The biggest flip the technology age has done on the industrial era is the open API. For the uninitiated, an open API (Application Program Interface) is a word used to describe sets of technologies that enable websites to interact with each other. It is also a system where web companies ‘open up’ their platform for external non affiliated software developers to create applications on. Facebook most famously did this with their ‘Facebook Platform‘.
While this sounds like some kind of nerd nirvana, it is actually a counter intuitive move that forms a large part of the marketing genius of social web 2.0 applications. And that is outsourcing the R&D to total strangers. That is, entrepreneurs who have new and interesting ways to mash up their content. It is quite revolutionary in fact. Corporations from the pre-web industrial era would rarely let people use their logo, let alone open up part of the factory for hackers to come in and try and build something interesting. But this is exactly what is happening, the most amazing stuff is usually coming from external organisations and the entire ecosystem is the beneficiary.
- Existing web companies get their new product development for free
- Entrepreneurs get a shot at being acquired by the firms whose API they focus on
The open API idea has to be one of the major reasons why technology companies are eating the world. The only question remaining is why don’t old world industrial companies open up their doors to some new, fresh and external innovation?
I recently tweeted something that, I think deserves a more detailed explanation:
This is true for a few reasons.
A direct world: all customers can and will contact brand controllers directly. Information services and direct brand channels such as twitter mean that customers deserve and expect direct answers and interaction. Something only traditional service companies would once provide.
The manufacturing gap: Every year the chasm between between brands and manufacturing is widening. In fact, many of the worlds most adored brands don’t make what they sell. They either design and direct (eg Apple) or only make information (Facebook / Google). In fact consumer manufacturing stalwarts like Kraft and Proctor & Gamble produce far less than they ever have. The gap between makers and marketers will only continue to widen. And require traditional brand owners to become more service oriented in the process.
The virtual replacing the physical: Increasingly we are making and selling virtual goods. Goods that are consumed intellectually. Think video games – and then think far wider. Just because we can’t touch something, it does not mean it doesn’t provide significant utility. Paid for mobile apps and software are great examples, as is music in digital format. The CD only provided utility in that it delivered the music, nothing more.
Recently Marc Andresseen, was quoted as saying ‘Software is eating everything’ which is a very important statement. The shift is happening, and even if we still make stuff – increasingly our service orientation will be how we win.
Industrial Tourism is big business. It’s a little know fact the Boeing factory in Seattle has over 180,000 visitors a year. At $15 a ticket that is approx $2.7 million in high margin revenue.
Local Australia firm fosters brewing has a popular brewery tour at their Melbourne plant (you get a free beer at the end of it) as does Media conglomerate NBC in the Rockerfella Centre in New York. None of this is free, and they are all fully booked pretty much every day. The thing that is almost as powerful as the cash such Industrial Tourism generates, is the relationship it builds with the brand.
It is pretty cool to be taken into the ‘secret back room’, even though we can all be pretty sure that Boeing or any large conglomerate are not about to give away any secrets on said tours. But this is where startups and SME’s can do it even better. We can let our early adopters into our Factory, Alpha testing, Retail back room, Warehouse, New Product Development session. We can let them expose our secret goodness to the market for us. Especially if we do something awesome like make great software, use recycled materials or anything creative.
So the question for startups is this: How can we let our early adopters and brand evangalists into our secret world to spread our world?