New article published in the Harvard Business Review, by Tony Tong of the Leeds School of Business, discusses how Xiaomi redefined what it means to be a platform company by blending two distinct business models—ecosystem and corporate venture capital—into one in today’s digital age.
Summary. Traditional platform businesses generally fall into one of two categories: Ecosystems, such as Apple’s App Store, which offer limited resources to a wide array of independently-run firms; and Corporate Venture Capital (CVC) companies, such as Intel Capital, which invest heavily into a small number of ventures that promise either financial or strategic returns. However, new research into Xiaomi’s growth strategy suggests that the Beijing-based electronics giant has developed a blended approach, borrowing elements of both traditional ecosystem and CVC firms to create a broad ecosystem of strongly-supported partner ventures. Based on a series of in-depth interviews with executives from both Xiaomi and its partner companies, the authors identify three factors that have enabled this novel business model.