Another Perspective on Why Platforms Rule

Last month I wrote about innovation effectiveness with an overview from BIF's workshop with Larry Keeley. The gist: platforms rule when it comes creating high growth opportunities. If you accept that all the important stuff cuts across companies and markets, you should check out John Hagel's recent blog entry Unsafe Harbors for Viacom and Google. He talks about how opportunities for value creation in the media industry are shifting and "as content proliferates, the ability to help audiences connect with content that matters the most to them will become the real sweet spot."

Although Hagel's entry speaks to the media industry, it obviously has broader implications:

Products are designed to be used on a standalone basis – you buy it and you view it or listen to it in the specific way the content creator intended. Platforms are designed to be built upon – they create opportunities for the original creator, third parties or the customers themselves to extend, enhance and tailor the content in ways that the original creator never anticipated. Offered as a platform, content can create far more value than any equivalent standalone product.

Getting out of the battleground of product innovation requires as much of a change in mindset as it does a change in overall strategy. Keeley says new products are a distraction—“an overly emphasized, not-very-important basis for innovation.” But there are many other types of innovations, from changes to channels or brands or customer experience, to changes in processes or service systems or business models, are more likely to give you sustained advantage.

We just need to get smart around our sense of opportunities. John writes that media companies are "an unnatural bundle of three very different kinds of businesses – product innovation and commercialization businesses, customer relationship businesses and infrastructure management businesses." Platforms in general are an unnatural bundle. Nailing the relationships should be the first order of business.

Read John Hagel's blog (well worth the trip)

Related Links

• Learn about Larry Keeley's high-protocol approach to innovation
• Read Larry Keeley's recent article in BusinessWeek “The Greatest Innovations of All Time.”