Three ways to create platforms for innovation

We all know it by now that innovation comes from the outside. Organizations know that and, still, struggle to accept it and try manufacture it; that’s why innovation programs fail.

Organization should now focus their effort largely on enabling innovation: create the conditions for it to emerge from customers, partners, peripheries, and ecosystems.

Three models already demonstrate this in practice. First, we’ve learned to appreciate Product-as-platforms. As with Airbnb or Uber, the product itself becomes a platform that connects external actors who create value for each other. The organization doesn’t deliver the service; it enables customers to connecet and do so. In certain cases, the organization provides an enabling system for third parties to create extensions to their core services, such as with smartphone’s app stores or extension ecosystems in SaaS (a la Hubspot). In this process, innovations are prototyped, new use cases emerge, as people hack togheter the perfect service for them. The more the product is hackable, the better. We’ve been helping people build such businesses for more than a decade now with the Platform Design Toolkit – advocating to even deliberately design for disobedience. That’s the idea behind the seminal work on Eric Von Hippel on the so-called User Innovation Toolkits: a simple recognition that users drive much more innovation than the owners of the product do.

Then we learned to appreciate and develop Innovation ecosystems – like Siemens X-celerator – that have emerged to mimic similar behaviours in a business context: organizations intentionally invested in integrating and collaborating with external partners and startups. In this way hoping for innovations to emerge from pilots and shared projects.

Lastly, some pioneers have stepped up to create a so-called Platform operating model. Companies like Haier, Amazon, and Flagship Pioneering design their entire organizations to operate as ecosystems of semi-autonomous entrepreneurial units: Haier’s micro-enterprises, Flagship’s GrowthCOs or Amazon Single Threaded Leadership are all expression of the same decentralizing pattern.

The company becomes a platform for both its own and external people to create, experiment, and respond to markets directly, structured enabling capabilities are standardized, and capital is made available to support continuous incubation: it’s the machine that builds the machine. The organization’s role shift from producing value to allowing others to create value inside, at the edge, and through it.

Yet the vast majority of organizations continue to treat innovation as something to do. They create dedicated departments, hire Chief Innovation Officers and fail. And today, for the first time, this inability is becoming fatal.

Innovation Doesn’t Exist (anymore)

Innovation, as a category, is an artifact: 20th-century management had to protect ordinary operations from change. And like all invented categories, it created the problem it claimed to solve. It artificially separated “those who innovate” from “those who execute.” It built organizational walls between exploration and exploitation. It transformed something continuous and emergent by nature into an “initiative”. It tried to measure what is inherently asymmetric, chaotic, and unmeasurable, turning the organic into something mechanical and predictable.

But if innovation is someone’s job, it’s no one else’s.

Roger Martin recently wrote that the global scenario has changed not in terms of volatility, uncertainty, complexity, and ambiguity; those have always been there. What changed is the combination of two forces: the explosion of fixed costs and radical transparency on price and value.

Fixed costs such as R&D, branding, distribution, and technology infrastructure have become dominant, and the industries with the highest fixed costs are consolidating rapidly as scale begets more scale. In the cloud services market, three companies account for more than 60% of the market. In smartphone operating systems, Android and iOS together own 99%.

On the other hand, the internet has made what used to take weeks instant and free. Comparing prices, reading reviews, evaluating alternatives: you can no longer hide behind information asymmetry. Either you’ve invested better than competitors, or you lose — and customers figure it out fast.

The result is that strategy has become somewhat… deterministic:

• You must choose a precise Where to Play.
• You must invest aggressively in a clear How to Win.
• You must win — or kill your experiments as winner-takes-most and mediocre players get eliminated faster than ever before.

But there’s a catch: most organizations, especially those that cannot play an infrastructural role, need a counterintuitive mix of capabilities to play this game: the ability to be strategic and deliberate, yet across multiple specific niches.

Why Traditional Organizations Can’t Play to Win

The problem is that traditional organizations are often built as vertically integrated silos with interconnected capabilities and a high level of dependence, and, despite this seeming to be in line with Martin’s suggestion, it’s not. What happens if your big bet fails? If everything all depend on each other and every decision requires coordination, everyone depends on everyone else’s timeline, priorities, and capacity.

When there’s excessive dependence within the system, formalized coordination becomes necessary. So you create processes: stage gates, review meetings, approval workflows, and alignment sessions.

