Queen Mary University: New Product Development Report BUSM084

This report provides a detailed analysis of new product development and business ecosystems, focusing on the concept of technological platforms as defined by Gawer (2014). The report explores the economic and engineering design perspectives of these platforms, highlighting their role in facilitating innovation and competition. It examines the similarities and differences across various platform types, with a specific focus on the Google platform as a case study. The analysis includes an examination of Google's platform typology, its constitutive elements, and the interactions between different consumers and partners. The report also discusses the importance of modularity in system innovation and its implications for new product development. The report provides insights into how technological platforms can drive innovation and create value in modern business environments. This report is an example of the type of past papers and solved assignments available on Desklib to assist students.

New Product Development and Business Ecosystems 1
NEW PRODUCT DEVELOPMENT AND BUSINESS ECOSYSTEMS
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New Product Development and Business Ecosystems 2
New Product Development and Business Ecosystems
The concept of the technological platform (as per Gawer, 2014)
In the contemporary business world, competition and innovation are taking center stage in ways
of doing business and especially in the development of new products. In fact, innovation and
competition are the keys to which platforms exist. There also exist interactions between the two
on the various technological platforms. The modern business architecture is built on the platform
from which competition and innovation decisions are made based on their interaction with the
platform (Baldwin and Woodard, 2008). The widely known technological platforms are
Amazon, Apple, Google, and Facebook. On these platforms, different end uses transact and
make innovations which could not have happened were it not for the platform. According to
Gawer (2014), a platform is a special kind of market that facilitates exchanges between different
consumers or developers in absence of which the transaction would not take place. For example,
when Google started operation in 1998 I was not a platform but just a search engine. Later on,
Google added more features like Gmail, Docs, Voice, Youtube, and other thus becoming a
platform.
To compare the way traditional business model in the 20th century produced two or more closely
related products or services and only applied marketing to reach out to the customers, with the
21st-century business model, we can say that it can no longer apply in the modern business world
(Chesbrough, 2007). Modern business models use platforms to integrate the ever-changing world
of customers and partners into their ecosystem. Today, consumers are driving the economy but
not the enterprises thus consumer-driven platforms area created. Businesses are working with
one another complementarity and competition exist when the forces of innovations and
competition interact in the platform. Through research and development, businesses and
developers are re-using components in a uniform platform because it cost less.
What is the technology platform?
Technological platforms are conceptualized in both economic and engineering design
perspectives for the development of businesses and new products (Gawer 2014). In this regard,
the economic perspectives explain the platform as a market that mediates between the customers
and partners and how the whole system fuel competition through innovation while engineering
perspective view products platforms as technological architecture (Baldwin and Woodard, 2008)
on which modulation for innovation is applicable. Technology platforms are industry and
economic led and seek to provide interaction between innovation and competition in the
platforms. These platforms range from loose networks to committed partnership of the
stakeholders. The major objective in technology platforms is to create the basis to do research
and development for the organizations and developers in the platforms. The platform enables
coordinate research on innovation and competition in the platform for the purpose of
technological development (Björkdahl, 2009).

New Product Development and Business Ecosystems 3
The economics perspective of the technology platform
This is kind of a market platform that brings customers and partners together for transactions
which will not have otherwise taken place. This perspective focuses on the network effect
created by the platform stakeholders. The network effect results to competition between the
participants as well as cross platforms. The network effect constitutes two kinds of effects which
include direct and indirect network effects. The kind of direct network effect arises when the user
benefit from the technology is dependent on other users of the technology. On the other hand, the
indirect network effect occurs if the benefit to users in one group is dependent on the number of
users in other groups (Hagiu and Wright 2015). In this case, while direct network effects
constitute demand sides economies of scale (Parker and Van Alstyne, 2005, p.149), indirect
network effect constitutes demand-side economies of scope.
The economic perspective creates value by acting as a medium between the different consumers
who are not close together except through the platform. The value is created when the platform is
able to coordinate the groups of consumers which are affected by the use of pricing. The value
created increase with an increase in customer base and indirect network effects with direct
network effects being the essential character of the platform. As a result, in the platform the
stakeholders are interdependent and competitiveness is created.
Assumptions of the economic perspective
Gawer, (2014) also provide for the limitations of this technology platform which include:
i. Fails to provide enough insight into the markets because the platform is fixed.
ii. The assumption of taking both sides of the platform as simple consumers including
the innovators. Reducing developer to passive consumers in this platform is self-
inhibiting in the explanation of competitive interactions that exist.
The engineering design perspective on technology platforms
This perspective views platforms as technological architectures. Under this perspective, the
platform is defined as a common structure from which various products can be produced
(Muffato and Roveda, 2002). This commonality creates economies of scope in the platform
where the joint production cost is less than when producing each product separately. This
advantage occurs in various industrial contexts and organizations in which manufacturing
platforms are shared across firms with the similar supply chain. These platforms design share
common features across the organization.
Baldwin and Woodard (2008), explains that, platform architectures as having a specific
technological architecture that is modular and has a core and a periphery around it. The platform
architecture groups products to constitute unchanged core parts and the variable peripheral parts
(p.24). The product itself is made of the stable core.
Therefore to create product innovation, the platform becomes a modular system from which the
product is partitioned into modules which facilitate innovation. The importance of modularity in

