This posting by Bob Wyman is most excellent, do read it.
Platforms, it is often argued, create innovation. They do that by creating large option spaces where third parties can bring their domain knowledge to bear. It’s an efficient way to structure the search because domain knowledge is sticky, otherwise the platform vendor would do the search in-house. The value created is then split between the platform vendor, the developer, and the end user who get’s his problem solved.
Developers select platforms for numerous reasons. Developers, for example, switched their attentions from Microsoft toward the LAMP stack for lots of reasons. Including the fresh option space the LAMP stack created, the impression that the value split around the LAMP stack would leave more on the table for them, and the discovery that Microsoft (“cut off their air supply”) couldn’t be trusted.
Much innovation that happens on top of a platform is too fine grain to be converted into value for the innovator beyond the intrinsic pleasures of inventing, having fun, and the extrinsic pleasure of solving the problem at hand. For all of those the platform(s) involved can roll up the innovations into to the greater good – of the platform or the society, it varies.
Innovation comes in all scales. Some of the smaller stuff is, well, just hacking. Hackers, innovators, developers, entrepreneurs might be names for various scales. Bob’s posting is more about entrepreneurs. he highlights a kind of chilling effect that comes as you atomize the options on the platform. It makes the platform stronger, empowers it’s winner take all nature. More hacks to roll up to it’s greater good.
That in turn reduces the number of platforms, which drives away the entrepreneurs. Since they are in it more for the exit strategy. Fewer platforms means greater pricing power for the platform and lower valuations for the startups. He takes a swag at how one might go about managing that risk, i.e. how you might “reducing the anti-innovative power of the platforms.”
Note that, platforms as anti-innovative is the opposite of the usual story we tell about platforms. Neat and right on.
> platforms as anti-innovative is the opposite
> of the usual story we tell about platforms
The “usual story” is true at the same time it is false…
Platforms make it easier to innovate by allowing new work to build on previous work. Thus, platforms greatly ease the task of developing and deploying innovations. But, by “easing the task” of innovation, platforms make innovation less viable as an entrepreneurial activity.
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There is a lot going on here. Stuff about the architecture of the information/knowledge flows. Stuff about who owns the results of that. Stuff about problem solving and splitting out the profits from that. The profits both in the solving of a single problem, and the solving of a class. Stuff about atomizing until the power is diffused. All fun and fascinating.
I’m often talking about tool-kits and platforms and open with firms who’s default behavior is to horde the options to innovate. I have some story lines I used to argue the benefits of open. But I’d not previously thought to use the lines analogous to the ones you sketch out your posting.
Curiously I think few of the actors at most platform vendors see these themes in their work. Possibly more curious is that I tend to think the principle value in a platform business architecture is actually elsewhere, or possibly over there to one side from these issues.