And process is the attempt to make the uncertain predictable: institutionalized control. Checkpoints require approval, and approvals require information. The organization builds apparatus to reduce variance, eliminate surprises, and ensure that nothing unexpected happen. Tragically sometimes, that’s exactly what happens.

Each process may seem rational in isolation, but together, they can form a deadly web for adaptation and innovation: dependency breeds process, process breeds control, and Control breeds rigidity. The coordination overhead grows faster than the organization itself.

But when you need to move fast on precise niches, a rigid organization cannot:

• Pivot when a bet fails — because too many dependencies have already been locked in
• Rapidly reallocate resources toward emerging opportunities — because budgets are fixed annually and headcount is tied to existing projects
• Play multiple games in parallel — because the coordination cost of each game is so high that you can barely afford one

As a result, most of the organizations just play to play instead of playing to win. And if you’re lucky that your existing business cores grant you some defensibility (for compliance, or scale, ….) you can probably still resist a few years. But how do you play the long term game?

 

The Forces Making Change Inevitable

Two converging dynamics are transforming what was once a tolerable inefficiency into an existential crisis.

First: A Coasean Singularity: A group of researchers from MIT and Harvard recently described what they call the “Coasean Singularity.” Coase’s insight was that transaction costs (search, negotiation, contracting, monitoring …) determine where you draw the boundary between “make internally” and “buy from the market. But as indicated by Roger Martin in the article mentioned above, these are largely plummeting.

Among other things, AI agents are about to collapse these costs dramatically. They can search, compare, negotiate, monitor at near-zero marginal cost. They can handle complex preferences and parallel negotiations without human cognitive limits.

In short, this means that vertical bundling loses its economic rationale.

It’s not uncommon to see the early sign of this: in many organizations I know and work with, coordinating through the market costs less than coordinating through internal hierarchy. In this case unbundling is no longer a choice but an imperative. When transaction costs approach zero, the boundaries of the firm become a liability rather than an asset.

 

The Second: Urgent Buyers and Systemic Crisis Pressure – In parallel, we have to acknowledge that decades of underinvestment in critical capacities — energy, strategic minerals, defense, infrastructure — have created brittle supply chains that are failing to adapt. Brett Bivens and Gregory Bernstein call it the “Urgent Buyer Era“: actors with increasingly existential needs are scrambling to source capabilities and resources, they are willing to pay premiums, accept technical risk, and commit to solutions that work now.

The enduring systemic crises create an urgent need for rigid organizations to develop capabilities they have failed to develop, creating an enormous market opportunity for those who can reconfigure rapidly and orchestrate ecosystems.

Together, these forces are compressing a transition that might have taken decades into a span of years. The question is no longer “if” but “who will be ready.”

 

The Real Lever: Unbundle First, Recompose After

In the end, the answer isn’t “more innovation“, but rather removing what prevents it from happening: rigid dependencies. Thus, reduce dependencies rather than manage them.

This is organizational unbundling:

• Decompose the organization into autonomous units with clear ownership
• Each unit has its own P&L, its own metrics, its own decision-making capacity
• Interfaces between units are explicit contracts, not requiring continuous coordination
• Fewer dependencies mean fewer processes, which means more room for evolution 

But unbundling alone isn’t enough. The point isn’t only to fragment but also to make capabilities recomposable: once you have modular units, you can recompose them vertically in different configurations to address different niches. You can create internal “ventures” that assemble existing capabilities for new markets. You can play multiple deterministic games in parallel — multiplying chances of success instead of putting all eggs in one basket.

 

This is what Platform Organizations like Haier or Amazon do:

• Autonomous micro-enterprises (unbundling)
• Shared platforms that provide common capabilities (infrastructure)
• Dynamic contracts that enable rapid recomposition between nodes (like Haier’s Ecosystem Micro Community Contracts)
• Investment mechanisms that align incentives between the units and the mothership

It’s not a model for “doing more innovation.” It’s an architecture that enables the organization to play to win in a deterministic world—betting on multiple niches in parallel, pivoting rapidly when needed, and reconfiguring capabilities rather than rebuilding them from scratch.

To make Roger Martin’s deterministic strategy logic workable, firms first need organizational unbundling: breaking down capabilities and making them reorganizable. Only then can you vertically integrate them within multiple promising niches. In this way, companies can play multiple deterministic games in parallel, thereby increasing their chances of success.