New Product Development and Business Ecosystems 4
the system innovation is to break the complex system into simple modules of parts which can be
worked on separated and are easily related to a standardized system.
Importance of system modularity in platforms
i. Reduce interdependencies that exist between the components parts of the system and
hence reduce the information that the developer needs to understand while allowing
for specialization in innovation
ii. Modularity enables manageability of the components by reducing them to discrete
components
Similarities and differences across platforms
Literature Economic perspective Engineering design
perspective
Conceptualization Platform as a market Platforms as technological
architecture
Perspective Demand Supply
Focus Competition Innovation
Value created through Economies of scope in
demand
Economies of scope in supply
and innovation
Role Coordinating device among
buyers
Coordinating device among
innovators
Empirical setting ICT Manufacturing and ICT
Illustration of the technology platform using the example
Google platform
Google platform is a digital platform. The reason to categorize it in this platform typology is that
it constitutes the elements of technology platforms. To expound further on the critical elements
that make Google a digital platform I will discuss the two perspectives which relate to the
technology platform namely:
a. The economic perspective on the Google platform
b. The engineering design perspective on the Google platform

New Product Development and Business Ecosystems 5
The economic perspective
In relation to the Google platform, Gawer definition of economic perspective can be framed as a
special kind of a market where various consumers and partners transact and without it this
transaction could never have happened. In this case, Google is the market where customer and
other partners do their transactions, in other words, it is a medium through which these
transactions are carried out.
When Google started in 1998, it was just a search engine which provided direct services to the
consumers (Vise, 2007). It was not a platform for customers and partners to interact as it was
one-sided without network effects that come with a platform. On the basic part of its operations,
it was, in fact, dependent on other platforms like IBM and Microsoft which offered host services
and operating systems. Later Google growth was exponential and had to transform from an
isolated innovation into an integrated platform. Google added more features like Gmail, Docs,
Voice, Youtube, and others thus becoming a digital platform. As a big internet and tech player
typically build its future offerings as part of an integrated strategy to raise the overall value of its
platform. As such, Google had learned from and worked with other digital giants like Amazon
and Microsoft.
For the purpose of illustration, for Google to acquire the status of a platform it must have the
following elements as per Gawer (2014):
a. Different consumers
b. Different partners, in this case, developers or other platforms which can compete
c. Creates value by harnessing the economies of scope in supply and demand
d. Interaction exists in forms of competition and innovation
When Google came up with various products offering to the market such as Gmail, Youtube,
Docs, and more, it aimed to acquire different customers and partners who interact under a
platform. It became a special market offering various services under one platform for end-users.
The platform has attracted the attention of various digital innovators and developers who create
complementary products and services to that of Google. When developers use Google’s Android
mobile operating system (Shyam Bhati, 2013) to other complementary products and services to
attract more end users, will create more innovations and competition in the platform.
In 2012 Facebook, which is a social networking platform, developed a mobile application for
Facebook home based on Android which was developed by Google as a mobile operating
system. Android itself is a technological platform. Facebook went ahead and positioned the
application as its own innovative product in the mobile devices. Before this development, both
Google and Facebook used to have a collaborative relationship. As a result, Facebook became a
competitor to Google by starting to compete in one platform. Facebook also invested in other
areas like social search which was the initial Google investment. This continued to intensify the
competition between them. These arguments show the interactions that exist between the two
tech giants through innovation and competition.
The competition in the Google platform comes from the multiple consumer constituencies
joining the platform fueled by the network effects. The value created by the Google platform is

