Pundits at Accenture and Harvard Business Review have justly heralded the rise of the platform economy. Digital natives and traditional enterprises alike have capitalized on the collision of big data, cloud, social technologies, and mobility (IDC’s 3rd Platform) to develop new business models and innovate digital or digital-physical products using Agile and DevOps processes. In a few short years digital natives such as Netflix and Google in the U.S., Baidu and JD.com in China, and Spotify in Sweden have grown to dominate industries and capture trillions in market share, while thousands more companies have used technology to transform the way they do business.
With all of these changes, it’s time to rethink the concept of a product or service offering. Traditionally, the value of a product has been the fixed set of features and attributes built in prior to the product’s release. In the digital era, value is created through digital environments in which consumers interact with the offering and other users. Offerings are not finished when released … rather, value continually changes and increases through interactions.
With these marketplace trends in mind, our research team has redefined offerings as a constantly evolving digitalized network arrangement of artifacts, persons, processes, and interfaces (APPI), which we call digitalized interactive platforms (DIPs).
We use the example of the Apple Watch NikePlus (AWNP) to illustrate our argument, explaining the components of a DIP, how value is created through interactions, and provide three key implications for companies and marketers to consider. AWNP is a smart device for runners that provides interactive functionality for activity tracking. It has an exclusive interface and a NikePlus Run Club App that enables runners to organize socially and collaborate on training and workouts. In this business model, companies collaborate with each other and with customers to create ongoing value.
Let’s analyze the APPI components more fully:
Artifacts – An artifact plays a clearly identified role in the platform, determined by users’ intentions, ecosystem contributions, and evolutionary change. Artifacts are used by many people, provide evidence of visible and action-oriented interactions, and have a utility that is contingent on their interaction with the rest of the APPI – other artifacts, persons, processes, and interfaces.
Persons – Users experience and co-create interactions, leveraging the artifacts, processes, and interfaces of the APPI. They also interact with other people, using social technologies, and company employees, who deliver ever-better service powered by artificial intelligence and machine learning.
Processes – A process is a sequence of activities, carried out by engaging users through technological or interpersonal interfaces. The process creates change, with direction and movement, with one stage clearly leading to the next in a structured sequence of connected events. Processes occur in relation to APPI and also as meta-processes, or the organization of sub-processes.
Interfaces – An interface is a point of connection between hardware, software, data, and users that enables interactions. Interfaces provide media and surfaces that enable user interactions, including decision making and problem solving, and also facilitate modular architectures that minimize unnecessary interdependencies.
To return to the AWNP example, a runner uses all the APPI components to create value. She uses the run-tracking interface to access digital artifacts and processes; engage with other actors, such as runners and trainers to access their input or share her insights; and receive offerings, such as coaching and workouts powered by AI and machine learning. Thus, the running experience is constantly co-created by the runner and the DIP provided by Apple and Nike. Value is no longer delivered on arrival, from the company to the user. Instead, interactions and analytics help create ever-better experiences that are an “all-win-more” outcome.
Brand experiences can also be enhanced by DIPs. The Apple Retail Store is an ecosystem where users can experience and learn about new products, such as Apple Watches. Meanwhile, employees capture insights using apps and provide aftermarket services through the Genius Bar – data which are provided to company developers and partners, such as Nike.
Our research has three key implications for managers and marketers:
- DIPs are never finished. Product releases can be as simple as bite-sized code, released in an Agile sprint, or more fully realized, such as Apple Watch. However, once the offering is in place, further modifications will be driven by interactions. Thus, firms and marketers have to develop an interaction orientation, develop new strategies for joint value creation, and continuously evolve interactional relationships.
- DIPs operate in networked system environments where users’ experiences are enabled and constrained and continuously change as they interact with APPIs. Firms and marketers must be able to capitalize on the new information obtained as customers continuously engage with them, other customers, and partners. Marketers must become savants at operationalizing customer knowledge value. DIPs can also help boost sales and profitability by co-creating offerings with customers, which can potentially increase customer referral value as engaged users yield higher net promoter scores. Similarly, adapting customer relationship management strategies to DIP models can enhance customer influencer value and help companies win back disaffected customers.
- Finally, firms and marketers must recognize that the new model of value creation is co-creation, rather than exchange. DIPs can be created anywhere, are active mediators of value, and engage users on an ongoing basis to create value.
From: Venkat Ramaswamy and Kerimcan Ozcan (2018), “Offerings as Digitalized Interactive Platforms: A Conceptual Framework and Implications,” Journal of Marketing, 82 (July).
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