Planning for Product Platforms

In 1987, Fuji introduced the QuickSnap 35mm single-use camera in the U.S. market. Kodak, which did not have a comparable product of its own, was caught unprepared in a market that was destined to grow by more than 50 percent per year for the next eight years, from 3 million units in 1988 to 43 million in 1994. By the time Kodak introduced its first model almost a year later, Fuji had already developed a second model, the QuickSnap Flash. Yet Kodak won market share back from Fuji; by 1994, Kodak had captured more than 70 percent of the U.S. market. The success of Kodak’s response resulted in part from its strategy of developing many distinctively different models from a common platform. Between April 1989 and July 1990, Kodak redesigned its base model and introduced three additional models, all having common components and common production process steps.1 Because Kodak designed its four products to share components and process steps, it was able to develop its products faster and more cheaply. The different models appealed to different customer segments and gave Kodak twice as many products as Fuji, allowing it to capture precious retail space and garner substantial market share. The platform approach to product development is an important success factor in many markets. By sharing components and production processes across a platform of products, companies can develop differentiated products efficiently, increase the flexibility and responsiveness of their manufacturing processes, and take market share away from competitors that develop only one product at a time. For example, in the auto industry, firms taking a platform approach enjoyed market share gains of 5.1 percent per year, while firms pursuing a single-model approach lost 2.2 percent market share per year.2 The platform approach is also a way to achieve successful mass customization — the manufacture of products in high volumes that are tailored to meet the needs of individual customers.3 It allows highly differentiated products to be delivered to the market without consuming excessive resources. In this article, we define what we mean by a platform, describing the benefits and challenges of platform planning. We articulate three ideas underlying the platform approach to product development and present a method for planning a new platform of products. Finally, we provide recommendations for managing the platform-planning process.

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References

1. K.B. Clark and S. Wheelwright, Leading Product Development (New York: Free Press, 1996).

2. K. Nobeoka and M.A. Cusumano, “Multiproject Strategy and Sales Growth: The Benefits of Rapid Design Transfer in New Product Development,”

Strategic Management Journal, volume 18, March 1997, pp. 169–186; and

K. Nobeoka and M.A. Cusumano, “Multiproject Strategy, Design Transfer, and Project Performance: A Survey of Automobile Development Projects in the U.S. and Japan,” IEEE Transactions on Engineering Management, volume 42, November 1995, pp. 397–409.

3. B.J. Pine II, Mass Customization: The New Frontier in Business Competition (Boston: Harvard Business School Press, 1993);

B.J.Pine II, B. Victor, and A.C. Boynton, “Making Mass Customization Work,” Harvard Business Review, volume 71, September–October 1993, pp. 108–111; and

E. Feitzinger and H.L. Lee, “Mass Customization at Hewlett-Packard: The Power of Postponement,” Harvard Business Review, volume 75, January–February 1997, pp. 116–121.

4. For an interesting discussion of the strategic role of knowledge platforms, see:

D.J. Kim and B. Kogut, “Technological Platforms and Diversification,” Organization Science, volume 7, May–June 1996, pp. 283–301.

5. M.L. Fisher, K. Ramdas, and K. Ulrich, “Component Sharing: A Study of Automotive Brakes” (Philadelphia, Pennsylvania: University of Pennsylvania, The Wharton School, Department of Operations and Information Management, working paper, 1996).

6. For an example of the magnitude of these costs, see:

K. Ulrich, D. Sartorius, S. Pearson, and M. Jakiela, “Including the Value of Time in Design for Manufacturing Decision Making,” Management Science, volume 39, April 1993, pp. 429–447.

7. “Will Success Spoil General Motors?,” Fortune, 22 August 1983.

8. K.B. Clark and T. Fujimoto, “The Power of Product Integrity,” Harvard Business Review, volume 68, November–December 1990, pp. 107–118.

9. K. Lancaster, “The Economics of Product Variety,” Marketing Science, volume 9, number 3, Summer 1990, pp. 189–206.

10. This usage is increasingly common in industrial practice and is consistent with that used in:

K. Ulrich and S. Eppinger, Product Design and Development (New York: McGraw-Hill, 1995).

11. K. Ulrich, “The Role of Product Architecture in the Manufacturing Firm,” Research Policy, volume 24, May 1995, pp. 419–440.

12. V. Krishnan, R. Singh, and D. Tirupati, “A Model-Based Approach for Planning and Developing a Family of Technology-Based Products” (Austin: University of Texas, Austin, working paper, April 1998).

13. K. Ulrich and D. Ellison, “Customer Requirements and the Design-Select Decision” (Philadelphia: University of Pennsylvania, The Wharton School, Department of Operations and Information Management, working paper, 1997).

14. H. Lees, “Word Perfect: How Do You Accurately Describe What a Car Feels Like to Drive?,” Car Design & Technology, August 1992, pp. 54–57.

Acknowledgments

We would like to thank Per-Ola Karlsson, Glenn Mercer, Jeff Sinclair, and Karl Swartling from McKinsey & Company for their contributions and the many McKinsey clients who helped develop the ideas in this article.