A Winning Growth Strategy: Platform Thinking
The Platypus is one of the world’s most amazing creatures, with an almost impossible combination of mammal, reptile and bird DNA and features – what other amphibious, furry animal is capable of electro-detection, poisonous stinging, laying eggs, and waddling like a duck?
Platypus means “Flat Foot”. The Platypus is nature’s Plug & Play, a prime example of Platform or “Flat Form” thinking when attempting breakthrough innovation. It is hard to provide a precise definition of Platform thinking – it has both figurative and literal meanings. For breakthrough innovation, it may help to think about Platforms in the following ways, which are not necessarily mutually exclusive:
- Product Architecture (Modular Design)
- New Business Launch Pads (Growth Platforms or ‘Franchises’)
- Industry Platforms (Essential, Ecosystem Dependent Networks)
A platform based product architecture is a straight-forward concept that leverages the power of commonality to create a wide and diverse set of end offerings. The auto industry has adopted ‘platform’ thinking as the basis of its product design (for economies of scale in not only purchasing but also in production).
New Business launch pads take advantage not only in base components but also in other company capabilities, brands and assets that can be leveraged in new offerings and markets. Initially rejected by many publishers, the “Chicken Soup for the Soul” is one of the most successful franchises in the history of publishing, now with over 70 derivate titles (“Chicken Soup for the Teenage Soul”, etc.), 80 million in print in the US alone, and now it also includes diaries, calendars, seminars, and even toys and games (no actual chicken soup, strangely enough) – to boot, most content is now contributed by the readers. Growth Platforms or ‘Franchises’ can include products, services and businesses – It’s interesting to note that in the beginning, some of these growth platforms start out as single products – but successful companies have the opportunistic, ‘Platform Thinking’ mindset as the single product develops. “Oh, that’s why we see so many movie sequels and prequels and I’ve personally spent over $500 in toy cars from the movie Cars alone? There it is! Walt Disney was a genius.
Especially relevant to technology companies are the Industry Platforms – companies must choose their basic strategy of being a platform provider (and/or sponsor) or a component or complement player (or both, or hybrid in some cases). To be considered an industry platform, it has to be essential to the system for which it pertains (Processor & OS are essential to the PC, etc.) and it also has to allow others to connect to and build upon it (Supported by an ecosystem, aka a mediated network). Examples of industry platforms, including multi-sided platform mediated networks include Windows, Qualcomm’s MSM, American Express, Xbox, and HULU. In the case of HULU, it’s a three-sided network serving three major nodes (Users, Advertisers, and Content Providers).
Why should anyone envy the position of having an industry platform vs. a single product? – MUCH better odds of having a sustainable competitive advantage or ‘lock-out’ position. Industry platforms are a beautiful thing – they benefit from network externalities and high switching costs (value to any single user increases as number of users increase) and thus users and complement providers help build your business without being on the payroll! Well, you do have to provide incentives for complement providers and that is always a tough balancing act with your own profit goals. Most challenging perhaps is having to coordinate your pace of innovation with the other ‘less visionary’ players in the ecosystem (Qualcomm’s and Intel’s particular challenge, for example?).
Qualcomm as a platform case study: There are many reasons for Qualcomm’s success to date, number one being leadership – but Platform Thinking in focused bold concepts is right up there – CDMA (and OFDMA) is the platform gift that keeps on giving new growth platforms (QCT (MSM), QTL (Licensing & Royalties)). And Qualcomm will continue to see new platforms built on previous platforms, that will take them to new device categories and likely beyond mobile…dare I say beyond wireless: SnapDragon, Gobi, Mirasol, licensing as a business, low-power processors for tethered machines, etc.
So as you work through your startup or internal innovation ideas, remember the goal is to pitch a “Breakthrough” – hard to define a breakthrough, but these modes of thinking outlined in this silly blog may help in guiding you:
- Think Big – Have a clear innovation focus or intent (Go after a big problem; reframe the next source of industry focus (e.g. for Starbucks, it isn’t about selling a commodity, coffee, it’s about providing the best 20 minutes of a person’s day))
- Think Market Innovation – Innovation isn’t just in the offering or product, but should also include business model, make or buy processes and go-to-market and branding aspects (Market Innovation = Feasible, Desirable, and Viable offerings, e.g. Google, iPod/iTunes).
- And lastly, Think Platform – Pursue a Platform Innovation Strategy (Whether you start with a platform offering or a single product, think through the various elements of Platform Thinking that will provide longevity and sustaining competitive advantage (e.g. Windows is the most profitable franchise in history – and it’s full of flaws!)
Memo to SeaWorld: Time to give killer whales a rest – bring in a Platypus! (nevermind, it’s probably illegal)
Reblogged this on Necrophone and commented:
A smart way to think about continuous growth – Platform thinking
Reblogged this on Helder J. Sebastiao, PhD.