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

4 responses

  1. Nice ;0)

    But what happens AFTER embracing Openness? When the crisis is abated.

    Here is a story:

    Once upon a time, your car radiator blew and you were stranded. The crisis meant you immediately become open to the help of strangers.

    Along came a scary looking tattoo covered biker who showed you that pretty much any fluid will make your radiator work…Even at body temperature….It was all a bit yucky, but you got home and gained a great story to tell.

    But your new found openness only really lasted as long as you felt like telling the story. The real stress of the experience was also quickly forgotten.

    The garage has since done a paid service on your car and you don’t need your newly acquired open knowledge…In fact the nice guy at the garage suggested that next time you didn’t drive the car with a blown cooling system and you have taken out AA cover as a precaution.

    Will Government’s engagement with Open (stuff) be any different?

    Crisis solutions rarely become habitual and anything that needs a little extra effort will usually give way over time to a solution with less effort.

    When you have money you don’t mind paying for convenience.
    When you have none you will make do.

    Your “business reason” bit made me ROFL – Class !

  2. I agree with John! being open to ideas is totally different to being open with your own intellectual property, these shouldnt be confused. sharing ideas and technology can help expand a market [IT examples include the IBM PC, earlier examples include the steam engine and the printing press] but originators dont always benefit [Xerox PARC and the development of the Graphical User Interface]. Neither Apple nor Microsoft make their technology available for free, they are fiercely protective. But both Apple and microsoft have been very good being open to others’ ideas, at looking at existing ideas/technology already in the market place, and judging just how to improve it or launch it in a way to generate new demand. Also, branding and pricing becomes incredibly important when users find it difficult to judge the differences in the basic quality and technology different suppliers [best example - bottled water, but also: home insurance; electricity; directory enquiry services]. Equally Linux appeals to some and may be cheaper for the small % of users with the skills to maintain and develop themselves, just as a % of people are competent at DIY and choose to do it themselves – and a smaller % of people will build a house or a car from a kit, and a much much smaller % of folk may attempt to build a house from raw materials. In much the same way, release by suppliers of raw unfurnished data in large volumes for its own sake with no dialogue with users on possible uses nor other support, may result in little actual use by anybody and then only use by existing expert users (think the COINS dataset), the new local crime maps will likely generate much more use through being simpler and more accessible, but the greatest use of data would come from schoolchildren all being taught to use data and as basic numerical literacy improves via longer term initiatives such as the getstats campaign http://www.getstats.org.uk/ . But even then the vast majority of people will expect to use the media to get information that is news, accountants or their employer to calculate what taxes they should be paying, and geeks to develop the apps for their phones, even if they were given access to the raw data and tools to do these tools themselves. In 2009 the Public Accounts Committee published a report looking at the progress made in improving adult literacy and numeracy in England and commented “In 2003, an estimated 75% of the adult population of working age had numeracy skills
    below the level of a good pass at GCSE”. It is also doubtful whether garnering the views of tens of thousands or millions of people via a consultation will often generate a better answer than consulting and getting views from a smaller number of experts , – which is why referenda are rare. It is far from clear that Big Brother style voting on every issue would enhance democracy or by engaging and listening to the electorate or merely encourage populism and ever greater pandering to those able to influence public opinion [the mass media]. I’d rather live in a society where evidence on policy is gathered in a fair open way from people who have properly considered a question, whether as part of participating in sound social research, writing in, petitioning their MP, or taking part in a demonstration. I’d rather we arent moved via the volatilities of daily news events or twitter feeds.

    It is much more important for suppliers to act as sensible consultants by starting by asking users what they are interested in and why, and then helping them figure out what data to use and how – most if not all suppliers of data have stories about “if we’d known that’s what you wanted to do, then we would have advised you to do X/use this other dataset, in the first place”.

    and yes this can then still achieve innovation and the distribution benefits you describe. An example is the bbc’s what’s my risk tool http://www.bbc.co.uk/truthaboutcrime/risk/ which turns existing published data into something relevant to individuals.

    enough of a rant from me!

  3. Pingback: What’s the next challenge for Open Government data? | Emma Mulqueeny

  4. Pingback: Open Education: It’s not impossible, it’s already here | Emma Mulqueeny

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