A long cycle of global economic evolution can be defined as a societally pervasive development which, over a time span of a few decades, fundamentally changes 1) the everyday life of people, 2) economic structures, and 3) geopolitics. Long cycles have been largely driven by technical inventions such as steam power, electricity, combustion engine, and digital computers.
Despite the massive hype around companies like Uber and AirBnB, and simplistic extrapolations of their impact, digital platforms share many of the characteristics which have given rise to long cycles. Still, we have seen but the very beginning, for it is only now that global business-to-business (B2B) -platforms are starting to emerge. Indeed, there is a good chance that by the late 2030’s digital platforms will have earned a permanent place on a par with steam power, electricity and comparable pervasive inventions, thus underpinning the next long economic cycle towards the emergence of the global platform economy.
Platforms and platform economy are enabled by a vast array of rapidly evolving techniques, technologies and concepts, including automation, robotics, virtual presence, augmented reality, intelligent analytics, Big Data, reali-time optimization, digital marketing and sales, Internet-of-Everything, cloud and mobile services, GPS and location services, haptics, digital ecosystems, and crowdsourcing, just to mention a few. Because of this immense pervasiveness, platforms and their evolution are not easy to comprehend. Nevertheless, the transition to the platform economy is highlighted by the following stylized visualization:
The journey from the industrial economy via the service economy to the platform economy will change the configuration of the fundamental elements on top of which our economy runs. This may sound abstract, but the implications are very concrete. The ownership of physical products will become less important. The emphasis on business processes (which have been essential in the service economy) will lose some of its relevance. Conversely, analytical, computational and software tools (manifested, for instance, in sophisticated algorithms for Big Data; convergence of utilization and production of services; and exploitation of customer ‘use case’ information in service design) will become crucial for making a successful transition to the platform economy. In this transition, Finland as a small open economy will face existential challenges, but there are tremendous opportunities as well. It will be very much up to ourselves which scenario will materialize.
Finland is part of the EU where the situation in the digital and the platform game looks today difficult, as indicated by the modest capability to commercialize innovations (compared to that of the US), a market highly fragmented by nation states (compared to those of the US and China), and massive historical IT legacies (compared to the developing world that can cherry-pick the best modern technologies and concepts and skip the painful intermediary development phases). To improve this situation, Germany has started efforts in order to take the lead, most notably with its “Industrie 4.0” initiative, by copying neither American nor Chinese models but building unique European ones instead. We are witnessing the emergence of the era of new – digital – geopolitics.
The significance of platforms in driving the next long cycle of economic evolution, and especially that of a small open economy like Finland, is the motivational big picture behind “Platform Value Now” project whose objectives are to generate relevant scientific knowledge and to foster “hype-free” understanding of platforms, the platform economy, and their evolution for Finnish policy and business decision makers.