Jan Bosch is a research center director, professor, consultant and angel investor in startups. You can contact him at jan@janbosch.com.


Platform lesson #4: Don’t integrate new functionality too quickly

Leestijd: 4 minuten

Any solution aiming to stay relevant needs to continuously integrate new, innovative functionality. The main reason is that functionality commoditizes over time so that if we wouldn’t add new features, the entire product or platform would commoditize and become irrelevant. Commodity software isn’t necessarily useless, as proven by quite a bit of open-source software, but it’s hard to monetize software stacks that don’t provide clear differentiating and innovative functionality.

One of the models I often use in this context is the Three Layer Product Model (3LPM). It organizes functionality into three layers. At the bottom, we have the commodity functionality layer where we aim to optimize for minimizing the total cost of ownership. On top of that, we find the differentiating functionality layer with the functionality that’s really liked and appreciated by our customers. Here, we optimize for maximizing customer value, meaning that we provide ample configuration and variation points to ensure that customers can optimally exploit the functionality. The top layer is the innovation and experimentation layer where we try out new functionality that we hope will provide future differentiation. Here, we optimize for maximizing the number of experiments that we can run.

We can use the 3LPM as a conceptual model, but it’s even feasible to use it as the basis for the architecture of the system. In this case, we define interfaces between the three layers to minimize dependencies and clearly classify functionality into different categories. This is important since, especially, commodity functionality is often still treated as differentiating, as a consequence of which it receives far too much R&D resources.

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