Andrew Carnegie’s style of vertical integration is no longer possible for most (if not all) companies. The primary reason being that we’ve moved from a brick and mortar world to a digital one. You can’t really “own” data and code.
Numerous attempts at controlling the flow and spread of code (see DRM, CD keys etc.) have failed miserably due to the culture of free that seems to propagate the digital world. Therefore any attempt to build a stand alone ecosystem will fail. If it doesn’t connect; it doesn’t work.
Why then do companies like Facebook and Google succeed while more traditional companies flounder? By embracing the idea of fluid integration.
Vertical integration relies on a closed loop. Fluid integration relies on an open loop.
How does fluid integration work? Collect data from consumers, not in the traditional sense though. By providing various utilities, services and experiences companies can learn more about you. All they ask in return? A small tracking code that follows you around the web. Thus, the ecosystem that they create is one that doesn’t rely on control but rather the sharing and propagation of data.
When setting out to build something we have to consider that people use products for two reasons:
1. They need the product.
2. The product was recommended to them.
New products (especially digital ones) rarely fall into the first category. After all, if someone needed something wouldn’t they have already invented it? Start-ups live and die by the mantra that they are inventing something that people need, they just don’t know it yet.
This is also why 90% of start-ups will fail.
Corporations can’t innovate the same way start ups do. The reason? They need to make money. Their margins are slimmer thus so is their appetite for risk. Every action they take will have an impact on the bottom line.
How then do corporations/agencies innovate effectively?
- Allow any (non-sensitive) data you possess to be accessed via an API.
- Does someone do something better than you do? Integrate and connect with ecosystems already in existence.
- Ask your customers. They’re just as invested in your brand as you are and can provide the “Emperor has no clothes.” type of advice that goes overlooked by internal resources.
- Test. Test. Test. You can’t innovate unless you test/try out new features.
How else can we improve/innovate a company’s experience? I’d love to hear your thoughts.