When attempting to integrate the local service providers into the platform, we are likely to find different attitudes with regards to their confidence on the project and their will for keeping the control of their business. Further, this attitude may change over time, for it is necessary not only to offer many integration formulas attending different risk attitudes or want for autonomy and ownership, but also to offer a flexible system that allows them to shift from one to another integration status.

For instance, the range of integration formulas could go from the full integration exchanging the business ownership for platform shares, to the lowest possible integration status in which the business is associated to the platform only by having to comply with certain service quality standards to take advantage of the aforementioned benefits of the platform. In between these formulas, there could be intermediate formulas guaranteeing a minimum profitability, but also with a limited dividend, to accommodate those with a medium level of risk aversion. As showed in the following table, in many cases we should distinguish between the integration of businesses and properties.

Owner’s risk perception Properties (premises, facilities, land, etc.) Businesses
High risk Renting or selling to the platform Association in low integration status
Medium risk Integration with guaranteed profitability Integration with guaranteed profitability
Low risk Full integration at all risk Full integration at all risk

Detailed information about the implications of each option would be provided to partner candidates, to help them visualize the pros and cons of every option. In general, these could be the following:

  Advantages Disadvantages & Obligations
Low integration ·   Keep ownership of the business

·   Take advantage of platform’s marketing

·   Advantageous deals in key supplies

·   No influence on platform’s policies

·   Compliance with service standards

Mid integration ·   Guaranteed shares’ profitability

·   Right to vote on platform’s policies

·   Preferential marketing deal

·   Free or subsidized training & assistance

·   Limited shares’ profitability

·   Limited voting power

·   Loose business ownership & control

·   Fix salary + bonus, subject to penalties when failing to comply with rules

Full integration ·   Stake in platform’s profits to the fullest

·   Full right to vote on platform’s policies

·   Preferential marketing deal

·   Free or subsidized training & assistance

·   Loose business ownership & control

·   Fix salary + bonus, subject to penalties when failing to comply with rules

·   Risk of no profits in case of platform’s poor results

Hereby it is necessary to remark that partners associated to the platform –in low integration status- would be also encouraged to invest in the platform to take advantage of its profits and have the right to vote when deciding the platform’s policies.

Besides, there should be a specific integration and development strategy for the new entrepreneurs encouraged through the platform development policy, establishing many integration options and setting their path to regain full ownership of their business in case they eventually wish to do so. For instance, as it happens with new employees, many new partners –especially the micro-entrepreneurs in the poorer layers of the community- should follow a trial period during which they are trained, coached and closely monitored to assess their suitability as integrated service suppliers.

What challenges do you foresee when integrating partners through this “formulas strategy”?

Posted by Jordi Pera

Jordi Pera is an economist passionate about tourism, strategy, marketing, sustainability, business modelling and open innovation. He has international experience in marketing, intelligence research, strategy planning, business model innovation and lecturing, having developed most of his career in the tourism industry. Jordi is keen on tackling innovation and strategy challenges that require imagination, entail thoughtful analysis and are to be solved with creative solutions.

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