Benoit Reillier, is Managing Director and Co-founder of Launchworks & Co where he specializes in helping organizations harness the power of ecosystems and innovative platform business models. He has been training, advising and coaching the boards and top management teams of many blue chip companies as well as regulators and governments for more than 20 years and is a guest lecturer on platform strategies at a number of business schools and universities including ESCP Europe, HEC Paris, and Berkeley.
Reillier is the co-author of Platform Strategy: How To Unlock The Power of Communities and Networks to Grow Your Business (Routledge 2017) and Mission BlaBlaCar (Eyrolles 2022 for French edition, English edition forthcoming).
Prior to founding Launchworks & Co Reillier worked in senior positions at KPMG, LECG and TeliaSonera on a range of strategic assignments that shaped the technology, media and telecommunications sectors globally. He was instrumental in the development of regulatory frameworks in a number of countries and provided expert advice in the context of several multi-billion dollar transactions and litigations. Reillier started his career under the aegis of the French government as a special advisor preparing the liberalization of the French telecom sector in the 1990’s. He holds a MSc in Management Sciences, a Master degree from IMT Business School in Paris, a MA in Economics & Competition Law from King’s College as well as MBAs from both London Business School and Columbia University in New York City. Reillier, who was co-chair of the Platform Leaders conference, which took place in London on November 9, recently spoke to The Innovator about how platform networks are evolving.
Q: Platform business models have proven to be very successful so why don’t we see more traditional companies adopt them?
BR: There are lots of reasons. I think it is helpful to start with definitions. I have learned over the years that lack of a good definition and alignment around the definition is one of the reasons for delays and issues down the line, both for startups but also for large companies who want to design and launch platforms and orchestrate their ecosystems. If you ask people about platforms there are as many definitions as people around the table. A good and shared definition is a prerequisite to any successful platform strategy formulation. Marketplaces, app stores, social networks, etc. are examples of platforms. Typically, platform businesses create value by attracting participants, matching them, and enabling them to transact. You can’t execute if you don’t have congruence.
Q: So far it has mainly been Chinese and American companies that have built successful platforms: Why are there so few European platforms?
BR: It is a little bit more difficult for clients in Europe because we do not have a homogenous market. Since platforms benefits from ‘network effects’ reaching a critical mass is key and this is still much easier to achieve in the U.S. where you have not only access to capital, but access to a largely homogeneous market that use the same language and operate within a similar regulatory environment. In Europe you need to localize, there are language, cultural and regulatory differences and these things conspire against you. That said, while it has taken more time, once it is done you tend to have a strong market position.
Most established players, in Europe and beyond, have now started developing platform strategies because these days it is quite difficult to just sell a product or a service without engaging with your ecosystem. It may still be a small part of many established companies’ operations, but we see them adding product marketplaces, service marketplaces and content marketplaces. So, say a traditional DIY chain, can offer more products (product marketplace), match craftsmen, plumbers and electricians with clients who have relevant projects (service marketplace) and offer tips for DIY projects in videos (content platform). All these activities complement and strengthen the core business and allow the firm to harness the power of its ecosystem.
Q: Is the pressure to become more sustainable pushing more companies to either start or build platform models?
BR: Absolutely. Traditional firms with their linear value chains have not been designed for being sustainable from an environmental point of view. Platform business models on the other end, by enabling sharing, reusing, recycling, refurbishing, etc. are uniquely able to power circular economy initiatives. Now half of the platforms we work with are either circular or focused on the Sustainable Development Goals (SDGs) and we encourage the other half to be. We wrote our last book, Mission BlaBlaCar, with French Entrepreneur Frédéric Mazzella, founder of the car sharing platform BlaBlaCar, to show what it takes to design and scale a sustainable 100 million+ members unicorn. Becoming sustainable will be a condition in the future. It will need to be part of your mission and the mission of the ecosystems you belong to.
Q: How are AI and other tech advances changing platform business models?
BR: When properly harnessed Generative AI improves productivity. It allows businesses to do things faster and more effectively. For platforms, that boost has the potential to be particularly valuable, making it easier to attract people, to connect and match them. With the help of LLMs [large language models] like ChatGPT, you can potentially get a working prototype in one day. The problem is that everybody can do that now, so you still need to work hard to do something unique that is valuable, rare, and difficult to imitate to get ahead.
What is exciting is the current tech stack powered by AI enables new types of organizations. The traditional model of the firm – closed and hierarchical – is no longer sustainable for the planet. We’re now just seeing new types of decentralized, autonomous flexible models, managed very differently and more sustainably. For example you see Decentralized Autonomous Organizations experimenting with self-executing smart contracts, that can now be LLM generated, and embed governance principles that are voted on organically by relevant communities cooperating on various projects. It’s happening for open source but also for commercial initiatives.
Q: What advice do you have for corporates who want to adopt platform business models?
BR: Make sure top management is involved, otherwise the project will remain small or get killed. Next embrace platform thinking and create space to experiment outside of your existing core business. Invest time to ensure that everyone understands and agrees on the definition of what you mean by platform, organizing a workshop / training early on is often extremely valuable. Then, start small. This is counter intuitive because you need critical mass to get network effects to kick in, but you need to start with a small prototype and team to experiment and learn what works before you scale. To avoid the fear of cannibalization it can also help to start with complementary products your company doesn’t stock to understand how the model works and learn. These things are big cultural changes for many traditional organizations but that’s the price to pay to remain alive in fast-moving markets. Companies should seek to create value at scale outside of boundaries of their organizations at the ecosystem level. Business ecosystems are going to become increasingly powerful and these coalitions will be able to tackle more ambitious, responsible and sustainable missions. You’ll know when your platform strategy works: it’s when everyone in the ecosystem benefits.
To access more of The Innovator’s Interview of The Week articles click here.