best firms face a common dilemma best described by Clay Christensen in his book The Innovator’s Dilemma: Their success makes it difficult to change, even though their technology must evolve or become obsolete.a As new platform wars emerge around mobile phones, video games, cloud computing, and social networking, it seems like a good time to reflect on some past examples of platform leadership and draw some general lessons. In this column, I begin with a few companies we all should know well: IBM, JVC, Sony, Google, and Nokia. Then I turn to Microsoft and Apple.b

iBm

This venerable company created the first global platform in the modern computer era, based on the IBM/360 mainframe software introduced in the mid-1960s. Antitrust initiatives pressured IBM to release information to independent maintenance providers. This eventually led to an ecosystem of hardware “clone” makers like Amdahl and Fujitsu as well as software product and service companies focused on IBM customers. But IBM had the deepest knowledge of its market. It had sold primitive electronic computers since the early 1950s and for decades before that dominated in electromechanical tabulating machines and other office equipment. In the 2000s, IBM still rules the mainframe world and does pioneering work in high-performance computing (consider the Watson computer system that beat the “Jeopardy!” game champions). But enterprise computing has evolved to a much more heterogeneous world of machines and software of different shapes and sizes.

To their credit, by 1980, a few key a See A. Gawer and M. Cusumano, Platform Leadership: How Intel, Microsoft, and Cisco Drive Industry Innovation (Harvard Business School Press, Boston, 2002). This column also plays off the dilemma noted by Clayton Christensen, who observed that established companies may pay too much attention to their established customers and fail to see challengers emerging with initially inferior technology. See C. Chris-tenson, The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail (Harvard Business School Press, Boston, 1997).

Google has
challenged the
modus operandi
of the computer
industry—proprietary
technology.

IBM executives had realized that a platform shift was occurring and they introduced their own personal computer design in 1981. The operating system and microprocessor turned out to be the two key components of this new PC platform, and IBM ceded control over these elements to its suppliers, Microsoft and Intel. To its credit again, though, after absorbing billions of dollars in losses, IBM found a way forward. Under new CEO Louis Gerst-ner, hired from RJR Nabisco in 1993, it became the champion of “open systems” (Linux, Java, the Internet, ubiquitous computing, and the cloud). Ger-stner and his successors also sold off commodity hardware businesses and rebuilt the company around services and middleware that help customers utilize different technologies.

The lesson here? Platforms inevitably evolve and the leader of one generation may lose control over the next. But all is not lost if the erstwhile leader truly has distinctive capabilities that keep it linked to its customers. In this case, IBM had decades of experience that helped it understand—like no other company—the data-processing needs of enterprise users and other large organizations. This is where the firm kept its focus. The shift in platforms away from the mainframe and the loss of control over the PC were both highly damaging financially. But these changes created a new beginning for a service-oriented IBM.

JVc and sony

In the 1970s, VCRs became the highest
volume consumer electronics prod-
uct as everyone with a television set
became a potential customer. Sony
actually won the race to create a viable
home-video recorder but JVC ended
up as the market winner. Several Japa-
nese firms studied Ampex’s technol-
ogy for broadcasters in the late 1950s,
and both JVC and Sony found ways to
miniaturize and improve the technol-
ogy for the mass market. They beat out
their rivals in Japan, the U.S., and Eu-
rope. Sony introduced the Betamax in
1975 and JVC countered with the VHS
in 1976. By 1978, however, VHS had
passed Betamax in sales. It became a
global platform in that JVC licensed
the VHS technology widely, allowed
other companies like RCA and GE to
influence feature development (main-
ly recording time), and cultivated a
large set of outside firms for video con-
tent and distribution. Sony may have
built a better product and was first to
market, but it did not do as good a job
cultivating ecosystem partners. JVC
went on to become a multibillion-dol-
lar company, based mainly on the VHS
platform. It must also be noted that,
while it diversified from audio and
video to computer storage products,
JVC never dominated another market.
Today it survives after merging with
another Japanese audio equipment
producer, Kenwood.