Ar tic le Anal ysis of “ Ho w companies

become pla tf or m 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.