Searching for the Moon

Shannon Clark's rambles and conversations on food, geeks, San Francisco and occasionally economics

Transperency and Business of the future

Posted by shannonclark on December 5, 2004

Shel Israel emailed me a question in reaction to a comment I posted on his blog.

I really like your thinking on this one, Shannon. While technology
will change while we are writing this book, business is built on fundamentals
and evolves slowly. I am still having difficulties with writing the
transparent book. Do you think most businesses will pay the price for
total transparency? Their basic instinct is to keep competitors, publics and
even employees in the dark until shortly before taking a final action such
as launching a product.

What are your thoughts?

Shel highlights a challenge that all businesses will face increasingly in the future, and many already do face today. Whether making physical or “soft” goods, it is increasingly possible for competitors to react seemingly immediately, so there are many incentives for attempting to keep future moves secret and/or strongly protected via copyright, trademark, and patents.

On the other hand, the counterargument is that in an increasingly connected world business is rarely entirely conducted internally, so someone “outside” the corporation has to learn about the plans fairly early on, whether it be suppliers, service providers, consultants, partners, media, regulators, select customers, even potential employees sooner or later people learn about future plans. And as soon as anyone learns, it is fairly likely that the information or at least hints about it can be “leaked” online. This can be seen whether you look at product company’s new products, a car company’s new cars, a movie studio’s future releases, or a new game. The music and other industries that are essentially selling data have to deal with the expected full release of their product, not just news about it (bands changing release dates of albums in reaction to the album appearing on p2p networks was recently in the news).

Different industries are reacting to this reality in very different ways. The movie and music industries have, mostly, been reacting via increased legal action as well as preemtive attempts to make distribution of their content (or at times information about their content) illegal and perhaps physically prevented via changed to hardware. (new laws and actions to prevent videotaping in movie theaters, DMCA and follow on laws, both the various regional recordings of DVDs and the newer “broadcast flag” to prevent some actions with content recorded from TV etc.). In contrast the software industry is moving significently towards open source, where often not just the released product, but ongoing development of the product are available for anyone, including competitors to view and potentially use.

While the business model of open source is not 100% proven I think it is getting there. Further, I think that it points to an important distinction that may help resolve the issues that Shel raises with respect to both writing the book and towards corporations being “transperant” in general.

Even if all the tools and framework are out in the open, a corporation can still add considerable value with the data that those tools use, with the services provided by those tools, and with how the tools are configured and applied. Whether it be a car company which makes available all the information about the car – allowing other companies to build booming businesses selling parts and aftermarket upgrades – or a software company showing how their tools work, but still “selling” the tools as a way to access specific information and resources, configured specifically for a particular client real businesses can succeed even when relatively transperant.

In terms of the book, I think that many people will be engaged by and during the process of writing, but will pay for the completed work printed out, bound, and available in a very easy to read format (sure, Cleartype is nice but reading 100’s of pages on screen is a different experience than curling up with a great book in bed). Likewise, blogging can open up how a company is making decisions even where they are planning on going in the future, perhaps even give a sample or a taste of what those directions will be, but customers will still pay for the finished result.

Further, the corporation (or in this case the authors) benefit by the potential for immediate and early feedback which can avoid many potential failures.

There is a danger that should always be considered, that of too much feedback, so the corporation (or authors) have to balance feedback with editorial control and creative license. People do not always have the words to express how they will react in the future when presented with something new or different (this is the entire subject of Malcolm Gladwell’s new book Blink, out early in 2005 btw) so feedback whether on a new product or a new book has to be tempered with creative vision.

But likewise, in our increasingly complex and diverse world, few products are really the creation of just a few people – from movies to cars products and creativity are spread out amongst large teams (though in the best cases lead by just a few people exercising control and strong editing of the process). Blogging offers an opportunity for the voices at the corporation to document this process and to control (to a great extent) the level of transperency.

A fascinating issue which will be played out over future years on the pages of the Wall Street Journal as well as online.

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