In the ever-expanding global market, it is important for companies to examine the interconnected business market and explore platforms. These are coalitions that form in the business world that can help facilitate greater innovation within the business market or within an industry. Platforms can help business owners and managers identify complementary markets and develop their corporate strategy. Platform leaders are “companies that drive industrywide innovation for an evolving system of separately developed pieces of technology” (Cusumano & Gawer, 2002). This essentially means that platforms emerge within the business world, and leaders emerge within these platforms, which help drive groups of firms that are able to innovate using technology that congregates around a particular platform. Platforms essential are building blocks that help motivate other firms to invest in a firm, and innovate or provide additional products or services that enhance on a platform. These add-on firms or firms that want to provide additional products and services to an existing interconnected conglomerate platform are known as complementors.
Cusumano & Gawer (2002) in their article for MITSloan define complementors as “companies that make ancillary products to expand the platform’s market.” This helps put a firm in the top competitive position within the marketplace. It is critical for a platform leader to understand what is necessary to coordinate the various roles of platform management to help firms interact effectively within this network.
Micro Soft and Intel first worked by providing ancillary services, thus acting as complementors. Intel provided the microprocessor chip, a core hardware component for the personal computer. However, the microprocessor itself is useless; it is a part of the whole or a piece of a much larger platform. Intel was providing the engine for the PC much like a car requires an engine to function. So, on the one hand, Intel operates as a complementor providing a valuable ancillary product; however the add-on is so vital to the PC that without this add-on the PC could not operate. Thus, Intel also operates as a platform leader because its product is a critical component, and they have much influence over the architecture of the entire PC. How the microprocessor functions has a lot of power over the entire functioning and architecture of other components within a PC. Microsoft functions in the same manner.
Platform leaders may face three primary problems. These include maintaining compatibility with add-on or ancillary products, (2) developing methods that allow products to innovate, so they do not become obsolete, and (3) maintaining leadership within their industry (Cusumano & Gawer, 2002). There are four methods to overcome these problems as defined by levels of platform leadership. These include (1) Scope, which allows leadership to weight whether it is better to allow the market to product ancillary products or to allow leaders to develop them in house. Next, product technology which allows platform leaders to make decisions about whether a platform can become broader, or whether a platform should remain minimal in architecture. Following this, a manager has to determine if they want relationships between producers and the ancillary products or complementors to remain competitive or collaborative in nature so conflicts of interest may be determined (Cusumano & Gawer, 2002).
Lastly, managers must determine whether the company cultures allows managers to negotiate internal and external conflict of interest. Groups with similar interest can work on similar goals or be kept in distinct departments to help mitigate conflicts that may prevent the organizational mission from being deflected; this will help promote greater innovation within the company, and improve communication within the organization of goals, expectations and the corporate strategy (Cusumano & Gawer, 2002).
- Cusumano, M.A. & Gawer, A. (2002). The Elements of Platform Leadership. MITSloan
Management Review. Retrieved from: http://sloanreview.mit.edu/article/the-elements-of-platform-leadership/