Platform Leadership: Aligning your C-Suite to invest in digital platforms

How to gain senior leadership support and galvanize the organization behind the change initiative towards transforming to a platform business?

This article is part of the Digital Platforms hub

Gaining senior leadership buy-in to a platform initiative is one of the key factors that determines success or failure of the initiative. Senior leadership buy-in determines not just the prioritization of the initiative and the funding awarded to it, but also the extent to which other stakeholders across the organization liaise towards the success of the initiative. First, framing the platform initiative within the overall goals of the business and in service to furtherance of overall business strategy is essential to gaining senior leadership support. As the pace of technological change accelerates, senior leaders are bombarded with potentially revolutionary ideas and also aware of the many shiny objects that have failed after excessive investment. As the cost of capital increases, senior leaders tasked with allocating capital need to understand the return on investment (ROI) and the initiative’s impact on the topline.

As executives increasingly think about stakeholder capitalism, highlighting larger stakeholder benefits beyond business benefits may also play an important role, particularly for platform initiatives that create surplus value across the ecosystem. Conversely, threat framing – highlighting the threat of non-action – may spur some leaders into action but may also backfire if not done correctly. Finally, grounding or anchoring the change initiative in a familiar success story that has gained organization-wide buy-in in the past also helps gain senior leadership. At Nike, for instance, the success of the initial Nike+ projects laid the groundwork for a lot of subsequent organizational buy-in.

Another key to unlocking senior leadership backing is de-risking the business case by deploying initial pilots. Platform initiatives require investments across a longer horizon. Senior leaders often prefer tranched funding models where subsequent funding is dependent on the successful completion of the prior stage.

Getting senior leadership buy-in is not a one-time effort. Clearly articulating metrics, defining pilots, and gaining leadership buy-in to the approach and goals is key. As multiple innovation teams compete internally, the ones that lower the perception of risk by regularly meeting metrics they set out to achieve are the ones that consistently secure buy-in.

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A successful pilot can also galvanize the rest of the organization around the idea. It builds the initiative’s credentials with the rest of the business, demonstrates a low tolerance for risk and a high focus on outcomes, and creates a learning cycle which informs subsequent rollouts.

Senior leaders also need to be educated on how strategic decision-making for platforms is different. For example, unlike traditional products, platform businesses require strategic monetization and subsidization choices. Often, charging users for core services may actually kill a platform’s network effects. Senior leaders need to clearly understand the trade-offs involved in such strategic choices, particularly where such choices involve subsidization in the short term to promote lock-in in the long term or involve subsidization of one side to drive monetization with another player in the ecosystem. Without clearly understanding considerations and trade-offs involved, they may be averse to funding platform initiatives that involve strategic subsidization.

Finally, the most important factor that drives senior executive buy-in is psychological. Every executive thinks differently about ROI and risk. When presented with a platform innovation project, what excites one may alienate another. The individual executive’s risk tolerance determines the biases that inform their decision-making. Executives who are more risk-averse and looking to deliver safe, sustained execution may be guided more by loss aversion. Those that think in bets and evaluate innovation along the lines of early stage venture funding may be more driven by the upside potential and expected outcome across a portfolio of bets. More generally, positioning an initiative to a senior leader requires tailoring the pitch not just to address their biases but also to be sensitive to their goals, values, and understanding of the topic. Understanding the unique mindset guiding key executives’ decision-making is key to crafting the right proposal to gain their buy-in.

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Frequently Asked Questions

How do platform leaders secure senior leadership support, aligning platform initiatives with business goals, emphasizing ROI, and addressing concerns about risk?

Platform leaders navigate the challenge of gaining senior leadership support by aligning the platform initiative with overall business goals and strategies. They emphasize the potential ROI and broader stakeholder benefits beyond immediate business gains. Strategies may involve framing the initiative as a response to industry trends and threats, grounding it in past success stories, and addressing concerns about risk through tranched funding models and pilot projects. Effective communication and education are key to mitigating skepticism and building support among senior leaders.

How are pilot projects in platform initiatives evaluated, and how do their outcomes influence subsequent funding decisions and strategic direction?

Pilot projects in platform initiatives are evaluated based on predefined metrics aligned with strategic goals. These metrics may include user engagement, platform growth, ecosystem expansion, and revenue generation. The success of pilots influences subsequent funding decisions by demonstrating tangible results, minimizing perceived risks, and building confidence in the initiative’s potential. Organizations ensure that metrics accurately reflect strategic goals by defining clear objectives and regularly assessing progress against them.

How can organizations teach senior leaders about platform monetization, adapting to various risk tolerances and decision biases?

When educating senior leaders about platform monetization and subsidization strategies, organizations focus on clarifying the unique considerations and trade-offs involved. They explain how charging for core services may impact network effects and how subsidization can drive long-term growth and ecosystem monetization. Tailoring the approach to accommodate diverse risk tolerance and decision-making biases involves understanding each executive’s mindset and goals. By presenting the initiative in a way that resonates with each leader’s perspective, platform leaders aim to secure alignment and support across the C-suite.