All organizations face limits in resources, but the envelope of the possible can be drastically expanded by building on a powerful platform. The cost of development and manufacturing can be reduced (you do not need to re-invent the wheel), and an ecosystem can be developed with partners, customers, and collaborators who will drive adoption and innovation in a product.
Platform technologies are an abstraction of a technology or product that allows other systems, products and processes to be built on top of it. Platform technologies can be broken down into two types: external platforms and internal platforms. Internal platforms are very common, and exist as a way to reduce manufacturing costs. External platforms are customer and partner facing, allowing for ways to build value beyond the confines of the business. Said another way, platforms either shrink the pie [cost] or grow the pie [value], and in a duplicative turn of phrase, can both grow and shrink the pie simultaneously.
Examples of internal platforms include designs implemented to reduce the cost of several products built by a single company. Examples includes the VW vehicle chassis platform & Apples IPhone / IPod architecture.
VW’s vehicle chassis platform allows the company to use the same underlying components to build several models of car (think Passat, Jetta, etc) utilizing a fixed set of engines (1.4L, 2.0L, 2.4L etc), across several brand lines (VW, Seat, Audi). The result is reduced cost, reduced employee training, and higher quality products; at the same time the components and features that truly segment the products and customers can be tailored to drive value for the business.
If you take a look at the last few generations of Apple hand held devices, the IPhone and IPod specifically, you’ll notice a few things. A lot of the materials and components are the same, and they are arranged in the same way on the device. Functionally the phone has superior features, including the phone, a better camera, etc. There are also different levels of phone and ipod, typically with increasing levels of storage that further differentiate the products. Beyond sharing design techniques this has a lot to do with using a shared manufacturing platform to build different products with different price points.
Examples of external platforms include designs implemented to grow ecosystems around a product, and to layer on to the value of the products built by the initiating company. To use parallel examples, this includes Lotus’ coupe rolling chassis platform and of course the Apple iTunes.
Lotus is a very different animal in the automotive industry, and is well known for performance cars and race heritage. Since they do not have the same volumes of production that a company like VW, they have used their chassis platform a different way. Most recently they lent the platform for the Lotus Elise—a solidly designed two seater chassis born from the racetrack—to other manufacturers as what they called a “rolling chassis”, meaning it had the frame, suspension, wheels, but no engine, bodywork, or other accoutrements that define a vehicle. These products went out to GM, Citroen, and most notably Tesla for their roadster. The result was that manufacturers were able to layer on value to the underlying platform, and Lotus could leverage their investment in design to sell more vehicles than they could have by themselves.
The platform built by Apple using iTunes and the iPhone is another example of allowing others to leverage the strengths of a product to build new and unique products and services. This external platform has become a significant addition to the underlying hardware, and is often a point of differentiation with Apples competitors. Furthermore, the applications built on the Apple platform extend far beyond Apple’s core competency, and control, yet Apple is still able to monetize this by sharing a percentage of sales made through the Apple Store.
There is actually a third type of platform not discussed here, but it is related to both internal and external platforms, and is built by a consortium of customers and vendors. It is called a standard—it’s a way to take a set of products and technologies and build a common interface to allow greater value creation for the ecosystem as a whole. Common Standards include IEEE’s 802.11, which gives us the standard for using WIFI, another is the 36” racking standard which nearly every server in the world is physically sized to. Whether platforms are built to support the internals of a business, build layers of value above a business, or standardize an industry, it is clear that platforms are key to driving business value.