Antecedents and Outcomes to Implementing a Top-down Approach to Platform Product Design

Abstract

This dissertation investigates causal factors that lead to implementing a top-down approach to platform product design as well as performance outcomes from such a design. A top-down approach to platform product design requires intentional planning of a new platform-based product design during the new product development process, incorporating a level of modularity into the new design, and planning derivative products based on common subsystems and interfaces. A thorough review of literature was used to build a theory of platform product design founded on risks and benefits. Benefits are that platform design can drive revenue, introduce cost and time efficiencies, lead to more reliable products and offer managerial benefits in the form of adjacencies. Risks include increased costs and time to market for the first product, reduced revenue due to commonality, sub-optimal product design, and increased management complexity during the NPD process. A conceptual model was then developed encompassing antecedents, contributing factors, and market performance measures to implementing a top-down approach to new platform product design. The model was empirically tested in the context of U.S. manufacturing firms using data collected from 249 manufacturing product design managers. Respondents included managers from B2B firms and B2C firms as well as small and large firms. In order to test the model, a new continuous multidimensional measurement scale of top-down platform product design was developed. Results showed that market turbulence, technological turbulence, a product that is new to the market and competitive strategies of differentiation and design for supportability are positively related to platform design. Firm type - B2B versus B2C - and firm size - large firms versus small firms - was found to moderate this relationship. Regarding firm type, products that are new to the market are positively related to platform design for B2C firms, not B2B firms, while a competitive strategy of design for supportability is positively related to platform design for B2B firms, not B2C firms. Regarding firm size, a competitive strategy of design for supportability is positively related to platform design for large firms, not small firms. These findings suggest that an important predictor of top-down platform design is risk or uncertainty. Results also showed that top-down platform product design is positively related to both short term and long term market performance although this relationship is significantly greater for long term market performance. In the short-term, performance as measured by sales and market share was greater than performance as measured by profits. In the long-term, performance measured by sales and profits was greater than performance measured by market share. Organizational support in the form of management buy-in and cross-functional integration partially mediates the relationship between platform design and long term market performance. Finally, strategic flexibility was found to have an inverse relationship with top-down platform down. Firms lacking strategic flexibility were more likely to pursue a top-down platform design. This is in line with findings that suggest top-down platform design is undertaken when uncertainty is high and strategic flexibility is an advantage These findings contradict conventional wisdom in new product development literature and offer a better understanding of why platform design is important in a way that has not been previously defined.