In their new book, Platform Leadership, Annabelle Gawer and Michael Cusumano offer an interesting exploration of ways in which high-tech firms such as Microsoft, Cisco, and Intel have established commanding positions in software, Internet switching, and chip-based technologies, respectively. They have developed and manage so-called "platforms" on which many innovations created by many entrepreneurs can be based. By successfully facing issues such as scope (the degree to which a "platform leader" creates and develops product complements internally vs. the degree to which it encourages others to do it), modularity and openness (determining the ease with which outside complementors can "hitch their wagons" to the platform), balance (between competition and collaboration with producers of complementary products), and organization (to manage internal and external conflicts of interest most effectively), these organizations have taken different paths to build competitive positions that are hard for others to attack.
They can force suppliers, consumers, competitors, and complementors to bend to their will in the hope of obtaining profit or value. |
James Heskett |
Of course, one can argue that this is what the highway system of the U.S. (or any country, for that matter) is all about. Or at a more micro level, it is what General Motors, Ford, and others created when they built a system of complementors based on the platform of the internal combustion engine. They decided what they would create and produce themselves and what they would encourage others to develop. This then determined the extent to which they had to disclose confidential specifications describing their platforms and design the platforms with sufficient modularity to allow makers of component parts to design complementary products that fitted together.
Successful platform leaders exert a great deal of influence. At times, they must build trust among those that choose to utilize the platform as partners. At other times, they may choose to compete with the very partners they may have courted earlier, but at the risk of destroying future trust in search of immediate "in-house" profit. They can force suppliers, consumers, competitors, and complementors to bend to their will in the hope of obtaining profit or value. In doing this, they walk a fine line which, if crossed, can land them in the courts, as Microsoft learned.
The concept of platform leadership raises a variety of questions. First, is it really new or has it just taken on increasing complexity and importance in the high-tech era? Second, how broadly can platform leadership principles be applied? For example, is a comprehensive brand a platform? Or are high-tech platforms of a more pervasive order, essentially influencing the way millions of people do business and lead their personal lives on a global basis? If so, what is the likely process (free market, regulation, or other) by which authority and limits will be imposed on leaders of global platforms who mismanage relationships with complementors and competitors? What do you think?
· · · ·
Annabelle Gawer and Michael A. Cusumano, Platform Leadership: How Intel, Microsoft, and Cisco Drive Industry Innovation (Boston: HBS Press, 2002).
Also see John P. Morgridge and James L. Heskett, "Cisco Systems: Are You Ready? (A)," Case No. 9-901-003 (Boston: HBS Publishing, 2000) for an in-depth example of a typical platform leadership issue.
For a recent example of the use of a brand, Crest, as a platform for a related product (in this case the SpinBrush) requiring significant changes in P&G's strategy and organization, see Robert Berner, "Why P&G's Smile is So Bright," Business Week, August 12, 2002, pp. 58-60.