Introduction

A few years ago, American Express started running a campaign ‘What can OPEN do for your business?’ Over the last few week’s I’ve been thinking about what I think is a more interesting question: How would an open ethos reinvent your industry? Specifically, I’m interested in looking at the ways that new entrants into a marketplace who take an open approach have changed industries.

What do I mean by ‘open ethos’

Wiktionary defines ethos as

The character, or fundamental values of a person, people, culture, or movement.

The most appropriate definition of open from Wiktionary is

Which is not closed; accessible

Therefore, for the purposes of this two-part post, I would define open ethos as an organization embracing accessibility as an fundamental value.

Interestingly, it seems like new entrants to the market with an open ethos have reinvented a number of industries. In the first part of this two-post series, I’ll focus in-depth on two examples where new entrants to the market have placed a higher value on being open. (I’ll also just link to a few other examples that I find illustrative.) In each case, you’ll see the organization has catalyzed significant change in their industries. In the second post, I’ll focus on a few generalizations that I think can be learned from the examples and point to a few industries that I believe are very vulnerable to being reinvented by embracing a more open ethos.

NOTE: This is more of an ‘think out loud’ series of posts, then one that I start knowing a specific conclusion I hope to reach. Therefore, I’d especially be interested in other people’s opinion on the topic - please leave comments below.

Open Source Software

I’ll start with reviewing the keystone example, open source software. The entire software business has been changed significantly because of business models that have sprung up around open source software. Interestingly, while some businesses have been effected negatively, there are a number of new business models that have emerged. There is an excellent book by O’Reilly that came out in 1999, “Open Source: Voices from the Open Source Revolution” it included an essay by Robert Young one of the founders of Red Hat.

Robert states:

You can’t compete with a monopoly by playing the game by the monopolist’s rules. The monopoly has the resources, the distribution channels, the R&D resources; in short, they just have too many strengths. You compete with a monopoly by changing the rules of the game into a set that favors your strengths…

The benefit an open-source OS offers over the proprietary binary-only OSes is the control the users gain over the technology they are using. The proprietary OS vendors, with their huge investment in the proprietary software that their products consist of, would be crazy to try and match the benefit we are offering their customers, as we generate a fraction of the revenue per user that the current proprietary OS vendors rely on.

In 1999 when Robert’s essay was written, Linux was just emerging in the operating system market. At the time there were about 10 million users compared to 230M Dos/Windows users. Looking back it is interesting to see how insightful this essay was. Today Linux is an established player, a recent Information Week article stated “a third of respondents to InformationWeek’s most recent IT priorities survey have Linux servers on their 2007 project lists–and it’s generating increasing interest as a PC operating system, partly as an alternative to Windows Vista.”

There are obviously a number of other very succesful open source project, but that is outside the scope of this essay. If you need help figuring out what those projects are - go to SourceForge.

Open Publishing

The entire idea of collaboratively developing material in wiki pages is an excellent example of a publisher (in the broadest sense of the term ‘publisher’) embracing an open ethos. The largest example of this is obviously Wikipedia, which describes itself as:

Wikipedia is an encyclopedia collaboratively written by many of its readers. It is a special type of website, called a wiki, that makes collaboration easy. Many people are constantly improving Wikipedia, making thousands of changes an hour, all of which are recorded on article histories and recent changes. Inappropriate changes are usually removed quickly, and repeat offenders can be blocked from editing.

In a debate in the Wall Street Journal Online about a year ago between Jimmy Wales (founder of Wikipedia) and Dale Hoiberg (editor-in-chief of Britannica), Jimmy was quoted as saying:

The main thrust of our evolution has been to become more open, because we have found time and time again that increased openness, increased dialog and debate, leads to higher quality. I think it is a misunderstanding to think of “openness” as antithetical to quality. “Openness” is going to be necessary in order to reach the highest levels of quality.

Britannica has long been a standard bearer, and they have done a fine job within their model. But it is time to work in a different model, with different techniques made possible by new technologies but the same goals, to reach ever higher standards.

