The Phone Giant's Platform

Learning objectives

1. Analyse a choice between joining a crowd and standing apart.
2. See how announcing the end of an old product before the new one is ready can destroy the old one's sales.
3. Weigh irreversible platform commitments under time pressure.

Session plan

1. 0–5 min Read the situation, what is known and unknown, and the voices in the room. No discussion yet.
2. 5–13 min Each participant chooses an option on the case page, states a confidence and writes a one-line pre-mortem: if this choice fails, the most likely reason is…
3. 13–28 min Debate by option. Ask each group what it would announce publicly on the day of the decision, and what customers and developers would hear.
4. 28–33 min Reveal the outcome.
5. 33–50 min Discuss why the process is graded Sound despite the outcome, and what the announcement itself did to existing sales.
6. 50–60 min Transfer: participants recall a time their organisation announced a change before the replacement was ready.

The case page records each participant’s choice, confidence and pre-mortem in their own browser, and scores the confidence once the outcome is revealed. Nothing is sent anywhere, so it can be used in any classroom.

The key facts on one page

• The company chose an exclusive partnership with a large software company's new phone platform, announced in February 2011.
• Its existing smartphone sales fell sharply after the announcement.
• In 2013 it agreed to sell its phone business to its partner, which later wrote down most of the value.

Where discussions go wrong

• Assuming the open platform would obviously have worked. Many manufacturers on it struggled to make money.
• Ignoring the sequencing. The damage came partly from announcing the end of the old platform before the new phones were ready.

The forces at work

• The burning platform: The new chief executive described the company's position as standing on a burning oil platform, choosing to jump rather than face certain loss. Framing staying put as the certain loss made a risky move feel necessary.
• Fear of being one among many: Joining the open platform meant competing with every other manufacturer on the same software. The partnership offered differentiation, a way out of a crowd of near-copies.
• Irreversibility: Announcing that the old platform would be phased out, before replacement phones were ready, made the decision effectively irreversible and shrank the company's existing sales while it waited.
• Path dependence: Apps and developers had already concentrated on two ecosystems. A third had to overcome the self-reinforcing advantage of platforms that already had users and software.

The lesson to carry out of the room When joining a crowd means losing your edge and standing apart means losing the market, ask which loss you can survive, and do not announce the end of the old before the new is ready.

Pairs well with: The memo “Burning platform” and the strategy question “Should we build it ourselves, or depend on a partner?”.