Cristian Citu is the Digital Transformation Lead at the World Economic Forum. He previously worked as Senior Director of Group Digital Strategy at DHL Global Headquarters, where he was responsible for the design and implementation of the logistics company’s global digital transformation agenda. Before focusing on digital transformation, Citu managed DHL’s global digital marketing programs. He also spent a few years working as a consultant to a wide range of industries such as IT, telecom, automotive, pharmaceuticals or retail. Citu, who shares digital transformation insights at @TheChiefDigital recently spoke to The Innovator about one of Forum’s digital transformation workstreams: digital platforms and ecosystems.
Q : Why did the World Economic Forum start an initiative around digital platforms and ecosystems?
CC : Digital platform business models and digital ecosystems are hot topics for top managers across industries, geographies or sectors. Traditional corporations want to understand how digital platform companies have become so quickly such dominant forces in the global economy and how they are continuously migrating into new business sectors — and then try to either emulate them or come up with a solid digital ecosystem strategy. A very high percentage of all digital interactions are now happening through these digital platforms — including online shopping, banking, ride sharing, media consumption or social media interactions. Digital platforms are also increasingly interesting for the public sector because they can act as a key enabler in the digital transformation of governments and economies but also because there are wide implications from a policy perspective. The EU and the U.S. regularly discuss how to regulate platforms and perhaps go as far as forcibily split up some of them. We also see more and more opportunities and positive impact coming from larger or smaller organizations working at the intersection of economic interests and societal implications. From the start-up world for instance, we came across case studies such as as Wonolo, an on-demand staffing digital platform facilitating temporary work for blue-collar workers who can, for instance, find a job for a few days in a warehouse and then switch and work a few days for another company’s warehouse, potentially making more money than if they had a full-time job. Other examples are Producers Market, a digital marketplace aiming to allow farmers to keep a fairer share of the financial value generated in the agricultural chain or Kommerce, a digital platform that deploys blockchain for empowering African businesses to access capital markets and securely trade across borders. Other digital platforms bringing significant positive impact include microfinancing platforms or educational platforms that work to close the gap on inequality. Since digital platforms are playing a significant role on so many economic and societal levels it is natural for the World Economic Forum to get involved and help the various actors come together on key issues. Some of the main insights we have gleaned have been captured in a recent publication.
Q : You organized the latest deep-dive workshop on July 25 in Singapore. What was the focus of this workshop?
CC : We wanted to understand the status quo and the trends around the platform economy in Asia, and we are very happy that 70 executives joined and contributed during this full-day deep-dive. We also looked at platforms from the perspective of SMEs. One of the speakers, Professor Ben Shenglin from Zhejiang University in China, talked about how the number of SMEs in China has grown from about 3 million small businesses ten years ago to around 39 million today. These SMEs account for 80% of the Chinese economy and over 99% of all enterprises in China are SMEs. Most, if not all, have already used and have been benefiting from one or more digital platforms. It has become evident that weighing the alternatives and choosing the right platforms wisely is crucial for SMES if they want to be competitive in the digital economy. At the same time many SMEs are trying to come up with incentives for customers to buy from them directly instead of going through digital platforms, which often significantly reduce their profit margins. While talking about selling directly one of the case studies that was shared came from NearSt a digital platform showing live inventory of products in small shops near your current location. We are starting to see more and more industries and companies be reactive and try to figure out ways to get people off the big platforms. I actually experienced this last week when I checked into my hotel in Singapore and was told that they couldn’t offer me the usual loyalty points because I’d booked the room through a travel digital platform instead of their direct channels. Digital platforms and ecosystems are also topics of high interest for the public sector. If 80% of your economy is dependent on SMEs you want to make sure they remain competitive and don’t over rely on the giant digital platforms. We heard a whole list of recommendations for SMEs from Julian Wright, a Professor of Economics at the National University of Singapore (NUS).
Q : Can you give us some examples of the recommendations for SMEs mentioned at your workshop ?
CC : Professor Wright from NUS highlighted how SMEs can try to bring more customers to their own channels and entail loyalty. He recommended that SMEs try to focus much more on niche areas of the digital engagement model because large platforms tend to use one platform approach for every vertical; multi-home across as many platforms as possible and try to keep control of data; potentially try to create and join their own niche industry platform; and to ask for help from regulators. He encouraged regulators to promote multihoming, ensure data portability and to avoid conflict of interests — e.g. ensure that the large digital platforms can’t give preference to their own products when they also operate a digital marketplace.
Q : How are governments in Asia trying to leverage digital platforms and ecosystem models?
CC : There are various approaches, for instance there is the IndiaStack — a set of APIs [application program interfaces] that allows government and businesses to utilise a unique digital infrastructure for digital marketplace transactions. Singapore, on the other hand, is exploring a ‘country-as-a-platform’ approach. It has historically established the country as an important hub for logistics and global trade, now it is trying to see how it can be a main hub in digital trade and apply that as a national strategy. The idea is to launch a digital trade platform for South East Asia so that SMEs active in the region will have an incentive to trade through this platform. There are of course many challenges around scale, cross-border data, control points, how open or closed the platform can be and so on.
Q : Chinese giant Alibaba is currently trying to do something similar. It is targeting SMEs in Europe and the U.S. It says the benefits of using its offerings include the ability to trade globally and speedy customs clearance, logistic support and minimal tariffs. Will such private sector platforms that facilitate interactions and capture data have an increasingly larger role to play in the future of global trade?
CC : The streams of work between the private and public sector are intersecting in interesting ways. When Alibaba opens up its platform in a new country, the national macroeconomic impact can be sometimes stronger than some traditional cross-country trade agreements. So, a platform like an Alibaba or an Amazon can have huge implications for national GDP, depending on how the digital trade interactions are choreographed. This is one of the reasons multi-stakeholder dialogue is needed and why the World Economic Forum is stepping in. Our focus is facilitating interactions aimed at finding the right balance in maximizing the benefits for all stakeholders.
Q : What is next on the World Economic Forum’s agenda around digital platforms and ecosystems?
CC : We would like to start having a deeper look at the implications and opportunities in other regions. Last month, for instance, we ran five multi-stakeholder digital transformation workshops across Latin America and digital platform models have obviously been on the agenda. The next deep-dive will probably be on Africa, where digital platforms are increasingly being leveraged as the main or a complementary source of income for many families. Another future deep-dive is probably around the policy angles related to digital platforms, but also looking at how various technologies like blockchain and AI can be best applied to platform and ecosystem models. We’ll also continue to cover the topics of digital platform trust, responsibility and governance and explore how digital platforms and ecosystems can reinvigorate public‑private collaboration.