Platform / Service Innovations and Cash-Cow Business Models
Increasingly, the following three strategic moves at the fundamental innovation level in business organizations are being recognized as game changers:
1. It is not just products, it is also the process.
2. It is no more only about products, it is also about platforms.
3. It is not only about products and platforms, it is also about services.
So lets understand product innovations, process innovations, (technology) platform innovations, and service innovations.
In the following framework, what is posited on the left is the emergence of a dominant product design sometime around the intersection of the product and process innovation curves. This is intuitive, since a company initially focuses on building a core product out to market, and there is usually a lot of innovation around the product, until a dominant design emerges. Around that time, the rate of innovation at the business process level usually is on the rise, and this is depicted by the graph on the left, where the two blue hills of the product and process innovation charts intersect:
Similarly, what you see on the right hand side above are two curves depicting the rates of innovation at the technology platform level and at the services level respectively, as functions of time. The point in time where they intersect is also the time around which business focus has to shift from creating the world's best platform to servicing the customers who are using the platform. At this point in time, the rate of services innovation is still increasing even as the rate of platform innovation is on the decline.
What this platform-services innovation map depicts is a practical truth: before a business starts making boatloads of cash, it has to innovate its platform to a sufficient commercially optimized level, and also has to start working on its services as well. In a nutshell, cash-cow businesses now a days are not only about products or platforms, they are also about services. Listen to the corresponding podcast to learn more about ongoing platform battlegrounds ranging from social networking (Facebook / MySpace) to smart mobile handhelds (Google Android / Apple iPhone), and how the cash-cow business model evolves at the cusp of platform and service innovation...
Concepts Covered in the Podcast: Innovation, Rate of Innovation, Product Innovation, Process Innovation, Dominant Design, Technology Platforms, Platform Innovation, Services Innovation, Cash Cow Business Model
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