Michael A. Cusumano is a professor at MIT Sloan School of Management who has published 9 books and over 70 articles on management strategy and innovation. An industry platform provides a common foundation technology that can be reused across product variations. It requires complementary products and services from other firms to create value for users. Platform providers need to attract these complementors to join their ecosystem and help the platform grow through network effects that benefit both the platform and complementors. Winning platforms have a strong ecosystem backing their strategy rather than just the best technology.

2. Michael A. Cusumano
◦ Sloan Management Review Distinguished
Professor of Management, MIT Sloan School of Management
B.A. degree from Princeton in 1976
Ph.D. from Harvard in 1984
Postdoctoral fellowship in Production and Operations Management at
the Harvard Business School during 1984-86
◦ Published 9 books and more than 70 articles.
His latest book, Staying Power: Six Enduring Principles for Managing
Strategy & Innovation in an Uncertain World (2010, based on the
2009 Oxford Clarendon Lectures), was named one of the top
business books of 2011 by Strategy + Business magazine, with
translations into Japanese, Chinese, Korean, and Italian.
◦ Ref: http://web.mit.edu/cusumano

3. Platform” defined as a foundation product or key
technology in a system like the PC or a Web- enabled
cell phone.
It should have relatively open technical interfaces
Easy licensing terms
Encourage other firms to contribute complementary
products and services.
These external innovations create an ecosystem around
the platform.

4. Industry platform has two essential differentiation:
First:
Industry platform provides a common foundation or core technology
that a firm can reuse in different product variations.
Second:
The industry platform has relatively little value to users without
these complementary products or services e.g.
◦ Windows and Office for PC software are boxes without add on
products
◦ Smartphones without software tools and application / wireless
telephony or internet services is useless.
◦ Amazon, EBay for online buying and selling.

5. NEED OF COMPLEMENTORS:
The company that makes the platform is unlikely to
have the resources or capabilities to provide all the
useful applications to the end user to make
platform compelling for users.
It is necessary to open the technology to
competitors to build add on to the platform to
make it industry platform.
For that industry platform provider has to give
financial subsidy to complementors to join their
ecosystem.

6. Creation of Network effect:
Positive feedback loops that can grow at geometrically increasing
rates as adoption of the platform and the complements rise.
Direct Network effect: Technical compatibility / Interface
standard between
◦ Windows-Intel PC and Windows-based applications
◦ VHS or DVD players and media recorded according to those format.
Indirect Network effect: When application developers, content
producers adopt a particular platform that requires complements
to adopt a specific set of technical standards that define how to
use or connect to the platform.
◦ Windows-Intel PC as Platform provider and application development
services: eBay, Google, Amazon, and Facebook social networking etc.
as Complementor.
More external adopters in the ecosystem that create or use
complementary innovations, the more valuable the platform.

7. Standards are not platforms
They are rules or protocols specifying how to connect
components to a platform
How to connect different products and use them
together.
Examples of platforms incorporating specific
standards
◦ Telegraph, telephone, electricity, radio, television, video
recording and computer.

8. SWITCHING AND BUNDELING OF PRODUCT AS STRAGETY
Platforms companies are attracting users by offering many different
features for one low price.
They are making it difficult for user to move to different platform.
e.g.
◦ Telephonic companies offering voice, data and video service
PLATFORM COMPANIES MARKETING STRAGEGY:
They have more than one market side to them.
E.g. Micorsoft & Apple: Apart from users to their products, they also
attract software and hardware firms to build applications products
and peripheral devices, such as printers and Webcams compatible to
their standard.
Social media i.e Google, Microsoft, FB: Apart from competing for
users, also competes for third segment of the market i.e. advertisers
Companies that like to sell video have more complicated task to
attract not only end users, application developers, and advertisers,
but also producers of content as well as aggregators of other
people’s content

9. OTHER STRATEGY FOLLOWED BY PLATFORM COMPANIES (PRICING):
MICROSOFT & NETSCAPE: Provides browser as free but
charges for server.
Adobe: Provides Acrobat Reader free but charges for its
servers and editing tools.
Firms can give one part of the platform away to some users
(students or the general consumer) but charge others (corporate
users).
STRATEGY OF “OPEN, BUT NOT OPEN: Make access to the
interfaces easily available but keep critical parts of the technology
proprietary or very distinctive
E.g. Netscape Navigator: Special versions of programming
languages, and intranet and extranet combinations
Microsoft: Entire set of Windows technologies, including Office
and other applications are encrypted.

10. As long as there is room for companies to differentiate
their platform offering, and consumer can easily buy one
or more platform, then it is unlikely for one dominant
platform to emerge-unless the direct or indirect network
effects are overwhelmingly strong.
E.g. The gaming platforms (the consoles) Sony, Microsoft,
and Nintendo
◦ All consoles are different and user can afford to but more than
one console.
◦ They are subsidized by the makers (hope to make money from
software fees)
◦ Truly hit complements, (the games) often become available on all
three platforms
Winning and loosing is not defined by who has the best
technology or first product but the one who has the
best platform strategy and the best ecosystem to back it
up.