Product Platform Strategy

• The discussion covers the intersection of strategy, corporate strategy, and product strategy.
• Two main generic strategies used by organizations:
  • Price-based: requires low-cost operational excellence.
  • Product differentiation: requires distinctive design, user interface, and product feature capabilities.
• McGrath's 2001 publication on segmentation and product strategy for high-tech companies is referenced
• Strategic vision is the starting point and dictates the kind of expansion needed, which is position-oriented.
• Competency-based or resource-based strategy relies on core competencies and innovation for design development.
• Strategic balance between these creates a platform strategy and product line strategy.

Product Platform Strategy

• Product platform strategy forms that basis of competitive, differentiation, and pricing strategies.
• Platform is an architecture of common elements implemented across a range of products.
• One element in the platform represents a defining technology that dictates life cycle, capabilities, and limitations.
• Choosing the defining technology is a critical strategic decision for high-tech companies.
• Using that element, alterations and additions can address different customer segments.
• Common elements are things like material used to manufacture gears for the food processing industry.
• Element C can be the fundamental element, with elements A and B added to create a range of products.
• Different combinations of elements can address different industries, like the pharmaceutical industry.
• A core from food processing industry can be used to supply to people who manufacture food processing machines, creating products 1, 1A, 1B, 1C.
• Additional properties can address the pharmaceutical industry.
• The concept is like stacking elements; a platform with added layers, like a jigsaw puzzle.
• This allows covering certain markets, similar to playing with blocks or Legos.
• Building blocks create marketing capability, segmentation, targeting, and positioning.
• Adding blocks increases market addressability and creates new marketing capabilities.
• Intel initially used microprocessors for hobby computers, later expanding.
• Microprocessors and basic architectural elements remained as the platform's foundation.
• Platforms determine machine capabilities, processes, competencies, and create faster microprocessors by stacking elements related to speed, safety, security, and memory.
• The needs of hobby computer enthusiasts evolved to address everyday people, with software development happening in parallel.
• Intel, Microsoft, and others created a basic platform of high-quality microchips.
• These microchips, enhanced with different additions, became more powerful, addressing home computing and various other computing needs.
• The processors are now used to create personal computers and even supercomputers for demanding tasks.
• This approach allows creating computers tailored for complex game players, graphic designers, and those in the publishing business.
• It also supports creating computers for visual image management, film editing, and other specialized tasks.
• Hardware and software combined work on a platform, allowing element combinations to create products for different market segments.
• Instead of a monolithic approach, modularity helps in product creation, a modular chair can have it's wheels, back and/or seating changed
• Modularity aligns well with the platform concept, leading to improved manufacturing and repair processes.
• Design for X (manufacturability, maintainability, reliability) is made possible by platform and modular strategies.

Benefits of Platform Strategy

• It focuses management on key decisions and simplifies strategy processes.
• Enables rapid and consistent product development.
• Encourages a long-term view of product strategy.
• Allows leveraging operational efficiencies:
  • Manufacturing costs
  • Design Costs
  • Marketing and support.
• This strategy allows rapid and consistent product development, as seen in computer motherboards with vacant spaces for chip insertion, making it easy to expand memory.
• The Apple platform, using Mac OS, Motorola processors, and easy-to-use GUI, is another example.
• Vacant space on a computer allows adding memory, demonstrating modularity and platform strategy.
• Platform strategy creates product portfolios like product 1 A, 1 B, 1 C, product 2, and product 5.
• Product portfolio uses product platform and modularity strategy.

Open Interfaces in Product Platforms

• Open interfaces allow other manufacturers to participate, giving the company a smaller portion of the market but making the market significantly bigger.
• A small piece of a big cake is better than a large portion of a small cake.
• Java by Sun Microsystems is an open product system that benefits Sun and allows for the creation of different products and software.
• Google Android and handset association: Google develops Android, adding features, expanding the appeal of smartphones.
• More handsets are used, increasing the use of Google Android and making it a dominant operating system.
• The high dominance achieved by Google Android and handset association allows them to approach requirements earlier fulfilled by laptops.
• These devices are replacing laptops, with smartphone and tablet sales rising due to Google Android.
• Open interface platforms enable powerful strategies and long-range product development.