But why stop at organizational boundaries?

 

The Ecosystem as Playing Field

Once you accept the logic of unbundling and recomposition, organizational boundaries become arbitrary.

No organization has all the capabilities needed to win in every promising niche. No matter how large, how well-funded, how talented — the combinatorial space of possible innovations exceeds any single entity’s capacity to explore it. But if you know how to recompose modular capabilities, you can do it with capabilities you don’t own — from partners, suppliers, startups, customers, even competitors.

Innovation has never been a property of a single organization. It’s a property of the ecosystem.

It emerges from interactions between actors. From flows of knowledge, technology, and talent that cross organizational boundaries. From the collision of different perspectives, different constraints, different capabilities that no single entity could contain. The question isn’t “how do we innovate?” but “where do we position ourselves relative to innovation flows that already exist?”

Today’s Urgent Buyers — the Microsofts, Googles, and Amazons that are desperately seeking clean energy and capabilities they lack — are demonstrating exactly this. Organizations that can’t generate internally become premium customers of those who know how to orchestrate ecosystems. They pay whatever it takes to acquire capabilities they failed to develop. They become dependent on external innovation that they cannot control.

The pattern will only intensify. As AI agents collapse transaction costs, the boundaries between “inside” and “outside” become increasingly porous. Coordination across organizational boundaries becomes as cheap as — or cheaper than — coordination within them. The competitive advantage shifts from owning capabilities to orchestrating them.

This requires a fundamental shift in posture from control to orchestration: you can’t direct an ecosystem, you can only:

• Create conditions that attract participation — value propositions that make others want to play in your space
• Provide infrastructure that reduces transaction costs — platforms, standards, APIs that make interaction frictionless
• Define rules of the game that align incentives — governance mechanisms that ensure participants benefit from collective success
• Let emerge what you cannot predict — accepting that the best outcomes will surprise you

Those who try to control the ecosystem kill it. Excessive extraction, lock-in tactics, and winner-take-all dynamics — they all drive participants away. Those who orchestrate it make it flourish. They understand that their success depends on the success of others.

And in a world where AI agents collapse external coordination costs, those who know how to orchestrate ecosystems will have a growing structural advantage over those trapped in the logic of internal control.

 

Stop Innovating: The Era of Innovation Is Over

What does “stop innovating” mean in practice, then? It means stop treating innovation as a separate activity and start designing organizations capable of continuous adaptation.

Concretely:

• Dismantle (or reconvert) the innovation department: Its job isn’t “doing innovation” but building the infrastructure that enables it everywhere — reducing experimentation costs, creating safe spaces for failure, connecting those with ideas to those with resources.
• Stop measuring innovation outputs: Patents, POCs, demos — these are vanity metrics. Measure instead the capacity for reconfiguration: how fast can you reallocate resources? How many bets are you playing in parallel? How much does it cost to launch a new experiment?
• Unbundle first: Identify rigid dependencies. Reduce them. Create units with clear ownership and explicit interfaces. Not for efficiency — to be able to play to win.
• Build platforms, not programs: Platforms are permanent infrastructure that reduce transaction costs. Programs are temporary initiatives that die when the budget ends.
• Position yourself in the ecosystem: Map the innovation flows crossing your domain. Ask yourself: where can we create value by orchestrating instead of producing? What external capabilities do we need? What can we offer that attracts participation?
• Accept that control is impossible: AI is collapsing external coordination costs. Systemic crises are creating urgent demand for those who can adapt. The world is moving toward fluid ecosystems and continuous recomposition — with or without you.

You have to stop innovating, not because innovation doesn’t matter. But because the category itself has become an obstacle. A way to keep believing that change can be confined, managed, controlled. It cannot.

We’re in the era of permanent adaptation. And the forces at play — AI, systemic crises, radical transparency — are accelerating the transition beyond any forecast. The organizations that will survive won’t be those that “innovate better.” There will be those who stopped innovating and learned to reconfigure.  The question isn’t whether your organization has a good innovation strategy. The question is whether your organization is designed to adapt continuously — or whether it’s still pretending that change can be delegated to a department.

If it’s the latter, the Urgent Buyers of tomorrow might be you. Desperately seeking from the ecosystem what you couldn’t build yourself. The alternative is to become the ecosystem. To stop trying to produce innovation and start enabling it.

To unbundle, recompose, and orchestrate.

To stop innovating — and start adapting.