Platform Innovation: Watch Your Step!

There are few things more seductive to a tech-sector management team than the thought of becoming the next industry-enabling platform.  Virtually every major corporation has a platform strategy, not to mention an equally elaborate set of plans to prevent any other vendor from achieving platform status.  All in all it makes for complicated navigation, both outside and inside the enterprise.

To clarify matters, understand that platform innovation takes on very different properties depending on which of the following three goals you have in mind:

1. Productivity.  This is the most basic domain of platform innovation—platforming your own product line.  Companies which have grown through acquisition or through independent business units operating in silos discover, upon reaching market maturity, they have massive duplication of efforts because they are supporting a wide array of product platforms.  To address this issue they undertake an architecture rationalization effort to migrate toward a common platform.  The goal is to improve their internal productivity and eventually reduce cycle time and time to market.

2. Whole Product.  This is an intermediate domain for platform innovation, where the goal is to build out an ecosystem of partners who will add their efforts to yours to flesh out solutions for target markets.  Hardware vendors seek out system software vendors to this end, system software vendors seek out ISVs, ISVs seek out systems integrators and VARs.  The typical focus of these efforts is on recruiting a large number of partners, which is almost never a good idea.  Rather the focus should be on quality not quantity, making sure you actually make an market for the best type of partner, and providing tools and support to enable them to use your platform productively.

3. De Facto Standard.  This is the dream state, in which your technology becomes a critical enabler of a whole class of applications.  In a book called The Gorilla Game, we identified the critical success factor here as having proprietary control over an open architecture.  This only seems like a contradiction in terms, for the word open here simply refers to the ability of any third party to avail itself of the platform’s services.  (Compare in this context, for example, Windows’s open platform with Xbox’s closed platform.)

As you can see, each stage of platform evolution implies securing the prior stage or stages.  Most importantly, however, Stage 3, becoming the de facto standard, can never be reached directly.  That is, if you announce that you are offering a proprietary technology to serve as a de facto standard in some open architecture, you may be assured that every other member of the ecosystem will resist your efforts to the death.  No one wants to create one more platform vendor to whom they must pay monopoly rents. 

Therefore, the only way a new platform can emerge is indirectly, first by achieving ubiquity as a product or as a component in someone else’s product, and only after having achieved ubiquity, converting to a proprietary platform.  How can anyone still fall for the old Trojan Horse trick?  I can’t answer that—ask the guys at Google.

Comments

[Antti Vanhanen]

Hi Geoff,

as usual, a very interesting post. I can easily see how it applies to firms such as Apple or Microsoft, but what about a firm such as Nokia?

Obviously, they have a platform strategy with Symbian OS, but I am curious how you see the infinite number of other technologies fit into your model. They seem to be willing to embrace practically all new technologies, most likely to make sure they always betting on a winning horse.

Thanks, always enjoy you posts.

[Tom]

Ask the guys at Google how they fell for it? I don't think that's what you mean. So I take it you mean ask the guys at Google how they got others to fall for it. Which begs the question: What proprietary open architecture platform are saying Google has? Adsense/Adwords in conjunction with Google search?

What?

Thanks

Tom

[Saul Kaplan]

Instead of platform innovation how about a platform for innovation. A real world laboratory to explore and test new business models. The imperative for any innovator is R&D for new networked business models. We are turning Rhode Island, the smallest state in the country, into a real world test-bed. We call the strategy innovation @ scale and have launched the non profit Business Innovation Factory to enable collaborative innovation in our unique statewide ecosystem.