We’ve banged on about the platform economy and its importance for a while now. Roland Berger, as one of our primary sponsors of Vizions, discuss why their involvement was vital for the platform conversation.
Roland Berger joined the Vizions as a partner to strategically fuel the knowledge of the current state of the platform economy in Europe. Over a month has passed since Vizions came to life for the first time in Berlin, so we took the chance to sit with Dominik Loeber and discuss the reasoning behind such an initiative and the outcome.
Boris: Dominik, why did Roland Berger join Vizions for the first event? Why is such an initiative worth the direct invest by the Roland Berger team?
Dominik: As the only top management consultancy with a European background, we see ourselves as an ideal partner for Zalando, the leading European online fashion platform, to initiate a discussion on the state of the platform economy, bring together key players in the market and discuss pressing issues. Having done various consulting projects for Zalando we wanted to support this initiative when we heard about it.
In the past we were already active in that area e.g. supporting the German government or the Internet Economy Foundation on platform economy topics. We noticed that the platform economy in Europe is facing several challenges, which need to be overcome to foster growth and remain competitive in the years to come. That is why Roland Berger was proud to be the strategic partner of Vizions.
Boris: How does Roland Berger approach such an involvement? What can you bring to conference such as Vizions?
Dominik: For me and my colleagues active participation in the content preparation was key. Together with Zalando we planned some of the panels during the day to foster the discussion especially on how the traditional economy might be affected by platform developments and vice versa. Our aim was to add a strategic perspective and invite panelists from our client network and thus bring different views into the discussion.
In our daily work we see how the platform economy is shaping the customers’ needs as well as business models of market incumbents. This is also the reason why we founded our digital hub “Spielfeld” in Berlin in 2016 – bringing together our clients from traditional companies with digital business models here in Berlin. We were very happy that we could host the speaker’s dinner for Vizions in this location.
Boris: What is Roland Berger’s view on the state of the platform economy in Europe?
Dominik: The platform economy is evermore gaining importance and is a dominating factor in today’s business world. Although six of the 10 highest valued companies worldwide are platform business models none of them is of European heritage. Their origin is either in the US with a single, open market or in China where the government supports the development of platforms.
The European platform economy is still in its early stages of development and is confronted with various challenges from fragmented markets with different languages/legal systems to rigid regulations e.g. concerning data privacy or the availability of venture capital. However, with the ongoing digitization and the European know-how in many industries the chance is there to catch up if society, politics and business develop the right framework for a European platform economy – Zalando itself is a great example of how to create a platform company here in Europe.
Boris: At Vizions, we’ve gained great insights from the USA and Asia regarding platforms and the dynamics they create. How can Europe position itself and what is needed to reach that position?
Dominik: In the US as well as in China we see that platforms continuously claim more and more markets for themselves. “Voice” will further strengthen this effect. This trend can yield to negative effects for the customers as well as for the producers since it places market power in the hand of one platform provider.
Europe can create a platform economy that fosters freedom of choice for customers and producers, offering alternatives that will prevent the monopolization of certain industries.
In order to support this development Europe should aim at creating a more unified marketplace with streamlined regulations among its member countries as well as increasing the availability of funds to foster internet economy developments.
Boris: What do you think are some key industries where Europe has the chance to play a vital role in the worldwide competition of platforms?
Dominik: Regarding the available know-how Europe is well suited to play a vital role in industries like automotive or in B2B industries, where the maturity of platforms is not as high as in most B2C industries, yet.
Key to this will be to engage traditional European companies in platform businesses. As an example from the automotive industry take the navigation map provider “Here”, one of the European platform success stories. Several traditional German carmakers teamed up to secure this know-how and build business models upon that. If European companies manage to cooperate with each other and internet economy companies there is a good chance that European platforms can claim vital roles.
Boris: Do you believe in the highlander principle, that the risk of only one dominant platform in each industry is likely?
Dominik: We have to take this risk seriously, because we have seen several examples of the highlander principle in the past, like Google or Facebook which emerged from a large variety of search engines and social networks. However the negative effect on consumers and producers if this monopolization spreads throughout more and more industries will lead to alternatives. You can see that in the market already – take the rise of Snapchat as a new social network.
Otherwise governments will react to limit a dominance that might become too strong.
Boris: What do you believe, are the necessary steps in the near future to get Europe to become a clear competitor against US and Asian players?
Dominik: There are three main fields of action for Europe:
- First, European institutions need to foster the creation of a more unified market starting with a more streamlined regulation among its member states.
- Second, throughout Europe funding in terms of venture capital for digital platform companies need to be increased. Government support should be channeled into these directions to a larger extent. Compared to the US for example available funds for starting and growing companies in Europe are still very, very limited.
- Third, a higher degree of risk taking and the willingness to take it to the top in Europe is required. Too often digital platform companies in Europe sell out too early to US competitors missing out on large shares of the value creation.
Boris: How likely is it that we will see a European platform company to join the group of the most valuable 10 companies in the world?
Dominik: If Europe is able to lever its vast know-how and sets the conditions right for digital platform companies there is a decent chance that a European platform company will make it to the rank. But the way will be tough.