How Xiaomi redefined what it means to be a platform

• Main Authors: WONG, Tony W., GUO, Yanting, CHEN, Liang
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2021
• Subjects: Xiaomi; e-commerce; China; partner ventures; eco-systems; Asian Studies; E-Commerce; Strategic Management Policy
• Online Access: https://ink.library.smu.edu.sg/lkcsb_research/7299; https://ink.library.smu.edu.sg/context/lkcsb_research/article/8298/viewcontent/Xiaomi_HBR_2021_av.pdf
• Institution: Singapore Management University

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: Xiaomi structures its investments to incentivize innovation and build trust while still ensuring alignment, proactively fosters an ecosystem mindset throughout its organization, and takes a deliberate, measured approach to expanding the scope of its ecosystem over time.