New Product Development and Business Ecosystems 6
accessible by both sides of the platform. The presence of various complementary products and
service bring the group of end-users and developers together, as a result, a mechanism has to
exist to balance or to attract one side of the customer to the other side. Therefore, by the use of
the economic approach to this problem, there exist different pricing and business models in
various platform markets. From the economic perspective, Google is seen as the way through
which different end-users come together and transact and without its existence, they could not
have met and transact. It coordinates the consumers by creating value through pricing. The
network effects namely direct and indirect network effects are considered the essential features
of the platform.
The engineering design perspective
Looking at this perspective in line with the Google platform, it can be defined as a platform with
common structure from which various products can be produced (Muffato and Roveda, 2002).
Google is a platform from which various innovative products have been produced. It is
considered as a platform where the needs of a core group of customers are met. Under this
platform, various products can be produced by utilizing a standard component in the platform.
This type of re-using the components creates economies of scope I production. On Google
platform, economies of scope are used in innovation which is an essential element in platform-
based new product development. In line with this, the economies of scope exist when the cost of
producing products jointly is less than producing them separately. For instance, when Facebook
own innovation, “Homescreen” for Facebook home (TechCrunch, n.d.), was created by re-using
Google’s Android platform jointly, was less costly than having to create the platform itself and
the product.
In other words, Google can be viewed as an ecosystem for innovations to take place (Nambisan
& Sawhney2011). The network of firms created under the platform not necessarily related
through buyer-supplier relationship. The firms can be attached to the platform loosely where they
are provided with an ecosystem for innovation of the new product.
Google platform as an organization is view in the lens of technological architecture. The
platform offers the stakeholders has structural commonality. In other words, it is viewed to have
a kind of technological design that can be modulated into structures of a core and a periphery.
The Google platform itself constitutes the stable core which is re-used to facilitate innovation of
other products by the developers and other firms like Facebook.
Modularity in Google platform exists when a firm or a developer re-use one component of it as
the core, to innovate or develop a new product. The developer abstracts the components which
are useful in developing the new system. Today, various firms are using Google’s Android
platform which is a mobile phone operating system, to develop software applications for their
companies. On this platform, developers are able to get the core functionality of the android and
innovate on the peripherals to come up with a new product based on the unchanged android core.
The complexity of the Google platform can be partitioned into the following peripherals and
core;

New Product Development and Business Ecosystems 7
a. There are individual software applications running on the Google platform. This software
includes but not limited; Gmail, Youtube, Docs, Drives, and Voice. These can be taken as
modules and are peripheral from the core for re-use in other product development.
Therefore the developer does not have to create them from start. Individual peripherals of
Google platform can further be divided into modules to innovate additional
functionalities for use in another platform.
b. The core functionality to which Google platform itself constitute remains unchanged.
When Facebook introduced social search which is initially the core function of Google, it
manifests the stability of core module of in Google platform. Facebook re-invented the
search engine from the core functionality of Google.
In an engineering design perspective, the technology architectural view in the organizational
context of Google platform makes it have a modular architecture. This modulation of Google
architecture facilitates in reducing complexity by breaking it into discrete components that are
simple to analyze, understand and build on. These discrete components interact within Google
standardized interface and architecture. For instance, by abstracting the Android operating
system from the peripherals on it, the developers have manageable parts to build on for a new
product.
When platforms are open for development, complementary innovations and knowledge are
drawn together with their external capabilities. The abstraction also comes with independent
testing of the new product.
In summary, technology design views Google platform as an organization designed with a
technological architecture where developers’ innovations thrive. Through this openness for
complementary innovations and reproductions, economies of scope are created. That is, there is a
simulation of innovation and production in the platform by allowing users and developers
modulate the system.

New Product Development and Business Ecosystems 8
References
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Björkdahl, J. (2009). Technology cross-fertilization and the business model: The case of
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Chesbrough, H. (2007). Business model innovation: it's not just about technology anymore.
Strategy & Leadership, 35(6), pp.12-17.
Gawer, A. (2014) Bridging differing perspectives on technological platforms: Toward an
integrative framework. Research Policy, http://dx.doi.org/10.1016/j.respol.2014.03.006 xxx.
Hagiu, A. and Wright, J. (2015). Multi-sided platforms. International Journal of Industrial
Organization, 43, pp.162-174.
Muffatto, M. and Roveda, M. (2002). Product architecture and platforms: a conceptual
framework. International Journal of Technology Management, 24(1), p.1.
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Parker, G. and Van Alstyne, M. (2005). Two-Sided Network Effects: A Theory of Information
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Shyam Bhati, S. (2013). Review On Google Android a Mobile Platform. IOSR Journal of
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TechCrunch. (n.d.). Facebook Announces “Home”, A Homescreen Replacement Android App
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