptions.
 This strategy works best when
the product company has access
to unique sensor data, but lacks
adequate control to share it
freely across users and
complementary entities.
 The company can serve as the
back-end operator of the
platform, while its clients own
and manage the front-end value-
added services.
DESCRIPTION
PLATFORM STRATEGY
Enabled Tethered
Platform

In a Fully Tethered Platform, we operate the platform and own the data
Products produce a single revenue streams, while platforms that connect 2+ distinct groups
of users and enable their direct interaction—and can generate multiple revenue streams.
Platform Strategy — Fully Tethered Platform
CORE PRINCIPLE
 The underlying principle of a Fully Tethered Platform Strategy is to run the platform
directly.
 Sensor data is owned by
product company
PLATFORM OWNERSHIP
 Platform is fully owned by
product company
EXAMPLE(S)
Scientific, technical, and medical publishing
company Elsevier digitized thousands of its
proprietary research publications and then began
collecting sensor data through online and app-
based interactions with users.
 Elsevier uses this data to enable exchanges
among researchers with common interests,
create communities, and facilitate collaboration.
 Through premium subscription services, it is
generating new revenues from researchers and
institutions that expect to improve productivity.
 This approach is best suited
for products with sensor data
that is unique and faces few
sharing restrictions on a
platform.
 The product company can run
its own platform and
orchestrate data exchanges
with full autonomy.
DESCRIPTION
PLATFORM STRATEGY
Fully Tethered
Platform

Lastly, the Hybrid Tethered Platform blends 2 or more platform types
A good platform strategy will help you dodge the traps, and can send you in a more
prosperous direction.
Platform Strategy – Hybrid Tethered Platforms
CORE PRINCIPLE
 Underlying principle of Hybrid Tethered Platform is to blend 2 or more platform types.
 Sensor data is owned and
shared
PLATFORM OWNERSHIP
 Platform is owned and shared
EXAMPLE(S)
 Whirlpool may choose to offer a full tethered
platform for some of its customers and also
provide a collaborative sub-platform on
Amazon’s Alexa platform.
 GE Transportation could run its own full tethered
platform with clients that offers free sensor-data
sharing, while offering enabled platforms for
other clients that place restrictions on that data.
 Hybrid approach helps to
combine the best of all worlds
for Platform Strategy
Development.
 A hybrid strategy makes
sense for products with
sensor data that has both
strengths and weaknesses.
 It’s a way to diversify
approaches and test which
one is most profitable.
DESCRIPTION
PLATFORM STRATEGY
Hybrid Tethered
Platform

Contents
 Overview
 Templates

 In traditional competitive strategy,
it is generally assumed that
customers can determine their
willingness to pay for the product
or service independently.
 This assumption breaks down
when studying platforms, as
platform participants’ participation
is interdependent with the choices
of other users.
 This is why the formulation of a
platform strategy requires
somewhat distinct tools to help
platform entrepreneurs and
managers tackle the challenges of
value creation and value capture.
Strategic considerations and platform strategy is more critical to success
than the idea behind the platform itself
Experts say, they can tell right away that someone has a platform strategy if they have
a plan to drive the first users to a platform “when there is nothing there.”
Strategic Considerations – Overview
As businesses evaluate new opportunities offered by sensor data, three strategic questions can help sharpen
their focus.
These strategic questions each correspond to a type of strategy.
What is our Sensor
Strategy?
Sensor
Strategy
What is our strategy
to attract platform
users?
User Acquisition
Strategy
What is our optimal
Tethered Platform
Strategy?
Digital Platform
Strategy

To select the optimal Sensor Strategy, we must identify where we stand in
terms of data generation and how to expand our consumer ecosystem
The opportunities to build IoT applications are limited only by the imagination and
engineering prowess of system designers/integrators—yet, almost all paths lead to sensors.
Strategic Considerations – Sensor Strategy
Sensor
Strategy
What is our Sensor
Strategy?
Given that sensor data primarily arises from how a product
interacts with its users, maximizing the potential of product
user interfaces is central to a company’s Sensor Strategy.
To do so, it may need to find ways to use its product-user
interfaces beyond the core functionality of its products.
 Sensors are powerful devices that can fundamentally change
the way systems and entire supply chains operate.
 As businesses evaluate new opportunities offered by sensor
data, strategic questions can help sharpen their focus.

A sound Sensor Strategy ultimately revolves around several key
questions related to sensors, interfaces and innovation
You have customers, now you have to make them talk to each other—Platforms make it
happen
Strategic Considerations – Sensor Strategy (Details)
Industrysegment Industrysegment Industrysegment Industrysegment
Guiding Questions Case Example
To determine your Sensor Strategy, drill
down and ask these questions:
 What is the data-generating potential
of our product-user interfaces and
sensors?
 How can we expand on that?
 How can we use our product design
and innovation capabilities to identify
new kinds of sensors and build new
product-user interfaces?
The core function of iRobot’s vacuum
cleaner, the Roomba, is cleaning. It is
designed to sense obstacles to avoid when
cleaning floor areas.
 Imagine if, with modifications, Roomba
sensors could detect problems like mouse
droppings, termites, or mold as the robot
scans floors.
 Then iRobot could pursue a Sensor
Strategy to expand into new services by
inviting pest control vendors and home
contractors to its tethered digital platform.

