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John Deere, Home Depot reinvent themselves with digital platforms

Platforms aren’t just for the software industry anymore.

In the era of the Internet of Things (IoT), today’s connected, digital customers are looking to buy “outcomes,” or measurable results, through the plethora of channels they interact with.

Companies across industries as varied as farming, food and lighting — businesses based on a traditional product services model — are finding that they must shift to a platform business model to deliver outcomes to these customers, as well as to stay competitive in their fields. And competitive advantage, in turn, requires investment in more agile technology that is able to support the demands of these digital platforms, said Paul Daugherty, CTO of Accenture, at last week’s MIT Platform Strategy Summit in Cambridge, Mass.

MIT Platform Strategy Summit, 2015

“Companies are dealing with big technology estates that they operate — legacy technology — and they know that they need to reinvest in those technologies to create new experiences for their customers,” he said.

Daugherty added that while many of these companies have a good grasp on the need for these reinvestments, there aren’t enough of them that are “reinventing.”

As an example of reinvention, he pointed to how John Deere, the agricultural manufacturing company, started conceiving of the tractor as a platform.

“If you think about the platform as a product, the business starts looking challenging; you have low-cost competitors coming in from all sorts of different places, different countries. You have lots of competitive threats to the business,” he said.

But once John Deere started considering the tractor as a platform — and started embedding it with sensors from which the company gathered valuable meteorological, soil quality and growing information — the company was able to sell a new “product” altogether, which is increased productivity for farmers.

“That’s a more differentiated way to go to market than just selling a great tractor,” Daugherty said.

Another example of a company reinventing its business model is Home Depot, whose business of selling a wide array of low-cost goods, based on a cost-effective supply chain, is now being threatened by Amazon and many others.

While Home Depot has already invested in a mobile app, Daugherty said that the company is also looking at other ways it can build up its platform. One route is through unique, connected experiences for customers via Wink, the company’s connected home system.

Home Depot is developing Wink into an ecosystem by working with its suppliers to make sure that every home product it sells to customers are standardized and compatible with the platform.