10
Technologie und Innovationsmanagement (Subject) / Innovation platforms (Lesson)
- Platform and complements Platform: -> Low variety-> Low rate of change-> Is essential Complements: -> High variety-> High rate of change-> are not essential
- Complements can be... ...people (Dating service = platform) ...businesses (A shopping mall = platform) ...hardware and software (for a computer = platform) ...user pages (facebook = platform)
- What is a product architecture The assignment (Zuordnung) of the functional elements of a product to the physical building blocks of the product -> there is a functional structure, which consists of the main function, which however consists of a few subfunctions -> there is also a product structure, which consists of the main product, which however consists of a few components -> the main function is directly related to the main product, while the subfunctions are directly related to the components -> the product and functional structure as one is also called the product architecture
- Integral vs. Modular product architecture Modular product architecture: -> Every function is associated with a component and interaction between component is limited. Components are easily detached from each other. Integral product architecture: -> Complex relationships between functions and physical components. Very closely coupled interfaces/little detachment possible
- Modular systems - benefits of modularity - reduces cognitive complexity - lowers transaction costs at module boundaries - enables parallel work - decentralized control and governance
- Why platforms make economic sense - platform system is evolvable, it can be adapted at low cost without losing its identity - Economies of scale - amortization of fixed costs - more efficient use of complementary assets - lower cost of adaption and innovation across time - lower cost of creating variety at one point in time
- closed vs. open platforms closed platforms: -> no external actors can modify or build complements to the platform wwithout the consent of the platform owner -> examples: XBOX, Playstation; game developers need approval of the consolers developer before distributing their game open platform in the broad sense: -> one or both sides of the market are free to create customizations and complements -> examples: open for platform users or for platform complementors (Windows, nobody has to ask Microsoft before distributing Windows software) open platform in the narrow sense: -> access to the platform itself due to free revealing of platform design information -> examples: open for platform suppliers to use and co-develop
- What is one of the most attractive ways to create a platform? Control the platform and open up the complements (everybody can distribute complements). -> Benefit from the flood of complements created by others -> high rates of improvement -> high demand for variety/customization -> and still maintain monopoly control of an essential component => Platform owners can capture most of the value created, while doing very little of the work
- network effects direct network effects: -> the higher the number of platform customers, the higher its utility to additional customers indirect network effects: ->a higher number of buyers attracts more sellers to the platforms, which in turns attracts more buyers etc. BUT "chicken-egg-problem": how to get positive feedback loops started? => platforms may benefit from both
- why are markets often dominated by a few large platforms? 1. Network effects ---> 2. increasing returns to scale (users will pay more for access to a larger network; margins improve as user base grows) ---> 3. platform leaders have deeper pockets (can invest more in R&D or lower prices; thus drive out weaker rivals ---> 4. Concentration (markets are often dominated by a few large platforms)
Advertisement