While Wikipedia is a non-profit, interestingly Jimmy Wales recently started a new for-profit venture called “Wikia.” You can learn more about the project by reading it’s home-page - constructed by the community. Another recent interesting example is being led by Jay Rosen called “Assignment Zero” which is putting together a new very interesting twist on this now. Check out a description by Jay in Wired there is also a good summary by Jeff Jarvis.

This is a model that is clearly beginning to disrupting the way content is produced - similar to how open source disrupted the software industry.

A Few Other Examples

The following are a few other examples that I find pertinent:

• Online Classified Advertising - Craiglist
• Scientific Publishing - Science Commons
• Tech Events - Bar Camp
• Online Identity Management - OpenID (hat tip to my colleague John for thinking of this one.)

Next Post

Wow, so this was certainly a LONG first post! In the second (hopefully shorter!) half, I’ll explore the unique characteristics that open ethos projects have and some other industries that my be vulnerable.

I am just getting back and recovering from SXSW. The conference was amazing and I would strongly encourage anyone to consider attending. The crowd is an amazing mix of creative individuals that are shaping the web. For a summary of my thoughts from the panels, you can read my posts at Read/Write Web. For this post, I’ll just focus on the experience of SXSW.

The temptation when you come back from a conference like this is to name drop, because you end up hanging out with so many people that you have long read and respected from a distance. I won’t do that, but I will say that that this truly unique about SXSW - the access you have to people. At most conferences, the speakers are ushered in and out quickly with no time for interaction with attendees. Here you end up having coffee and drinks with the speakers for four days & nights straight. See picture to the left for example of me drinking and eating BBQ w/ Robert Scoble. (ok, I couldn’t help myself)

Another interesting thing about the show was how geeky it was. It really was a conference full of people obsessed with interactive product. From my conversations, this included primarily: entrepreneurs, designers, product managers, advertisers/marketers and general media people. As ValleyWag, pointed out — it is fairly light on VCs. [The only recognizable VC I saw at the show was David Hornik (Venture Blog).]

Interestingly, it was amazing how many people were staying to listen to the music. (I didn’t stay for SXSW Music - the picture is of one of my best friends Eric James playing a show in Pittsburgh. However, Eric is currently at SXSW Music.) I spent three years working with Dr. Richard Florida, author of Rise of the Creative Class and Flight of the Creative Class, when we were both at Carnegie Mellon University. The core of the Creative Class Theory is that their is an entire ‘class’ of people who are distinct because they are employed to be creative. While distinct from other groups, they also have similar needs and wants across the class. In many ways, the continued success of SXSW is an interesting validation of his theory.

Rich’s background is economic development, so he tends to focus on how this changes where they choose to live. However, we’ve also done pieces for publications like HBR which showed how it applied to attracting and retaining talent in a corporation. [Tom Peters has also leveraged Rich's Theories in some of his work and blog posts over the last few years.] Anyway, one thought that hit me this week was how applicable his theory was to the changes in the online space from ‘web 1.0′ to ‘web 2.0′! (This will be the subject of an upcoming post.)

Finally, Twitter became more real to me than it had been. I had signed up for an account sometime ago, because of my respect for Evan. However, I stopped using it as I didn’t really get it. While I’m not sure how great it is for normal everyday interaction, it is amazing in a conference setting. I’m going to try it for a few more days and then we’ll see. If you are a regular Twitter User and have a Mac, I recommend Twitterific (thanks for the Tip Evan.) You can see a little more about my experience using Twitter in the following InformationWeek article.

I’m on my way to SXSW Interactive and decided to uninstall the Verizon Access Manager software.

It may have been the most frustrating application I’ve ever used! (And remember till a week ago I was a Windows User
The application repeatedly froze my Mac forcing me to reboot. I will say the Windows application worked like a charm (in my former PC days) However, I’m convinced they have adequately ported the app for the Mac yet.

