How Companies Become Platform Leaders. Technology strategy and management PDF

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How Companies Become Platform Leaders. Technology strategy and management...

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Platform and network effects 1. How Companies Become Platform Leaders 2. Technology strategy and management. The Evolution of Platform Thinking In the first article, authors discuss digital economy, business ecosystems formed based on platform technologies, which became objects of research in terms of strategic management. The ways of forming platforms leadership and possible strategies of high-tech companies are described. Based on the experience and success story of many platform leaders, the leadership position is achieved by companies that have managed to integrate the industry in a competitive environment based on a dominant design - a technological platform, product structure and production method, which are then adopted by the entire industry. In other words, the industry platform grows out of the company's internal platform. As a result, the company organizing the platform sets its own standards for the distribution and consumption of the product (formats, interfaces, protocols, etc.), which promote the interoperability of products and technologies. Company is able to get leadership platform status if was able to manage in a corresponding way the technology and business aspects of platform leadership. For “Platform-leader wannabes”, they suggest two strategic approaches: “coring” (taking a niche) and “tipping” (market momentum). Both of these strategies have technology actions and business actions to consider. In addition, authors stressing out the importance of choosing strategies whether it’s product or platform strategy both require different decision-making. Thus, Gawer and Cuzumano define similar criteria, noting product should solve essential problem of the system, whereas a platform should perform a function that is essential for a wider technological system; it also has to solve the problems of many industry market participants by encouraging external companies to join the platform. The prominent leader in the formation and widespread use of platforms is the software development industry, where the openness and ease of use of platforms by other market players (users, complimentary products and services suppliers) served as the key levers that have transformed the entire landscape of the industry. The second article complements and elaborates the subject of discussion of the first article. Primarily, by calming that the industry platforms' value insignificant for users without complementary products or services. In addition, author draw the reader's attention to the fact that platforms and standards are not the same thing. The crucial concepts like standards and technical compatibility, the occurrence of network, switching costs make distinctive influence on platform industries or products. Concluding author say that the winner is who has the best platform development plan and ecosystem to support it. Discussing the best strategies in a way of becoming platform leader the both articles did not mentioned the industry risks and drawbacks of this position if we are talking about strategic management: 1. Uncertainty and risk. The risk factors characteristic of the technology field include high uncertainty about the prospects of development. 2. Market position of the platforms firmly ties the company to existing customers, products and business models, and this creates additional difficulties in changing the product and developing platform technology even if there is a risk of being outdated. In general, the combination of physical and digital resources of the company will lead to the emergence of new forms of business organization based on platforms and business ecosystems. This will transform many types of activities, create new value for consumers and change the

strategy of competition. Of course, digital transformation creates new opportunities for interaction for all participants, but at the other hand, the question of digital security is acute, as well as the fact of threatening traditional businesses (services of Uber, Airbnb and others) and single platform is capable to leave jobless thousands of people. In terms of business positioning we cannot deny there are many advantages to a market player who takes the position of a leader platform, which is much more resilient to competitive pressures than single product manufacturers, because supported by global “complementator” ecosystems and strong network effect....