3 Keys to Big Tech’s Success that Your Company Can Implement Now

Many of the most valuable, biggest names in business — Amazon, Apple, Google, Microsoft, Meta, Tesla — are platform tech companies, using network effects for exponential growth. The secrets to these thriving tech giants’ success offer lessons for other industries and smaller businesses, says Smith’s Bobby Zhou. In his latest research, he outlines three key strategies that others can implement.

Zhou, an associate professor of marketing, says any brand can benefit from “platformization” and harness the power of network effects. He says there are three methods for doing so:

1. Open the door to third parties. Tap into the power, agency and creativity of third parties to build your business. Look at the example of Apple, says Zhou. The company was a pioneer platform player that leveraged outside app developers. “Now with literally millions of independent third-party developers, their IOS has become one of the most powerful ecosystems,” says Zhou. And all of those apps on a user’s iPhone make it much less likely that they’d switch to a Google or Android phone, regardless of price. “Apple’s app store is probably the most prominent, visible success story in the last 20 years or so, in terms of platform businesses.”
   The top players have tapped third parties to make themselves the most powerful companies in their industries. But you don’t need to be a tech giant to do so, says Zhou. “Aggressively utilizing those strategies will not only facilitate your growth, but also make your brand and business more defensible.”
   He points to FreeWater.io, which gives customers bottles of water for free by selling ads on packaging to third parties. They also offer consumer add-ons, like nutritional supplements and flavor additives.
   “If you do something similar to other companies, but your affiliation with a lot of third parties makes you stand out, consumers will choose you,” says Zhou.
2. Connect your customers. Building connections among your customers improves your brand’s strength, says Zhou. “Platform companies are so successful because they create ways for their consumers to connect and that creates a lot of value.”
   For smaller companies, one way to create connections is by organizing conferences to allow people in different industries to interact. Also be sure to learn what your customers are doing in their day-to-day so you can find ways to connect them with each other, says Zhou. That will boost your company’s brand equity among customers.
   One example: Intuit’s accounting software QuickBooks, used by both accountants and small to medium business owners. “QuickBooks started providing an online space where accountants can easily connect with small business owners through the software.”
   Zhou says companies also need to be aware of the risks. “Anytime you connect people together, there are risks for confrontations or unpleasant experiences. It’s the platform or the business owner’s responsibility to determine the extent of moderation.” Think uncivilized conversations on social media, he says. “When customers have bad experiences, they are much more likely to blame the platforms,” he says. “When you are building the bridges, think about how you are going to facilitate, even moderate, the interactions among those users.”
3. Reach your customers’ customers. “Figure out how to reach out to your customers’ customers while making sure your first customers are happy,” says Zhou. “That creates value for everyone.” He pointed to OpenTable, which started as an accounting software for restaurants. OpenTable figured out a way to reach their customers’ customers: the diners, to use their app to make reservations.
   Another example: the Shopify platform, which provides online storefronts for retailers. Shopify also built an app for shoppers, where they see their preferred retailers, but also get suggestions to explore new stores.

Zhou used his research findings to develop a class in Smith’s online MBA program, called “Platform Transformation and Strategies.” He teaches students how to apply the three concepts to their own organizations with very specific deliverables. He says anyone can do the same at their own company.

“I encourage you to think about the things you could do in your organizations — it doesn’t even have to be all three,” he says. “But at least identify one thing that can be implemented that fits into one of the three categories. That’s going to make your organization better.”

Read Zhou’s research, “Transforming Products into Platforms: Unearthing New Avenues for Business Innovation,” published in NIM Marketing Intelligence Review, with co-author Andrei Hagiu of Boston University.