Understanding platform-based product development: a competency-based perspective

In recent years, the competition in product development and innovation has intensified through increased demand heterogeneity and shorter product life cycles. An increasingly popular strategy to meet the mentioned challenges is the use of a platform-based approach to create a successful product family for the purpose of increasing variety, shortening lead-times and reducing costs. However, unlike the wellpublished benefits of platform-based product development, a clear gap in literature still exists when it comes to understanding how to implement and manage product families and their successive platforms. We do not know enough about the key attributes of platform-based product development which can contribute to a competitive advantage, which in turn leads to the success of a platform. In addition, the impacts of a turbulent environment on platform-based product development remain largely unknown. Given these limitations, our research is directed at building a framework to better manage platform-based product development from a competency perspective and specifically, we want to addresses the following research question: How can firms improve their platform-based product development performance, from a competency-based perspective? Based on existing literature and the interviews in four leading technology-driven companies, we propose the concept of product platform competency, and identify its antecedents. We hypothesize that such competency directly affects the performance of platform-based product development. However, these effects are moderated by the turbulence of the environment. To test these hypotheses, a large-scale survey is conducted in the United States. After analyzing the data by the means of structural equation modeling using LISREL 8.7 and hierarchical multiple regression using SPSS 15.0, we find sufficient empirical evidences to support most of the hypotheses. The results lend support to the concept of product platform competency which comprises reusability of subsystems, compatibility of subsystem interfaces and extensibility of platform-based products. Our results show that a formalized development process, design knowledge dissemination across platform-based products, continuity of platform-based product development team and existence of a champion in platform-based product development significantly affect product platform competency. Additionally, our findings further suggest that in a high technologically turbulent environment, some of these factors have even greater impact on product platform competency. Based on the results of this study, product platform competency can be considered as the underlying cause of high performance of platform-based product development. Therefore, managers are strongly encouraged to apply the aforementioned four management practices to improve their product platform competency, especially in a high technologically turbulent environment. This in turn should lead to reduction in the development cost and time.