The second strategic consideration centers around developing a
strategy to attract our platform’s users
Scaling any business is a challenging task which requires figuring out which are the
channels through which new customers can be acquired.
Strategic Considerations – User Acquisition Strategy
User
Acquisition
Strategy
What is our strategy
to attract platform
users?
From a platform perspective, user acquisition requires
marketing and selling of products which are integrated with
Sensors.
Sensor data is the platform foundation, and users represent
the scaffolding, bricks, mortar, and other “building” materials. A
Tethered Digital Platform generates value-creating services by
facilitating sensor data exchanges.
 To attract platform users, companies can start by marketing
sensor-equipped products to their existing customers.
 They also can partner with entities that offer complementary
value.

Platform based User Acquisition Strategy helps to continuously expand
the consumer ecosystem by attracting new participants to the platform
Research has shown that the key to growth lies not with your marketing or sales team but
your customer service team, and your customers themselves.
Strategic Considerations — User Acquisition Strategy (Details)
Industrysegment Industrysegment Industrysegment Industrysegment
Guiding Questions Case Example
To determine our strategy for attracting users, we
should ask the following questions:
 Which customers are the most likely users for
our sensor-equipped products?
 What kind of platform services would attract
them? How do we reach them?
 Which entities can use our sensor data to
complement our offering?
 What should be our API strategy?
 How should we set prices? Whom should we
subsidize?
A mattress maker such as Tempur Sealy that has
introduced a line of mattresses with sensors to detect
heart rates, breathing patterns, and snoring during
sleep may first want to use its established channels to
market these products to existing customers.
 The company could also offer to retrofit sensors on
mattresses already sold.
 It could then identify complementary services that
would help improve sleep by responding to sensor
data, such as adjustable lighting or soothing music,
and convene relevant third-party. providers —
perhaps even sleep apnea specialists — on a
tethered platform.
 Those users would expand services provided for
existing customers and broaden the appeal for
entirely new customers.

The final strategic consideration is focused on formulating the Tethered
Platform Strategy
To engage and manage business ecosystems, organizations are creating and integrating
with a digital business platform to share critical assets.
Strategic Considerations – Digital Platform Strategy
Digital
Platform
Strategy
What is our optimal
Tethered Platform
Strategy?
A good Digital Platform Strategy addresses leveraging of sensor
data and platform user base to increase revenue and also provide
new offerings.
A company must determine how best to leverage its sensor data
and platform users to offer new services that generate Competitive
Advantage.
This is a 2-step process:
Assess the product category and evaluate its available sensor
data — its scope, uniqueness, and controllability.
Examine the strength of the company’s traditional
competencies, such as its scale of operations or brand.
The 2 steps should inform decisions about which tethered digital
platform is optimal or whether being a supplier to a bigger platform
is the best option.
1
2

The 3 key attributes of sensor data along with products and Value Chain
are determining factors for building a robust Platform Strategy
The last ten years of IT have been about changing the way people work. The next ten
years of IT will be about transforming your business.
Strategic Considerations – Digital Platform Strategy (Details)
Guiding Questions
To hone in on the most promising
platform type for your business,
ask these questions
 What are the scope,
uniqueness, and
controllability of our sensor
data?
 How can we leverage our
traditional value-chain and
product strengths to
compete as a tethered digital
platform?
 What do we lose if we do not
compete as a tethered digital
platform?
Case Example
A shoe manufacturer can estimate the value of its sensor data for generating exchanges among
the shoe users and complementary fitness-related services. Similar to how way it would estimate
the market value for any new product.
 Assessing the uniqueness of sensor data may reveal strong potential competitors like Apple,
Garmin, or Fitbit and controllability of sensor data may not be a significant hurdle if one
assumes that most athletic shoe users would be willing to share their data for value-added
services.
Now consider the companies market position
 A market leader like Nike can marshal its formidable branding and operational scale in a
business entailing fitness services.
− That makes a full tethered platform appear to be an optimal option.
 A second-tier company with less capital may find the threat of potential rivals more ominous
− It may decide that a collaborative platform is better, or it may experiment with a hybrid
approach.
 A smaller company might opt to be a supplier to a dominant fitness service platform unless it
finds creative ways to build competitive platform services without the foundations that a larger
company can leverage.

Contents
 Overview
 Templates

Insert headline
Insert bumper.
Types of Digital Platforms — TEMPLATE
Supplier to
Digital
Platforms
Collaborative
Tethered
Platform
Enabled
Tethered
Platform
Fully
Tethered
Platform
Hybrid
Tethered
Platform
• Insert filler text, filler
text, filler text, filler text.
Insert filler text, filler

Collaborative platform Full platform
Supplier to platforms Enabled platform
Sensor data
controllability
Sensor data scope uniquenessLow High
High
Insert headline
Insert bumper.
of Digital Platform Strategy Selection – TEMPLATE
Hybrid
approach
text, filler text, filler
text. Insert filler text,
filler text, filler text,
filler text.
text.
text.

Insert headline
Insert bumper.
Digital Platform Strategic Considerations – TEMPLATE
What is our Sensor
Strategy?
Sensor
Strategy
What is our strategy to
attract platform users?
User Acquisition
Strategy
What is our optimal
Tethered Platform
Strategy?
Digital Platform
Strategy

Insert headline
Insert bumper.
Digital Platform Strategic Considerations – TEMPLATE ALTERNATE
What is our Sensor
Strategy?
What is our strategy to
attract platform users?
What is our optimal
Tethered Platform
Strategy?
Digital Platform
Strategy
User Acquisition
Strategy
Sensor Strategy
text. Insert filler text,
filler text, filler text,
filler text.
text.
text.

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