Definition
The Complementarity Effect occurs when the value of a product increases as the availability and quality of another, related product (the Complementor) increases. Andy Grove identified complementors as the “Sixth Force” in competitive strategy.
Why It Matters
It shifts strategy from internal focus to ecosystem management, recognizing that your success is often tied to the health of related industries.
Core Concepts
- Mutual Value Creation: Complementary products are used together (e.g., computers and software, cars and gasoline). Neither is useful without the other.
- Strategic Dependence: A firm’s success is often tied to the health and innovation rate of its complementors.
- The 10X Complementor Change: A massive shift in a complementor (e.g., the rise of the Internet for PC manufacturers) can trigger a Strategic Inflection Point.
- Winner-Take-Most: In horizontal industry structures, the most dominant complementors (e.g., Windows OS for Intel chips) create massive barriers to entry through network effects.