by: John Sviokla & Tony Paoni
The pressure to create new value and extract it through both higher prices and intellectual property protection (where possible) is relentless. Software companies like Microsoft and Oracle have attempted to follow a high-price/IP protection strategy by "controlling the platform." In fact, however, any product—not just software--can become a platform that can launch value creation and extraction—and can, more often than not—be "protected." What's required is imagination. Consider how S.C. Johnson, the multi-billion dollar consumer products company, "platformed" its way from, yes, floors to shaving cream, candles—and much, much more.
S.C. senior started the firm in 1886 as a parquet flooring division of the Racine Hardware Company. Old S.C. would finish the wood with a special wax of his own creation. After his flooring was laid, customers repeatedly asked if they could buy some extra wax from him--which led S.C. to develop Johnson’s Prepared Wax, and into consumer products. One possible product was a paste blended with wax for creating a spectacular sheen, but there was no mechanism to deliver this mixture to the end customer—until the company discovered aerosol can technology, first patented by Erik Rotheim of Norway in 1927. Marrying this to the wax and paste mix produced, Pledge, the first sprayable polish for furniture, useable at home.
Johnson soon decided to add pleasant scents instead of wood polish, and thereby invented Glade – which now has dozens of scents. The firm also experimented with adding the chemical deet to the aerosol can technology, and thus the consumer-friendly insect repellent called Off!, the category leader, was born. Meanwhile, company scientists discovered that gel was a better medium for shaving and "kinder" to the skin than traditional shaving cream. But how to dispense shaving gel from the traditional aerosol can? By introducing an expandable bladder in the bottom. And thus came Edge. Meanwhile, Off! led to "plug-in" insect repellant—and, through another route, to candles scented with deet, and we now find lanterns based on the candle technology using Off! cartridges. Stay tuned.
In a nutshell, S.C. Johnson got from indoor parquet floors to outside insect-repelling lanterns by thinking of "platform" in terms of where an innovation can go, not simply where it is. For this company, platform represents emergent opportunity. They are hardly alone. Many organizations aim to create an innovative platform that gives them not only an expanding set of links to the end customer, but also, where possible, defensible intellectual property, as the following example illustrates.
Nestle was one of the first companies to introduce a "coffee system" in the United States, whereby little coffee packs brew one cup at a time. This system increased the unit profit for each cup of coffee. However, Kraft now has 40% of the domestic market for so-called coffee singles because there is no intellectual property protection for Nestle around the coffee bags. Kraft, created a competitive system called Tassimo – now in Europe and coming to the USA this fall -- which also creates on-demand coffee and other hot drinks.. Unlike Nestle, Kraft has a patent on the cartridges, thus enabling it to control more of the margin generated from this creative platform for hot drinks. And it's "creative" because it features a chip indicating what is being brewed and when, enabling an on-line, real-time measurement of the system's use. The chip becomes a proprietary consumer panel for revealing the product’s use: market insight not otherwise available.
Cars, traditionally associated with platforms as a way to economically "share parts," with imagination, can be reconceived as entertainment and communication vehicles, literally and figuratively. With wireless capability to be added, the internet arrives in every car, just as it has with the heretofore boring old phone. Companies need to think in such terms.
The one-shot product is not only difficult to create over and over (most fail, in fact), the speed of product imitation is awe-inspiring. Meanwhile, the power of customer fidelity becomes more critical—and for their part, harried consumers increasingly seek "solutions." Companies that can harness their imaginations to platforms—aerosol can technology but also what you put in it!—are en route to cleverly making connections among their technologies, brands, "protected properties," customers, and innovation itself.