“Design decisions affect the organization of production, and modular designs provide the means for people to divide up the work in tasks or groups of task that are relatively independent of each other. Modularity in product design has a powerful impact on innovation: Innovation can happen on modules of the product without having to impact the overall system.”
The building a Platform is a cooperative effort with financial incentives associated with wealth sharing that are compelling. “The ability for an increased number of actors to innovate separately on different modules of systems is radically altering the nature and stability of relationships between firms that make core products and the developers of complementary products.” For example, IBM platform of hardware and software was most internally development. When the PC Junior was introduced with the DOS operating system, external parties clone the hardware and DOS, not being contractual obligated to a hardware platform flourished. Intel’s vision of a chipset, bus, usb, and graphic accelerator architecture provided the platform for thousands of software applications the leverage the benefits of standardization interfaces with hardware, sdks, and component reuse. A platform leader can benefit and maybe highly dependant on innovations developed at other firms. “No single company can replicate all the innovative capabilities of the market.” “As a result, nearly all the platform leader we observed have had to work closely with other firms to create initial applications and then new generations of complementary products.” Cooperation means getting a bigger piece of pie. Industries that center their business on platform products receive an increase in value of the platform as more incentives increase for complimentary products and this stimulates more people to buy or use the core product.
Scope of the firm: This lever deals with what the firm does internally and externally to produce complimentary components.
Product technology: Decisions regarding the architecture of the product and vision of the broader platform; decisions about modularity and the degree of openness of the interface, and how much information about the platform and its interfaces to disclose to outside firms.
Relationship with external complementors: The lever centers on determining how collaborative versus competitive should be the relationship be. Platform leaders need to be considered about gaining consensus with their partners and how to deal with potential conflicts of interest. “Decisions on the architecture or design of the product and on how to treat intellectual property tend to have a major impact on the incentives and ability of external firms to innovate”.
Internal organization: The issue of culture and process is at issue. There needs to exist an internal atmosphere that encourage debate and accelerates the strategy reformulations that may become necessary.
Platforms discussed: Intel, Microsoft, Cisco, Palm, Linux, NTT, and DoCoMo.