It really isn’t a problem, because OS/X has WAN support built in to the latest update. However, the Verizon Tech encouraged me to ‘optimize’ my system by installing the access manager. DON’T DO THIS — Unless, you consider constantly rebooting your computer an ‘optimzation’;)

Anyway, it is no uninstalled and everything is working great! I’m back to loving my EVDO card …

I’m writing this from 30k feet on my way home from Boston. I flew up for the day, to touch base quickly with one of my clients, Reed Business, before heading to SXSW tomorrow.

We have been working on a project over the last six months with Reed that will be coming out of beta over the next few weeks. Since we’re leaving the beta phase, I thought now would be a good time to talk about it.

The project is a new destination on the web for users interested in receiving personalized news on the supply chain space. Our partners at Reed have identified hundreds of RSS feeds from across the web and partnered with us at mSpoke to aggregate & deliver the most relevant content from those feeds to the visitors.

The MPA issued a report <b>The Value of Magazine Readership</b> about a year ago, which stated:

The real opportunity for magazines, as respected information agents, to make sense out of the massive data out there. The key to that is having strong brands with a loyal base of repeat customers, high name recognition and a unique service.

I believe this is exactly what Reed has done in partnership with us. If you’re interested in fork logistics, materials handling, procurement or other supply chain information please create an account at www.supplychaindaily.com

And let me know what you think!

My colleague Brian has posted about the new bag he recently purchased, so I figured I’d do the same.

Like Brian, I just upgraded to a Mac Book Pro. Although, it has been a more significant migration for me as I moved from my old Dell.

I decided that I wanted a more ergonomic bag this time around, so I went with the Incase Sling Pack.

As part of today’s free features from the Wall Street Journal, there is an interesting interview with Lawrence Probst the soon to be former CEO of Electronic Arts.

The entire article is very interesting. He (obviously) has great perspective on the video game industry & observations on its transition to be a major media channel for advertisers to engage with individuals. His quotes on the future of in game advertising are particularly interesting:

WSJ: Where do you see the biggest opportunities to make money from online gaming?

Mr. Probst: It’s a combination. Subscription revenue is what drives our Pogo business [a Web site where subscribers can go play games]. We’ve got a massively multiplayer game in development called Warhammer, which we have high hopes for. That will also be a subscription-based business.

The early returns on dynamic in-game advertising have been good, so we think there’s potential there. The microtransaction segment is beginning to develop pretty significantly. You’ve probably heard the story about our FIFA online [soccer] game in Korea. We did 1.4 million microtransactions at a price point of $1.60 on average [between Aug. 1 and Dec. 31 last year].

WSJ: You were selling uniforms for game characters and things like that?

Mr. Probst: Yes, power-ups, uniforms, shoes — let your imagination run wild. In the last 12 months, we’ve done something like $115 million in digital revenue, and it’s growing pretty rapidly. We think that number’s more than $200 million in our next fiscal year.

WSJ: How big is the opportunity for selling advertising in games?

Mr. Probst: We’ve consistently said that in the foreseeable future we think that’s in the tens of millions, not hundreds of millions. Some of our competitors are out there saying it’s a hundreds-of-millions opportunity. Maybe long term it is.

I could almost feel Darren smiling!

There is a great post in Read/Write Web by Alex Iskold on The Attention Economy. The entire article is worth a read (so go read it) … ok fine, here is my favorite quote:

It is important to realize that the key ingredient in the attention game is relevancy. As long as a consumer sees relevant content, he/she is going to stick around - and that creates more opportunities to sell. Literally, the longer a user stays on a site reading news etc, the higher the chance that person will click on an ad. So the question is: how do you show the user relevant content? This is a complex problem that can be partially addressed by recommendation engines. However, it is not possible for sites to generate relevant, personalized content unless they know the user. To personalize, web sites need to know you: your browsing history, the books you like, the wines you drink, the music you listening to, etc. The more information the better.

Well it is official. Today I went to the Apple Store and got a new Mac Book Pro. I just setup MarsEdit

I’ll blog some more observations over the weekend.