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Ideas Made to Matter

Platform Strategy

By

Beth Stackpole

Aug 29, 2023

Business-to-business platforms are still an emerging market. New research identifies four types of these platforms and three ways they can succeed.

Business-to-consumer platforms such as Uber, Airbnb, and Amazon have become business success stories and the staples of everyday life. Yet platform models have been less successful in the business-to-business space, with most B2B platforms still in the launch stage (24%) or scale stage (60%).

New research from Capgemini Invent and the MIT Initiative on the Digital Economy found that B2C platform models do not directly translate to the B2B world, and B2B platforms have unique integration requirements. Their goals are also different: B2C platforms typically solve for market failure whereas B2B platforms take aim at coordination failure.

These differences explain why B2B platforms are still an emerging market, according to Dartmouth College professor Geoffrey Parker, PhD ’98, who is a visiting scholar at MIT IDE and helped lead the research project. “In the B2B space, we do not see strong winner-takes-all characteristics yet,” Parker said at the 2023 MIT Platform Strategy Summit. “B2B tends to have a lot of variation, tremendous integration costs, and a complex environment that makes it harder to have the kind of scale that you see in the B2C world.”

Businesses cannot fit their B2B efforts into a standardized model because there are four different B2B platform types:

Parker and his research colleagues suggested a framework that will help B2B platforms succeed, regardless of type. The framework starts with understanding whether the proposed platform will be transaction-centric or centered around data, which dictates where the value creation opportunities lie. Once that choice is made, three dimensions dictate B2B platform design and, ultimately, success:

Network: Organizations need to address a number of considerations, including the openness of the platform, whether network effects are desired, and the likely business model, including whether additional revenue is the key metric of success.

Operating model: Companies must consider possible challenges resulting from the need to integrate with existing customer infrastructures. Doing so helps determine whether companies want to take ownership of critical factors like formulating data strategy or hiring people with the specialized skills required to establish a B2B platform.

Go-to-market: Once the pain points are identified and the B2B platform created, there’s still work to be done to show customers the value of using the new platform, especially if its success is tied to data sharing and systems integration. Crucial steps to encourage adoption include taking the time to clarify data ownership and other legal issues and convincing customers that joining the B2B platform doesn’t diminish their market power.

The bottom line is that B2B platform success requires a lot more than an innovative use case and a functional technology base. Players looking to lead in this space can learn from the B2C platform giants, the researchers found, but will still have to navigate fresh waters to address critical integration, data ownership, and economic model complexities.

The primary motivations to launch B2B platforms include creating new sales channels for existing business areas (43%), driving new revenue in existing business areas (40%), and developing new revenue streams and business models (34%).

More than half (55%) of technology platforms are operated by incumbents and only 10% by startups.

More than a third (35%) of platforms aren’t embracing the opportunities of network effects by remaining closed portals.

Integration efforts are by far the biggest challenge: Seventy percent of platforms collaborate with consulting partners on integration issues in order to scale.

Download the research report