The Elements of Platform Leadership

Nowhere is the growing interconnectedness of business more clear than in the information-technology industry, where the success of any one company’s innovation is dependent on the activities of a complex web of partners. Michael Cusumano of the Sloan School and Annabelle Gawer of INSEAD offer a new framework for understanding what is going on and how to orchestrate the interactions.

Building on their in-depth research at Intel, a company that excels in shaping its environment, the authors show how organizations can maximize innovation. First, they say, companies must decide if they are platform leaders (companies that drive industrywide innovation for an evolving system of separately developed pieces), wannabes (companies that want to be platform leaders) or complementors (companies that make ancillary products that expand the platform’s market).

Managers have two major challenges: coordinating internal units that play one or more of those roles and interacting effectively with outsiders playing the same roles at different times. The authors delineate four levers of platform leadership (including productive ways to work with complementors and techniques for building a supportive internal organization) and offer practical advice to complementors as well. They provide guidelines on when to show your cards to competitors and when to hold them.

As the experiences of Intel, Microsoft, Cisco, NTT DoCoMo and others demonstrate, platform leaders need to have a vision that extends beyond their current business operations and the technical specifications of one product or one component. Complementors have an important role, but it is the platform leaders, with the decisions they make, that have the most influence over the innovations that complementary producers create — and the future of the industry.