Open the business case

So I have been doing a bit of research into being “Open” as a business strategy, inevitably it led me to Open government thoughts.

We can all cite merrily the bazillion reasons for buying Open source/Open tech, using Open standards, championing Open platforms and generally being the cheering public and sometime consumers of, or contributors to, Open projects.

But what about when you are the supplier? What about when you are the business, looking at the business model and not just being the vendor of Open technologies? It’s a tricky one. In this blog post I have shared some of the things I found out, and as ever, I would love to learn and understand more.

Here is a starter for ten:

“Companies that keep their intellectual property too close to the vest risk missing out on critical business innovations that idea-sharing could generate. Open business models foster collaboration with customers and suppliers to everyone’s benefit.

The more companies learn about open business models, the more they realize how much they have to change their own innovation activities to take full advantage of these paradigms. It’s not simply a matter of searching for new technologies. To thrive, companies must adapt their business models to make them more open to external ideas and paths to market.”

Henry Chesbrough, “Embracing Open Business Models”, Optimize Magazine, 1/1/07

Ponderables for a business case

  • While you are Open, you still own the data
  • What you gain by being Open is distribution
  • The value of user generated content (UGC) is growing, indeed it’s king when it is structured properly
  • The more you Open up and distribute the higher the quality of UGC you get back
  • Sometimes, other people do better things with your data

(The above is a synopsis of a conversation I had with @steveathon, in Sydney, over IM, whilst his wife made gingerbread – thanks for giving up your evening Steve)

But that’s irrelevant: Crisis forces Open consideration

The one thing I saw repeated article after article was that it usually takes a crisis for a business to even consider the benefits of being Open. None detailed more clearly than this business week article by Michael Arndt. I advise reading the whole article but here copied is the bit that I think is most interesting:

Their companies converted to Open innovation—relying on outsiders for their next products or services—only after falling into a crisis….

Whirlpool came around that same year after top management realized that big-ticket appliances had become a commodity. As a result, prices and margins were in a permanent decline, steepened by the recession. Unlike P&G, it didn’t respond initially by Opening its portal to product suggestions from outsiders. But it did enlist proposals from all employees. Further, it trained some 3,000 in the innovation process and began collaborating with suppliers. Now, in Phase II, Whirlpool is inviting consumers to help, said Moises Norena, global innovation director….

GSK’s goal was to boost its share of externally developed products to 33% in three years. Instead, it hit 50% even sooner than that. Among the Open-innovation products is a new form of Aquafresh that turns to foam in your mouth. Rutledge said the idea came from someone in the oral-care business who had background in gel foams like Gillette’s Edge, but it never would have hit the market if not for technology that came from four outside partners….

Makes blinding sense right? A hard sell into a thriving business, relatively easy to a business in trouble who are pretty willing to do anything, especially when that ‘anything’ is something others have done successfully.

So – government: Open and as a platform

If we accept that fact that crisis triggers a consideration of an Open solution (and I am sure that there are many who will disagree) – a bit like how we can tell that someone is about to leave their job/is scared they are about to get booted when they start updating LinkedIn and asking to connect with lots of people: we can recognise that Government only really embraced Open principles after it realised its own crisis, economic mainly, but also engagement with the citizens of this country.

Not, sadly, for all the reasoned and logical arguments, lobbying and hectoring over the last decade or so. Shame that, but it doesn’t really matter. What matters is that it has happened – in a very roundabout and reactionary manner, which does leave everyone feeling a bit unstable and scared, but the blame for that cannot be laid solely at the door of Open – it’s crisis, innit.

Martha Lane-Fox and Transform’s paper: Directgov 2010 and beyond: Revolution not Evolution really is all about giving Open a go (not going to expand on this here but many have, if you want to read).

Interestingly when researching this a bit, I discovered that Tim O’Reilly has opened up his book: Government as a platform for comment, as he says:

You are reading the text of an O’Reilly book that has been published (Open Government). However, the author of this piece—Tim O’Reilly—understands that the ideas in this chapter are evolving and changing. We’re putting it here to get feedback from you—what are your ideas? This chapter uses the Open Feedback Publishing System (OFPS), an O’Reilly experiment that tries to bridge the gap between manuscripts and public blogs.

Next to every paragraph, there is a link you can use to comment on what you’re reading. We are grateful for any feedback you have: questions, comments, suggestions, and corrections are all welcome and appreciated.

It’s fascinating, and I know most of you who read my blog love this stuff, so get commenting :)

So, government has embraced Open, through a combination of natural crisis response behaviour with some well-timed logic in the form of a paper that they could respond to and point at.

This is good – but a LOT of information and a lot of confusion. It does help though to separate the confusion created by the crisis: money and engagement; and the confusion created by an Open and transparent government. See? It feels easier already, right?!

So how should we, as the Joe Bloggs in this wonderful Open world of government work with this?

Well, if we understand the business reason behind being Open and the ponderables, it gives us a place to start.

The trigger

Response to a crisis: no money, gloomy jobs market, disengaged electorate, nothing else is working so why not? (oh and the expenses palaver)

The business reason

  • Martha said it would work
  • It has worked elsewhere
  • We have tried everything else

Going back to the final three points I made in my list of ponderables up there:

  • The value of user generated content (UGC) is growing, indeed it’s king when it is structured properly
  • The more you Open up and distribute the higher the quality of UGC you get back
  • Sometimes, other people do better things with your data

What’s in it for us?

  • Well, assuming that one day soon government will realise the value of UGC and digital reach, they will soon find a way to run consultations in a proper consultative fashion – and find a way of receiving the feedback and including it in policy development: this ticks the box of those dealing with the crisis of a disengaged electorate
  • and assuming we have good collaboration around well-consulted policies, you never know, the solution they seek – much like the foaming toothpaste GSK stumbled upon – may be found more quickly than they thought, and a regenerated economy may be triggered by Mrs Miggins at Number 47 – you never know
  • and of course, we all know that the geeks will inherit the earth – and they will do better things with government data, whether that be services for us all or a hugely successful commercial opportunity that highly acclaimed, sets us as digital leaders and is syndicated across the globe. Dunno, might happen?

Shutting up now

The point of writing this was to share what I had learned, and the resulting clarity of mind I had with regard to the chaotic world of government at the moment. As well as unpicking the business reasons for being on the supplier side of being Open. I hope it was interesting.

Many thanks to Gordon Rae @socialtechno and Steve King @steveathon for the Links/conversation/insight

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