Embrace and Extend

A strategy to gain market dominance by first adopting a widely used standard, then adding proprietary extensions to create a lock-in effect.

"Capturing an existing ecosystem."

• Simon Wardley

🤔 Explanation

What is Embrace and Extend?

"Embrace and Extend" is an aggressive strategy for achieving market dominance by co-opting an existing, widely-adopted standard. It works in three phases:

1. Embrace: A company starts by creating a product that is fully compatible with an open or de facto standard (e.g., a document format, a network protocol, or a software platform). This allows them to enter the market easily and gain a foothold with the existing user base.
2. Extend: The company then adds its own proprietary features and extensions to the standard. These extensions provide additional value and are not available to competitors who stick to the original, open standard.
3. Extinguish (Implicit Goal): As users come to depend on the proprietary extensions, the company's version of the standard becomes the new de facto standard. The original open standard is marginalized, and competitors who don't or can't adopt the proprietary extensions are extinguished from the market. This creates a powerful lock-in effect.

Why use Embrace and Extend?

This is a high-risk strategy for companies with significant market power. The primary motivations are:

• Hijack an Ecosystem: It allows a company to take control of an existing ecosystem without having to build it from scratch.
• Create a Monopoly: The end goal is to create a proprietary, defensible monopoly around what was once an open standard.
• Marginalize Competitors: It is a direct assault on competitors, aiming to make their standards-compliant products obsolete.
• Increase Switching Costs: The proprietary extensions create a strong lock-in effect, making it difficult for customers to switch to a competitor.

🗺️ Real-World Examples

Microsoft and the Browser Wars

The most famous (and infamous) example is Microsoft's strategy with Internet Explorer in the late 1990s. Microsoft embraced the open web standards of the time (HTML, CSS). They then extended these standards with proprietary features and tags (like <marquee>) that only worked in Internet Explorer. As IE's market share grew, web developers were forced to build sites that used these proprietary extensions, making them look broken in competing browsers like Netscape Navigator. This helped Microsoft extinguish Netscape and achieve a near-monopoly in the browser market.

Google's Use of Android

While less aggressive, Google's strategy with Android has elements of Embrace and Extend. Google embraced open-source by making the core Android Open Source Project (AOSP) available to everyone. However, to get access to the Google Play Store and other essential Google services (the extensions), manufacturers must agree to Google's terms and pre-install a suite of Google apps. This makes it very difficult for a forked version of Android (like Amazon's Fire OS) to compete, as it lacks the crucial Google ecosystem.

🚦 When to Use / When to Avoid

🚦 Embrace and Extend Strategy Self-Assessment Tool

Find out the strategic fit and organisational readiness by marking each statement as Yes/Maybe/No based on your context. Strategy Assessment Guide.

Landscape and Climate

How well does the strategy fit your context?

• Your map shows a widely adopted, open standard that is central to a valuable ecosystem.
• The existing standard has clear limitations or unmet user needs that you can address with proprietary extensions.
• Competitors are committed to the open standard and are unlikely to be able to replicate your extensions quickly.
• The ecosystem is fragmented, with no single player having dominant control.

Organisational Readiness (Doctrine)

How capable is your organisation to execute the strategy?

• We have significant market power and resources to promote our extended version of the standard.
• Our organization has the R&D capability to create genuinely valuable extensions.
• We have a high tolerance for legal and reputational risk, as this strategy is highly controversial.
• Our leadership is willing to play a long, aggressive game to achieve market dominance.

Assessment and Recommendation

Strategic Fit: Weak. Ability to Execute: Weak.

RECOMMENDATION
Consider alternative strategies or address significant gaps before proceeding.

Use when

• You are a large player seeking to dominate a market with an established open standard.
• You have the resources to create compelling extensions and drive their adoption.
• You are willing to accept the significant legal and ethical risks.

Avoid when

• You do not have significant market power. This strategy is not for startups.
• The standard is controlled by a strong, well-organized body that can resist your extensions.
• The user and developer community is strongly committed to open standards and is likely to reject your proprietary extensions.
• The legal and reputational risks are too high for your company.

🎯 Leadership

Core challenge

The core leadership challenge is managing the immense ethical and legal risks of this strategy. It is an explicitly anti-competitive maneuver that is likely to attract regulatory scrutiny and public criticism. Leaders must be prepared to defend their actions and navigate a complex and hostile environment. They must also have the strategic patience to see the multi-year process through, from embrace to extinguish.

