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Adapt or Die: The Power of the Open Platform

How Allstate's Arity and the Cleveland Clinic are changing business models
bkirschner
Nov 29, 2016
Maybe we should start calling Chi-Town “API-ville.”

Apigee events in Chicago have consistently been well-attended, high-energy affairs, and our final 2016 stop on our Adapt or Die world tour was no exception.

It seemed especially fitting that the setting for storied brands like Allstate and the Cleveland Clinic sharing their vision for digital transformation was an industrial building originally constructed in 1855 and since converted into high-tech conference space.

This was my first opportunity to present and discuss the recent findings from our research partnership with economist Marshall Van Alstyne that the intensity of API use is positively and significantly associated with higher operating revenue.

Even better, attendees got to hear “why” straight from the source.

Arity is a start-up founded by Allstate to monetize the 80 billion miles of driver data the company has collected from over a million instrumented vehicles. As Arity president Gary Hallgren explained: “We thought about monetizing the data just for us, but decided to approach it as a platform for entire industries.”  

Using APIs (naturally), third parties can provide data about drivers or potential drivers and receive an algorithmically-based risk score.

This has some obvious applications in the on-demand ride industry (I personally would prefer a driver with a five-star safe driver score over one rated four stars by passengers for friendly banter or handing out Mentos). But perhaps more importantly, as an open platform even Arity’s competitors become potential customers. (For more on platforms and network effects, check out the keynote presentation slides from Apigee's Chet Kapoor.)

Only time will tell if some of those competitors on whom Allstate has stolen a march will wind up being “Amazoned” as a result of this bold platform play. William Morris, associate CIO at the Cleveland Clinic, provided some sharp insight into the kind of thinking that is likely to determine “who Ubers who.”  

“In healthcare we have to change the model from ‘the doctor will see you now’ to ‘the patient will see you now’.” Digital relaxes the constraints within which every traditional value chain evolved, and gives everyone the tools to make a shift of similar magnitude from inside-out to outside-in.  

As we’ve said in cities across the U.S. in 2016 and will repeat in Sydney and London in early 2017, the operative question is: who will seize the opportunity?

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