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When General Motors Corp. and Deere & Co. simultaneously attempt the same innovative business strategy, it’s worth paying attention. These industrial behemoths rarely get caught up in management fads, so having even one of them attempt a new type of strategy usually means there is something important there. Having two of them pursuing the same approach practically guarantees it. What they are doing is best described as building a platform. Instead of just trying to sell more of existing lines of individual products and services, GM, the No. 1 auto maker (www.gm.com), and Deere, which makes heavy equipment (www.deere.com), are viewing their extensive product lines as the launching pad for new types of information-based services. Every sizable company likely has similar opportunities and should pursue them aggressively. At Deere, executives are tapping the potential of platforms mostly by adding technology to their products so that, for instance, farmers can have their combines collect detailed information on a field’s crop yields and then transmit the data wirelessly to a computer. There, the data will be analyzed. The following spring, instructions will be sent back wirelessly to the farmer’s fertilizer equipment. With the farmer’s tractor keeping track of its location by communicating with the global positioning satellites, the fertilizer attachment will adjust the amount of fertilizer for each square foot of the farmer’s acreage. The farmer will optimize yield while minimizing cost. Deere, meanwhile, will generate revenue by providing this, and other types of managerial capabilities, as a service. Deere—like GM—has ensured that other companies can offer products and services that plug in easily to these new technology platforms, which will enhance their value to customers and increase the likelihood that the Deere platform will become popular. Deere and partners could, for instance, provide a way to monitor what is planted and how it is handled, so a grocer could certify that vegetables truly were grown using organic methods and didn’t sprout from bioengineered seeds. In the end, Deere hopes to create a sort of operating system that will be the technology backbone for the entire agricultural process “between dirt and dinner.” “Every industry is going to have an operating system,” my colleague John Sviokla says. “The question is: Who gets to be Microsoft?” At GM, the platform approach has, among other things, led to a different way of looking at OnStar, its car-based communications system. Rather than sell it as a separate product or use it as a feature to increase interest in luxury cars—which GM would have done as a reflex reaction in years past—the company has committed to putting OnStar in every car it sells. GM even licenses the technology to other car makers. That once would have been heresy at GM, but licensing allows GM to insert OnStar into the lives of as many people as possible and gives GM the biggest possible technology platform on which to build. With OnStar established, GM can sell services that it never could have provided previously. An emergency service promises that an operator will use OnStar’s cellular capabilities to ask a driver if he is O.K. whenever an air bag deploys and call an ambulance if there is no answer. The concierge service lets a driver ask for almost any type of assistance. The concierge can, for instance, provide directions because OnStar connects to the GPS, letting the operator know precisely where the car is. A driver who sees a warning light come on in the car can have the concierge diagnose the problem remotely and say whether there is a problem that should be addressed immediately or whether the driver can just keep going. GM has lined up dozens of partners that want to piggyback on OnStar. Mutual-fund manager Fidelity Investments (www100.fidelity.com), for instance, lets OnStar users request stock quotes and then buy or sell securities while driving. Many other companies are starting to explore the possibilities of platforms. Companies in the energy business, for instance, are talking about selling services that will manage customers’ power usage and save them money—perhaps by having the dishwasher go on automatically once electricity prices have dropped below a specified threshold. With technology being built into air conditioners that lets them be controlled remotely, utilities can compile information about demand and manage power loads better than ever before. They will be able to offer customers price reductions in return for the ability to occasionally turn the air conditioners off for a few minutes. Customers wouldn’t feel any change in comfort, yet utilities would save a significant amount of money by being able to reduce the amount of power they generate as insurance against spikes in demand. The computer industry has long used the platform approach. For example, EMC Corp. (www.emc.com) doesn’t just sell disk drives. It also embeds sensors that let it monitor the performance of the drives and spot potential problems before they occur. EMC can, thus, sell maintenance services that guarantee customers they will have zero downtime. A few companies in nontechnology businesses also have scored big by using their products as platforms for information-based services. Otis Elevator Co. (www.otis.com), for instance, generates huge maintenance revenue by being able to fix problems before an elevator breaks down. (Not coincidentally, the former chief information officer of Otis, George David, became the chief executive of the parent company, United Technologies Corp., www.utc.com.) By turning products into platforms, EMC and Otis became the focal point for customers on a whole array of products and services. The companies became more closely entwined with those customers, in ways that made defections to competitors much less common. Sabre Holdings Group (www.sabre.com) and TV Guide Inc. (www.tvguide.com) have shown just how valuable these information-based services can be. Sabre, the airplane reservation system developed by American Airlines (www.aa.com), now is a separate company that has 1 1/2 times the stock-market value of AMR, American’s parent company. When TV Guide was bought by Gemstar (www.gemstar.com) in 1999 for $9.2 billion, it was valued at more than any of the networks whose listings it carried. As Nicholas Negroponte once said, “information about the product is more valuable than the product itself.”
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