Business and technology platforms change faster now than ever. What does that mean for how companies compete?
In most management literature, the ideas that are fashionable are the ideas you haven’t heard before. We consume them even though what we really want is insight. For the past three decades, Michael Cusumano, MIT Sloan School of Management professor of management and author of Staying Power: Six Enduring Principles for Managing Strategy & Innovation in an Uncertain World (Oxford University Press, 2010), has explored industries and markets that have produced as much management fashion as any: Japan in the 1980s, the Internet in the 1990s, the platform-driven business model transformations of the last decade.
In this interview, Cusumano discusses characteristics that will help guide companies through disruptive transitions. One characteristic he highlights is agility (which he breaks down into four principles: capabilities rather than just strategy; pull rather than just push concepts and systems; economies of scope rather than just scale; and an emphasis on flexibility rather than just efficiency). Another is deep, differentiating capabilities, which he says can be found in processes (such as supply-chain management) as well as in more tangible skills like product engineering. Such characteristics have enabled companies such as IBM and Apple to manage transitions or reinvent themselves. Apple, for example, evolved from being a product company that tried to control everything and nearly went bankrupt to a more successful company with multiple platforms.
Cusumano points to two trends that emerged over the last several decades: the rising importance of industrywide platforms as opposed to stand-alone products, and another he calls “servitization,” which is when things that were once products become services. The automobile, he notes, has emerged as a platform for everything from loans, leases and lifetime warranties to navigation technologies, Webbased services and movies for the kids in the back seat. Major change is also occurring in the music industry, where people are more inclined to pay for a subscription than the music itself. Whether this shift will also take hold in the newspaper, magazine and book publishing industries remains to be seen.