PERSPECTIVE: Creating a platform-based approach for developing new services

This article explores the design and renewal of services. We do this through the lens of methods and processes for developing product platforms for physical products. We first articulate principles for effectively developing next generation product lines using platform concepts, and illustrate these principles with examples drawn from computer and electronic products. These principles include creating new insights into a firm's market segmentation, understanding both the perceived and latent needs of users, and doing so for new as well as existing groups of customers. These platform principles also include the design and implementation of subsystems and interfaces that can be used across different products and across different product lines. Such subsystems and interfaces become the operational platforms for new product development purposes. An approach to platform-centric organization design is also presented. We then make the extension to services by applying these principles to understand the innovations of a large international reinsurer. This company has resegmented its market to identify unfulfilled needs and growth opportunities. It also defined new service platforms, comprising operational activity areas that closely follow the value chain of how it wished to provide new reinsurance solutions to its customers. This reinsurer also had to organize differently to facilitate the development and deployment of the capabilities required for its new services. The analogies between these service innovations and those platform innovations of manufacturers are both clear and striking. We conclude by considering the difficulties faced by firms seeking to transition from a single product, nonplatform focused approach to new product development to the platform-centric ones described here.