Platform Leadership: Annabelle Gower and Michael Cusumano
A concept introduced by Annabelle Gower and Michael Cusumano. In the initial phase of many industries, the early movers tend to develop most of the components necessary to make the products. But later, specialized firms typically emerge to develop different components. Along with components, evolve platforms, which consist of various components made by different companies. Some companies become platform leaders. They ensure the integrity of the platform by working closely with other firms to create initial applications and then new generations of complementary products.

Platform leaders create interfaces to entice other firms to use them to build products that conform to the defined standards and therefore work efficiently with the platform. It is in the interest of a platform leader to stimulate innovation on complementary products. The more people who use these complements, the more incentives there are for producers of complements to introduce such products. This in turn motivates more people to buy or use the core product, stimulating more innovation, and so on.

Standards wars are an integral part of platform strategies. What matters is overall performance. The platform need not be superior to the competition in all product features. Neither was Windows, (particularly the early versions), technically superior to the Macintosh, nor were Matsushita’s VHS video recorders superior to Sony’s Betamax. But in each case, the network as a whole delivered more.

Defining the architecture of a system product is a powerful way to raise entry barriers for potential competitors. A potential competitor to Intel not only has to invent a microprocessor with a better price-performance ratio but also rally complementors and Original Equipment Manufacturers (OEMs) to adapt their designs to this component. This would obviously involve huge switching costs. Platform leaders must also be able to maintain architectural control over its platform, by making an ongoing assessment of their existing capabilities and the direction in which the industry or technology is evolving.

Platform leaders need to pursue at least two objectives simultaneously. First, they must try to obtain consensus among key complementors with regard to the technical specifications and standards that make their platforms work with other products. Second, they must control critical design decisions at other firms that affect how well the platform and complements continue to work together through new product generations.

A platform leader must play the role of industry enabler by encouraging innovations that improve the platform. The platform leader sometimes has to make decisions that might hurt some partners, even if they have been complementors in the past.

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