Advanced R&D for prepositioning strategies: the economics of platform shift in high technological velocity environments

This paper addresses the design of platform, and more precisely the economics of platform shift in industries with high technological velocity. A platform consists in fixing some design dimensions (such as basic components, modules or processes) to get better performance on some other dimensions (flexibility of alternative development, enhanced variety, lower costs). Platform design consists in using a stock of design rules to find the right balance between fixed parameters and to be defined parameters for a certain time period. In high technological velocity (HTV) environment this time period can become very short so that platform renewal becomes critical. Moreover in this HTV environment, the stock of design rules becomes obsolete so that platform renewal can take several forms: this can range from "adaptation" (development activity makes the optimal use of existing stock) to "anticipation" (research activity produces new design rules to prepare the development of the next platform). In this paper we propose an economic model of platform renewal to compare these strategies, depending on the technological velocity. We show where anticipation and adaptation are relevant and what is the optimal level of research compared to development. Moreover we show that an alternate strategy, called "prepositioning", based on advanced R&D (ARD) and consisting in renewing the stock of design rules for several generations, would be interesting in case of HTV. We then illustrate its insights through a case study in a typical HTV industry, semiconductor industry. This enables us to propose an explanation of complex platform renewal strategies. The article closes with managerial implications and directions for further research in platform renewal.