Thursday, June 5, 2008

Platform strategies: the academic view

Tuesday night I got back from a quick trip to London, which meant a lot of time in planes and five nights arguing with my body (mostly losing) about when (and when not) to go to sleep.

The reason I got on the plane (other than I could) was for a conference at Imperial College called “Platforms, Markets and Innovation.” The conference was organized by Annabelle Gawer, a lecturer at the Tanaka Business School. For us yanks, TBS dean David Begg noted Imperial’s role as England’s leading school of technology: 50% medical school (largest in Europe), 25% engineering, 20% science and 4% business.

Annabelle has spent the last decade studying the business of platform management, which was the topic of her 2000 dissertation at MIT which became a 2002 book from HBS Publishing.

I’ll admit I was a little slow to warm to Annabelle’s conception of the platform. But after reading her excellent 2007 article on Intel’s platform strategies (with Rebecca Henderson), I blame it on HBSP. Their formula for selling managerial books encourages (nay, requires) overclaiming and broad assertions that the book solves all the world’s problems — past, present and future. (For example, Clay Christensen’s excellent 1997 book suffers from this problem.) Meanwhile, academic papers (through the peer review process) tend to be more modest about claims that can be directly supported by the evidence, at least until you get to the part marked “implications.”

Annabelle and I are among the few people who’ve focused our academic energies on IT industry platform competition. We both build upon the masterful 1999 paper by my friend Shane Greenstein (and his former dissertation advisor Tim Bresnahan) which explains the success of computer platform strategies from 1965 to 1995. My own 2000 paper (with Jason Dedrick) on PC platforms emphasizes the role of technical control of a platform, while my most cited work (a 2003 paper on open source) is one of the first first academic papers on open platform strategies. (A 1993 paper on Sun Microsystems by Raghu Garud is about open platforms but doesn’t call it that). But in comparing myself to Annabelle, she is has clearly devoted her full energies to platforms over the past 8 years, while I’ve also been doing research on open source and open innovation.

Monday’s conference brought together the best platform strategy researchers in the world, including a lot of jet-lagged Americans as well as an equal number of European researchers. The goal was to air and discuss chapters from Annabelle’s forthcoming edited volume called (surprise!) Platforms, Markets and Innovation.

From a 15 minute PPT deck, it’s not always possible to understand the heart of an intellectual argument. Also, I can’t really capture in a 750-word blog posting 12 papers presented over a six hour period.

Instead, let me highlight those papers that offered new insights for my own work on platform strategies:

  • Annabelle’s introduction to the conference and the book presents her latest refinement of what platforms are and are not. (Unlike some theorists, she is going to great lengths to drawn boundaries.) Her current interest is in studying the link between platform design (and strategy) to industrial platform dynamics.
  • Jason Woodard of Singapore Management U. (with his advisor Carliss Baldwin of HBS), who presented very intriguing work to define a more precise way to represent platform architectural relationships — and to use that to predict which parts of the platform will have competition and which parts won’t.
  • A mathematical model by Geoff Parker and Marshall Van Alstyne about third parties adding value on top of the platform — and when should that layer be subsumed into the operating system to provide a building block to others. (E.g., OS X bundling a database, Windows bundling a browser).
Of great personal interest to me was the paper by Shane Greenstein on openness in the Internet. This is picking up a thread of a conversation between us going back to 2004, when he invited me to present a paper at his conference on standards policy. That conference paper became a chapter in his 2006 book with Vic Stango — probably my favorite book chapter of the 11 I’ve authored thus far. (The 2006 chapter on open standards and the 2003 paper on open source strategies are the two pillars of my research on open IT strategies).

In his presentation Monday, Shane contrasted the two great incipient platforms of 1995 and asked whether openness mattered. His conclusion was that openness made no difference to large business vendors (the IBM and MCIs of the world) who would have participated in a closed Internet, but it did keep IETF volunteers active and energized. On the negative side, since the platform isn’t owned, there’s no obvious leader to orchestrate a rollout (as with the August 1995 “start me up” celebration). I am hoping that in the final version will bring out the contrast between IETF and W3C, since both fit most definitions of openness but corporations were much more prominent in W3C.

As I said, this brief summary is not enough to capture the intellectual heft of the arguments: buy the book! As someone who did a 2000 dissertation on standards competition, I thought the field was going to fade away. But Greenstein is continuing the work in economics, while Gawer, Baldwin and Woodard (among others) are developing new insights with platforms. Meanwhile, even “two-sided markets” are telling us things we didn’t know before about standards and platforms.

The session concluded with an industry-academic panel discussion of platform strategies. More on this later.

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