How Innovation Drives a Sustainable Digital Platform Economy
In today’s rapidly changing economy, platform business models are disrupting industries and transforming society. To compete and survive, businesses need to innovate. This is especially true for platform companies. From hiring a transportation service, reserving a vacation house on the beach, sharing photos and status updates, or purchasing products online, consumers congregate through the internet on massive platforms to conduct their lives and business nonstop. At their core, successful platform companies identify a crucial need or “pain point,” create a solution, and help consumers to realize that their solutions are ones that they can’t function without. Developing an effective digital platform not only opens a myriad of efficiencies; it also provides higher margins for the economic sector overall.
Platform technology companies such as Netflix, Facebook, Amazon, Uber, and Airbnb enjoy sustained success due to their continued technological innovation while ensuring consumer trust in their overall business practices and technology offerings. They combine new business models with technological innovations, which has led to a digitally based new economy, or “platform economy” that connects people and businesses while creating value for all involved.
The maturation of technology
A range of technologies have matured simultaneously and have greatly impacted the economy and how people interact within it. The convergence of 5G, the internet of things (IoT), artificial intelligence (AI), and edge computing have paved the way for a “golden era of digital platforms.” 5G alone can transform the economy, including digital banking and electronic-based payments. With dedicated 5G networks providing more reliable connectivity, faster data rates, lower latency, and greater scalability, security, and network control than previous communications technologies, many industrial sectors have an enormous opportunity for innovation. By providing new avenues for innovation, 5G is reshaping existing business models and improving customer experiences. How information moves, how much information is moving, and how businesses and customers connect are foundational to the idea of a transaction, the modern partnership, and the very definition of a network. It would be difficult to imagine any industry not experiencing measurable, substantial change resulting from 5G during the next decade.
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For payments, 5G will expand the notion of what is possible and expected before, during, and after any transaction. High-speed, always-on connections radically change how consumers search for information, evaluate products and services, make purchase decisions, and share their experiences with others. Merchants, whether they are global-based giants or “gig workers,” will unlock access to more information about their markets, products, and customers daily, requiring them to collect unending data to appreciate their performance fully. Machines, devices, and objects will actively participate in all transactions. In-store experiences will transcend brick-and-mortar retail outlets, and digital interactions will move beyond the living room.
Throughout this transformed ecosystem, it will be imperative for industry leaders to embed the appropriate levels of consumer controls and security to ensure that trust and security are maintained as transactions move to an increasingly automated experience.
The need for sustainable development
The significance of the platform economy has caught the attention of governments around the globe. Some claim that a “platform capitalism” fosters market inequality and seek a “platform cooperativism” through a social solidarity economy (SSE). The basis for these economic activities is to prioritize social impact instead of pure financial profit.
Technology also has the ability to significantly impact the United Nations’ Sustainable Development Goals (SDGs). With the COVID-19 pandemic altering all types of industries, many white-collar employees are working remotely and collaborating in new ways. Platform and technology innovation are at the center of this sustainable development and are focused on bringing innovation and sustainability strategies together.
Today’s platform companies are tasked with giving more attention to engaging with the world. Companies must serve as exemplars of sustainability, which means they should embrace sustainability in all appropriate forms within their own business practices while engaging with customers as enablers of their sustainability and purpose initiatives. It’s certainly a comprehensive dual role to play. And it’s important that companies perform both roles with authenticity and credibility, whether through products, services, people, or partnerships that are created through various engagements.
The United Nations’ SDGs, a set of 17 goals built on decades of work by many countries, represent an urgency for global partnerships to achieve a true global platform economy. Strategies aimed at improving health, education, and the environment—while also reducing inequality and spurring economic growth—are essential to ending poverty and other deprivations, according to UN officials. The SDGs serve the UN’s 2030 Agenda for Sustainable Development and are expected to stimulate action over the next 15 years to achieve inclusive and sustainable economic growth and decent work for all. Eight goals, in particular, are relevant to digital platforms.
Impact on privacy, security, and ethics
Guidance on data privacy, protection, and ethics as a result of the digital platform economy is established through the Guidance Note on Big Data for Achievement of the 2030 Agenda set by the UN’s Sustainable Development Group. An overwhelming amount of data utilization by large and small platforms has led to calls for antitrust scrutiny because it is often assumed that data collection leads to harmful entrenchment in respective markets. As more digitalization is available to more populations, much like the concept of financial inclusion, the democratization of data will grow in an effort to avoid ignorance of privacy and security issues. The need to make data accessible enough to the average person also raises questions about privacy, security, and ethical standards.
The digital industrial revolution
Today’s platform businesses are part of what has become a digital industrial revolution. Access to people is now more achievable than ever before. Inequity and other societal shortcomings are being challenged on a global level more than ever before. Global leaders rely on industry to employ platforms that are trustworthy and inclusive to create a more equitable marketplace.
The emergence of new technologies such as blockchain, non-fungible tokens, AI, and augmented and virtual reality will further change everyday lives. The next generation of dominant platforms may be completely different from what is available today. The businesses that best identify their opportunities to build and integrate with new platforms and navigate and mitigate risks will become the next generation of market leaders. Those that have the potential to do so should allow the SDGs to serve as a common language to converse and engage globally with customers, partners, and the ecosystem at scale. Platform and technology innovation offers organizations a unique opportunity to accelerate growth, compete in a crowded marketplace, seize market opportunities, and, if used wisely, the chance to support a greener, more sustainable, and inclusive society.
About the Author
Ananya Bhattacharyya is an enterprising, process-driven, and globally experienced director of product development at MasterCard. She has a strong technical and financial services background and continually strives to guide creative vision, organizational change, customer-driven innovation, product transformation and strategic thinking in her professional career. For more information, please email firstname.lastname@example.org or visit LinkedIn.