Last month, we introduced our 2021 Business Trends report based on in-depth conversations with top CSOs in our Outthinker Strategy Network. We will be expanding on one of these trends every week with the intention of supporting your organization’s strategy for the next year and beyond. This is our ninth installment.
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Last week’s trend piece focused on Community Coordination — companies that create a platform for users to communicate and coordinate are better prepared for a future where consumers are using these platforms to connect quickly and make their voices heard. This trend toward coordinating the uncoordinated has been growing for many years and pervades across industries.
Historically in business, power came from control or ownership of assets and building economies of scale. In the new paradigm, power comes from coordination. Today’s outthinkers are able to build power without ownership.
But this takes more than a change in your business model. The trend toward platform and digital requires an entirely new mindset around how you serve your customers.
Bharat Anand and the spoke-to-spoke model
During monthly conversations with our network of top Chief Strategy Officers, many of them have expressed similar concerns related to developing platform business models and harnessing the power of connections between users. We invited Bharat Anand — author of The Content Trap and expert in digital strategy, media and entertainment strategy, corporate strategy, and organizational change — to speak to the group. Based on his research of the disruption of print media over the past 25 years, he explained the trend toward platform mindset using a hub-and-spoke model.
Most people believe that the decline in print media over the years was caused by the advent of the internet. However, Bharat’s research shows that the impact of the internet on print was no greater than that of radio or TV. Circulation per household was decreasing before the internet was invented. Circulation revenue has remained stable, while display advertising revenue has dropped, and classified advertising revenue (which fosters connections between readers) has almost completely disappeared.
If you ask most companies or individuals, they will tell you that the greatest benefit of digital is expanded reach. The producer, or the hub, can connect to more consumers, or spokes, thereby increasing value and market share.
Bharat explains that this is really only Phase One of the promise of digital. Phase Two occurs when the spokes can communicate with the hub, providing input and reviews or asking for what they need. It is in Phase Three where companies realize the true power of digital: the spoke-to-spoke connection that happens when consumers communicate with each other. This is the only change that occurred between the introduction of radio or cable TV and the internet.
More companies are learning to coordinate the uncoordinated
Last week, I was in Palm Springs, California, to explore with a school district around how to innovate to become more student-centric. After three days of workshopping came to a close, I decided to end my trip by exploring the local culture and restaurant scene. I got caught up in a few stimulating conversations and realized that I was running late for my dinner reservation. I stepped outside into the much appreciated 80-degree night and asked the concierge for the best way to get a ride into town.
“Uber or Lyft,” he quickly replied.
In the past, I might have taken a taxi or hired a car, but now ridesharing has become the fastest and most convenient way to get around while traveling. We’ve been following companies like Uber, Lyft, and Airbnb as they’ve capitalized on the spoke-to-spoke model. Without owning their assets, they have created platforms that power connections and scale quickly. Brian Cheskey, co-founder and CEO of Airbnb famously tweeted:
“Marriott wants to add 30,000 rooms this next year. We will add that in the next 2 weeks.”
The speed of technological advancement is enabling shifts to digital and platform models that allow businesses to grow quickly and scale without major investment. It is becoming less important to own and control assets because new technologies, mindsets, and behavior patterns are opening up new models to consider.
Platform models driven by the pandemic
The COVID-19 pandemic has also accelerated an interest in platform models. Due to increased focus on environmental sustainability and more time spent at home cleaning out our closets, the resale market is expected to expand from $32 billion in 2021 to $51 billion by 2023.
Poshmark, a peer-to-peer platform for shopping and reselling, went public earlier this year after increasing 28% in the first three quarters of 2020. ThredUp, another secondhand retail market, went public last year and is expected to be valued at $64 billion by 2025.
Amazon and eBay are well known for their marketplaces that connect consumers and sellers to each other. Etsy and Shopify have been able to stand strong against and even disrupt Amazon by staying true to their customer base — shoppers looking for handmade, one-of-a-kind goods or mom-and-pop retailers looking to transition to e-commerce. A spoke-to-spoke business model offers a greater chance to differentiate based on catering to a specific community with a distinct brand identity.
Rave Mobile Safety harnesses coordination to do good
In the realm of public safety, Rave Mobile Safety is another company seizing the coordination trend to solve a huge community problem. The company started out using technology to solve a discrete but urgent problem.
In an emergency, dialing 911 from your home phone gives the police your precise address. But when you dial from a mobile phone, they have very little idea where you are. Since mobile phone penetration in the US is great than 90% and even higher in most other developed markets, this is a problem. Sometimes a life-or-death problem.
Rave Mobile Safety started off helping universities broadcast emergency messages to their students. When faced with copycat competitors, the company stepped back and asked itself, “What assets could we leverage to pursue a truly disruptive opportunity?”
They recognized their power came not from their technology but from their ability to coordinate three key communities: service providers (Rave Mobile has assembled relationships with every major mobile phone carrier), 911 operators (many of Rave Mobile’s university clients also operate their towns’ 911 centers), and citizens.
Rave Mobile Safety is now building a nationwide safety ecosystem that allows critical data to be securely shared between 911 dispatch centers, universities, K-12 schools, citizens, students, teachers, and other stakeholders in moments of crisis. In 2020, Rave solutions were used in 38 million incidents representing billions of individual communications.
As the company grows its ecosystem, it becomes more valuable, making it easier to expand further. More than 1,600 enterprises and healthcare facilities have joined to keep workers and patients informed. During the 2020 COVID crisis, the company responded with solutions to aid in the distribution of vaccines, conduct daily health checks of workers and students, and coordinate tactical incident responses.
Should your business abandon its hub-to-spoke model to create a spoke-to-spoke system? In our roundtable discussion, Bharat explained that it’s often unnecessary to choose.
“You can be both,” he explained.
Organizations of the future will need to focus from the lens of their customer. In addition to delivering your current value, can you create a platform for your users that allows them to connect? As Rave Mobile demonstrates — the power is in the connections you enable and the community you create. Once you’ve won the connectedness game, competitors can’t come in and disrupt you by offering a better product.