The reduction of entry barriers allows companies to compete beyond their home

The reduction of entry barriers allows companies to

This preview shows page 6 - 8 out of 12 pages.

The reduction of entry barriers allows companies to compete beyond their home turf and results in increasingly fragmented value chains — as well as fundamental changes to traditional industry structures. v Suddenly, companies need to have a broader view on potential competitors. Finally, changes in customer expectations and preferences have forced companies to pursue product differentiation and develop new services. Speed, mobility and portability directed product development at most companies and sub- stantially transformed the demand for access and content. The end-user adoption rate of a new functionality — such as touch-screen-based smartphones — created a new de facto standard and made it difficult for players who did not offer those features. Had major mobile industry players such as Motorola, Nokia or Sony Ericsson succeeded in establishing a widely accepted mobile software ecosystem on their own, today’s marketplace could be different. Instead, Apple and Google defined the direction for the ecosystem of mobile applications.
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70 MIT SLOAN MANAGEMENT REVIEW FALL 2013 SLOANREVIEW.MIT.EDU S T R AT E G Y utilize orchestration processes to coordinate, sustain and influence the activities of other ecosystem par- ticipants. These involve modularizing assets, ensuring coherence and shaping mechanisms. They modularize assets. Ecosystem aggregators we studied modularized a set of assets that many players in the ecosystem could leverage. The purpose was to establish the core platform infrastructure where members could access and share tools, soft- ware and hardware components, and other assets, thereby reducing design and development redun- dancies. For example, Qualcomm, a semiconductor producer with a strong focus on wireless telecommu- nications products and services, established an application development platform that allows third parties to develop small programs, such as games, for phones built on Qualcomm hardware. Platform pro- viders can decide which platform elements to keep closed and which ones are open for free usage. By providing a software development kit, Qualcomm could direct third-party developers and allocate tasks to a wider community of software developers. They ensure ecosystem coherence. Aggregators can also ensure ecosystem coherence and align- ment between innovation activities and the overall broader corporate strategy. They can accomplish this by determining access points to the platform and how partners share knowledge with other part- ners. In the developer forum, for example, the platform owner can moderate the discussion topics and specifications of interfaces. They shape capture mechanisms. Finally, ecosys- tem aggregators design “capture mechanisms” that enable partners to secure value from their efforts. For example, ever since Intel initiated its “Intel Inside” cam- paign, other companies that wanted to build on Intel’s technology have been able to participate in co-brand- ing and joint marketing. The value capture is not just monetary — it includes enhanced reputation.
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