Key leadership skills required

• Risk Management: The ability to assess and mitigate the significant legal, reputational, and competitive risks.
• Aggressiveness: A willingness to play hardball and engage in direct, often confrontational, competition.
• Strategic Vision: A clear understanding of how to leverage the extensions to achieve market dominance.
• Lobbying and Public Relations: The skill to manage the narrative and influence regulators and the public.

Ethical considerations

This strategy is widely regarded as ethically dubious. It involves deliberately undermining open standards for private gain, stifling competition, and limiting consumer choice. The "extinguish" phase is explicitly about putting competitors out of business. Any leader considering this strategy must grapple with the fact that they are attempting to create a monopoly, which is often harmful to the health of the market and to consumers.

📋 How to Execute

1. Embrace the Standard: Launch a product that is 100% compliant with the existing open standard. Gain credibility and market share by being a good citizen of the existing ecosystem.
2. Identify Weaknesses: Analyze the open standard to find its weaknesses, limitations, and the unmet needs of its users.
3. Develop Proprietary Extensions: Create valuable, proprietary features that address these weaknesses and solve the unmet needs. Integrate them seamlessly into your product.
4. Promote the Extensions: Use your market power to promote your extended version of the standard. This could involve marketing, bundling, or making the extensions the default in your product.
5. Create Lock-In: As users and developers start to rely on your extensions, the switching costs to a competitor's product become very high.
6. Extinguish the Competition: Once your extended version has become the de facto standard, competitors who have stuck to the open standard will be unable to compete effectively.

📈 Measuring Success

• Adoption of Extensions: What percentage of the market is using your proprietary extensions?
• Decline of Competitors: Are competitors who rely on the open standard losing market share?
• Market Share: Has your overall market share increased to a dominant or monopoly position?
• Control over the Standard: Are you now the one dictating the future direction of the technology?

⚠️ Common Pitfalls and Warning Signs

Antitrust Lawsuits

This strategy is a red flag for regulators. The most famous example led to the United States v. Microsoft Corp. antitrust case.

Community Backlash

The developer and user community can revolt against attempts to undermine open standards, leading to significant reputational damage.

Failure to Extend

If your extensions are not compelling enough, users will not adopt them, and the strategy will fail at the second step.

Competitor Response

A strong competitor may be able to counter your extensions with their own, or by rallying the community around the open standard.

🧠 Strategic Insights

The Dark Side of Platform Power

Embrace and Extend is a powerful illustration of the dark side of platform power. It shows how a dominant player can use its position to manipulate standards and crush competition. It is a strategy of control, not innovation.

Open Source as a Defense

A strong, vibrant open-source community around a standard is one of the best defenses against an Embrace and Extend attack. The community can act as a guardian of the open standard and resist proprietary extensions.

❓ Key Questions to Ask

• The Target: Which open standard are we targeting, and is it vulnerable?
• The Extension: What unique, compelling value can we add that will create a lock-in effect?
• The Risk: Are we prepared for the inevitable legal and reputational backlash?
• The Endgame: What is our plan for when we have successfully extinguished the competition and control the standard?
• Our Character: Is this the kind of company we want to be?

🔀 Related Strategies

• Tower and Moat: A related strategy for achieving dominance, but typically focused on building a new Tower in a future market, rather than co-opting an existing standard.

• Standards Game: Embrace and Extend is a particularly aggressive way to play the standards game.

• Lock-In: The ultimate goal of this strategy is to create customer lock-in.

• Fear, Uncertainty, and Doubt (FUD): FUD is often used as a tactic to support an Embrace and Extend strategy by creating anxiety about the future of the open standard.

• Open Approaches - championing open standards and collaboration, in opposition to proprietary extensions that undermine compatibility.

• Co-opting - absorbing compatible implementations into your ecosystem before introducing proprietary extensions.

• restriction-of-movement - enforcing extensions to constrain competitors’ ability to adopt or move between standards.

• fragmentation - splintering the ecosystem by introducing incompatible variants that divide community implementations.

• Platform Envelopment - "Embrace and Extend" can be a method to achieve platform envelopment, by first adopting a standard to integrate a service, then extending it with proprietary features to lock users into the platform's ecosystem.

⛅ Relevant Climatic Patterns

• Creative Destruction – trigger: extending a standard can undermine incumbent approaches.
• Components can co-evolve – influence: ecosystem partners adapt as you change the core.

📚 Further Reading & References

• The Halloween Documents: A series of confidential Microsoft memos that were leaked in the late 1990s, which provide a detailed, internal view of this strategy.
• United States v. Microsoft Corp.: The court filings from this landmark antitrust case offer a deep dive into the mechanics and consequences of the Embrace and Extend strategy.