In today’s business world, no company is an island. Straightforward supply chains of yesterday have given way to interconnected industry ecosystems. To compete and win in these ecosystems, firms need to learn new strategies.
A novel industrial phenomenon is happening. At the heart of these ecosystems, “industry platforms” have emerged, or are in the process of emerging. Platforms are industry “building blocks” which attract other firms’ investment and innovation on add-on products or services. In many hi-tech industries, platform leaders have already emerged, driving coalitions of firms who innovate around a platform, and have achieved unprecedented degrees of influence over competitors, complementors, and customers – and have shaped the evolution of their industry. Successful platform leaders such as Google, Intel, Microsoft, or Nokia have managed to create value for many firms within their ecosystem, while making unprecedented levels of profit.
The emergence of platforms poses difficult strategic questions for business leaders and managers. Platforms haven’t yet emerged in every industry. How can business leaders anticipate whether their industry could be subject to platform dynamics? Under which conditions would the emergence of platforms be a threat to existing firms? How can business leaders and managers anticipate and prepare themselves to take advantage of the opportunities created by platforms?
Dr. Gawer’s pioneering research on platform leadership, conducted and refined over more than 10 years, has tackled these questions. Through research, complemented by her activity in consulting and executive education engagements in a variety of industries, Dr. Gawer has developed unique and practical insights on the formulation and implementation of platform leadership strategies.
Formulating platform strategies requires firms to explore, concretely, whether and how firms can transform their product, technology, or service, into a platform. How can business leaders, managers, or engineers, know whether their technology, product, or service, has got platform potential? A recent article, How Companies Become Platform Leaders, answers this question and presents two fundamental approaches to building platform leadership, called "coring" and "tipping”. "Coring" is using a set of techniques to create a platform by making a technology "core" to a particular technological system and market. "Tipping" is the set of activities that helps a company "tip" a market toward its platform rather than some other potential one.
While the archetypical examples of platforms are multinational powerhouses, it would be a mistake to believe that platform strategies are only feasible for large firms. There are many examples of smaller firms who have achieved platform leadership. While small firms may face resource constraints, they can successfully provide an inspiring vision and a workable architecture of business arrangements for a coalition of industry players. Small firms can provide visionary leadership, successfully rally a coalition of other firms, and orchestrate industry innovation. It can be hard to convince others to follow a particular direction, for example when an industry is undergoing transition and its contours are ill-defined. But these are precisely the junctions when companies that want to become platform leaders can stand out – precisely because they are so badly needed.
Implementing platform strategies require a coherent implementation of what Gawer and Cusumano call the Four Levers of Platform Leadership :
- (1) Scope of the Firm,
- (2) Technology Choices,
- (3) Relationships with External Firms, and
- (4) Internal Organization and Processes.
The article « The Elements of Platform Leadership », presents how to use The Four Levers framework.
A fuller expostions of these ideas can be found in the book PLATFORM LEADERSHIP, derived from Dr. Gawer’s original work as her PhD thesis at MIT.
VIEW PLATFORM LEADERSHIP ON GOOGLE BOOKS
How Companies Become Platform Leaders
The Elements of Platform Leadership
View Platform Leadership on Google Books