Platform Leadership in the Era of Rising Complexity

Abstract

Platform leadership has drawn substantial attention not only from high technology industries, but also from conventional industries. We examine two cases of platform leadership in semiconductors to shed light on the questions of why some platform leaders do better than others, and why existing platform leaders sometimes fail. As the number of transistors on a chip doubles every two years for more than a half-century, semiconductor companies face rising complexity in designing their chips. When the number of transistors on a chip increased into the tens of millions in the 1990s, chip design process had become extremely difficult. Our study shows that in the face of the rising complexity, successful platform leaders figured out what to overlook, while focusing on what they could do best. They built their ecosystems based on their strengths and encouraged other firms to do business by embracing their ecosystems. Winners were those who understood that the increasing complexity was far beyond the reach of what a single company could manage. Attracting competent allies and allowing them to prosper was a sustainable solution to the ever-increasing complexity in the semiconductor industry. Those who were blinded to or resisted this sea change were driven out.