Article Analysis of “ How companies become platform leader” by Majid sharif

The article written by Annabelle Gawer and Michael A. Cusumano focused on the issue

Of “Are small or medium size companies can become a platform leader or it is only

option for large companies” and also highlighting the problems facing by different

companies in the process of becoming a platform leader.

“Ecosystem” of innovation can be formed by the working of platform leader with the

companies supply complementary product and service. The value of innovation can be

increase as more user working with platform. Number of companies fail to become a

platform leader by of inadequate strategies to handle both the technical and business

aspect of platform leader.

There is significant difference between product strategy choice and industry platform.

In product strategy choice the product is in the ownership of one company on the other

hand industry platform is not under the full control of originator mean it is partially

accessed by the originator. Sometimes manager do wrong decision either they go for

platform or product strategy and suffer lot of problems by business or industry condition

are different for both. Another common mistake that managers do, is overlooking

platform potentials for there product. It is not necessary that every product in a potential

to become a platform. If a product satisfy these two conditions… (1) it should perform at

least one essential function within what can be described as a System of use or solve an

essential technological problem within an industry (2) it should be easy to connect to or

to build upon to expand the system of use as well as to allow new and even unintended

end uses. They will be the platform potentials. But the problem is that how can we

evaluate these condition it is not very much difficult if the system cannot operate, then

the product does indeed perform an essential function and for second on external

companies have succeeded in developing complementary and interoperable products, or

at least have started to do so.

Companies purse platform strategies in new energy source, banks credit cards

companies and so on but this article is focusing on the issue of platform leadership in

information technology industries such as computing and telecommunications because

these industries not only have visible demarcations between platforms and complements

But also have strong “network effects” between the two, leading to clear interdepend-

-ences.

The two main strategies for becoming a platform leader are (1) coring (2) tipping

Both have been describe technological and business aspects. Coring means how to create

a new platform if no one existed before. Tipping is created market momentum to win

platform war.

The first technological aspect in coring is to solve an essential system problem. Like

Qualcomm solve a basic technical problem of the late 1980s and early 1990s

Incompatible and inefficient wireless cell phone technologies. Qualcomm invented the

code division multiple access technology, which breaks phone calls into small bits and

then reassembles them, much as the internet does with data packets.

The second aspect is to facilitate external companies by providing add-ons like

Qualcomm invested in chipset designs embedding its technology and made CDMA

widely available for licensing.

Third aspect is to keep intellectual property closed on the innards of your technology.

And in fourth aspect maintain strong interdependencies between platform and

complements.

The first business action is to solve an essential business problem for many industry

players like Google solved a fundamental problem, which was that it was not initially

Clear how companies could make money from using the internet. Second action is to

create a preserve complmentors’ incentives to contribute and innovate.third business

action is to protect your main source of revenue and profit and fourth and last action that

the business taken is to maintain high switching costs to competing platforms.

The technological action that for Tipping are, try to develop unique, compelling feature

that are hard to intimate and attract users like LINUX has subsequently evolved through

a formal and informal community of open-source programmers and users around the

world. Second on is tip across the market by absorbing and bundling technical features

form an adjacent market, like Microsoft by bundling a product for free that competitor

often offered for sale.

The business action are (1) provide more incentives for complementors than your

Competitors’ do (2) rally competitors to form a coalition (3) consider pricing or subsidy

mechanisms that attract user to the platform.

When battling to become a platform in a standard war, companies should try to gain

control over an installed base, broadly license their intellectual property and facilitate

partner investments in complementary innovation.

A company can be tipping by …..

Brand equity

Manufacturing, distribution & service

capabilities

Committed to developing in them selves in

large Quantities

Pricing

Tipping across market/platform

envelopment

For explain Problems with pricing there is no simple formula to tell managers how much

to subsidize one side of market over the other.

Some of the problems with Tipping are (1) tipping strategies dependent on narrow

technical standards are effective only as long as platform boundaries remain relatively

fixed and Predictable. Companies that dominate in one market may fail to maintain their

position when converging technologies create opportunities to extend other platforms.

(2) inner working to encourage the supply of complimentary innovations.

Conclude the article

Technological and business conditions of strategy does not depend on the size

of the company.some time size can be benefited for the company but not always but

becoming platform leader we must have compelling vision of the future as well as the

ability to create a vibrant ecosystem by evangelizing a business model that work both for

The platform leader wannabe and potential partner.