Mutualism and the dynamics of new platform creation: A study of cisco and fog computing

Research summary: How firms respond to the emergence of dominant platforms that undermine their competitiveness remains a strategic puzzle. Our longitudinal study shows how one incumbent, Cisco, responded to such a challenge by creating a new platform, Fog, without undermining the dominant platform, Cloud, where it played a complementor role. By developing a process model we reveal how a firm in a peripheral role in a platform ecosystem can reposition itself through a dynamic mix of material, symbolic and institutional actions to develop and legitimize an alternative platform. This can be done first through symbiosis with the dominant platform, then partial competition with it. We theorize the value of a mutualistic “rising tide lifts all boats” strategy in contrast to hostile “winner takes all” approaches. Managerial summary: The increasing pervasiveness of digital platforms are driving established firms to reboot their strategy to embrace emergent forms of competition, collaboration, and mutual coexistence. Fearing disruption in their traditional business models, firms may decide to jump into the platform game. However, this is not straightforward since they do not want to go head-to-head with existing platforms and alienate their partners and customers by being perceived as encroaching on their turf. We describe one way that established technology firms are overcoming this dilemma through a “rising-tide-lifts-all-boats” strategy to cultivate new platforms. We show the value of seemingly inconsistent and dynamic approaches toward strategic communication and investments firm can use to lead new platforms without facing backlash from others.