Innovation and transaction platforms have enabled nearly every type of exchange and activity imaginable in today’s world, earning some of the companies that own them valuations in excess of $1 trillion. But while successful platforms yield a powerful competitive advantage with financial results to match, the nature of platforms is changing, as are the ecosystems and technologies that drive them and the challenges and rules associated with managing them.

This is an MIT Sloan Management Review article. An industry platform involves not only one company's technology or service but also an ecosystem of complements to it that are usually produced by a variety of businesses. As a result, becoming a platform leader requires different business and technology strategies than those needed to launch a successful stand-alone product. Companies should decide early on whether they want to pursue a platform or a product strategy. The authors describe two fundamental approaches to building platform leadership, which they call "coring" and "tipping." "Coring" is using a set of techniques to create a platform by making a technology "core" to a particular technological system and market. When pursuing a coring strategy, would-be platform leaders should think about issues such as how to make it easy for third parties to provide add-ons to the technology and how to encourage third-party companies to create complementary innovations. Examples of successful coring include Google Inc. in Internet search and Qualcomm Inc. in wireless technology. However, the authors note, Qualcomm faces opposition from some companies in its business ecosystem. The authors cite EMC Corp.'s WideSky initiative in the early 2000s as an attempt at coring that did not succeed. EMC's competitors were not eager to adopt WideSky as a platform and instead supported an open-standards one managed through an industry group. "Tipping" is the set of activities that helps a company "tip" a market toward its platform rather than some other potential one. Examples of tipping include Linux's growth in the market for Web server operating systems; the Linux case study, the authors point out, demonstrates the power of a coalition of service providers and users to tip a market by supporting a particular platform. Another tipping strategy is for a company to bundle features from an adjacent market into its existing platform; the authors call this "tipping across markets."

This is an MIT Sloan Management Review article. 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, and their decisions, that have the most influence over the innovations that complementary producers create--and the future of the industry.

This is an MIT Sloan Management Review article. To grow steadily and avoid stagnation, a company must learn how to scale up and extend its business, lengthen its expansion phase, and accumulate and apply new knowledge to products and markets faster than competitors. Managers can't leave growth to chance. They need a plan that renders consistent sales growth over the long term--one that captures management's vision for expansion and that addresses the product and market combinations the company intends to pursue, the size it hopes to achieve in a particular time frame, and the know-how and organizational structures needed. Three thriving companies demonstrate three different strategies in action. The Netscape experience shows how a company can scale up--do more of what it already does well. Netscape went from $80 million in sales in 1995 to $500 million just three years later. IKEA used duplication by repeating the business model in new regions. According to the authors, IKEA's success is tied to the way it manages and transfers knowledge. SAP's growth strategy is an example of granulation--growing select business units. SAP started with a basic enterprise-resource-planning system, then moved to multiple products for e-commerce and Internet activities. Using one product as a platform, it began allowing customers to fine-tune virtually any resource-planning system. The authors emphasize the importance of combining strategies for growth with explicit strategies for learning. Companies must decide what kind of growth strategy they want to pursue, given their capabilities and market opportunities. They must then make the strategy work by changing their structure and processes in a way that lets them acquire or create specific knowledge about new technologies, customers, and industries.

Competition on the Internet is creating fierce battles between industry giants and small-scale start-ups. Smart start-ups can avoid those conflicts by moving quickly to uncontested ground and, when that's no longer possible, turning dominant players' strengths against them. Authors David Yoffie from HBS and Michael Cusumano from MIT call this competitive approach judo strategy. They use the Netscape-Microsoft battles to illustrate the three main principles of judo strategy: rapid movement, flexibility, and leverage. In the early part of the browser wars, for instance, Netscape applied the principle of rapid movement by being the first company to offer a free stand-alone browser. This allowed Netscape to build market share fast and to set the market standard. Flexibility became a critical factor later in the browser wars. In December 1995, when Microsoft announced that it would "embrace and extend" competitors' Internet successes, Netscape failed to give way in the face of superior strength. Instead it squared off against Microsoft and even turned down numerous opportunities to craft deep partnerships with other companies. The result was that Netscape lost deal after deal when competing with Microsoft for common distribution channels. Netscape applied the principle of leverage by using Microsoft's strengths against it. Taking advantage of Microsoft's determination to convert the world to Windows or Windows NT, Netscape made its software compatible with existing UNIX systems. While it is true that these principles can't replace basic execution, say the authors, without speed, flexibility, and leverage, very few companies can compete successfully on Internet time.

Examines a significant example of "technological pioneering"--the development of an emerging technology in pursuit of future commercial opportunity. In this case, the pioneer's efforts resulted in the birth of a major industry, the manufacture of videocassette recorders for the mass consumer market. The authors compare the actions of six firms that were pioneers in the development of this technology, two in the United States and four in Japan. Three firms, all Japanese, emerged in the late 1970s as the big winners in the growth of this new industry. However, this is not another case in which international differences in "competitiveness" were decisive. The real success story lies in the management practices of three pioneers, who just happened to be Japanese.