Tuesday, December 19, 2006

Architected for Openness

Earlier this year, I wrote a post titled Innovation Happens Elsewhere.

The post, inspired by a quote from Bill Joy, argues that no company owns a monopoly on talent and innovation. As such, businesses need to be designed to leverage the innovation of others. Certainly the multiple benefits - cost, innovation, wealth - driven by standards and open-systems speak to the value of building businesses that are premised on the axiom of distributed innovation.

The atomization of the web is well underway. Standards and protocols are enabling end-users to consume services and content on their terms. Companies are realizing that "off-domain" consumption and service/content syndication leverages the optimal mix of consumer preferences and technology.

As an example, in Q306, GOOG's Q306 total ad revenues were $2.66bn, of which $1bn came via non-GOOG domains, or 39% of the total. The rise of GOOG gadgets, Windows Live gadgets, web widgets, etc reflect a creeping realization that no matter how large the brand it is impossible to keep users on a single domain. JavaScript-integration represents the lowest common denominator for the adoption and usage of a given company's services. Like AdSense, it is critical that web companies allow users to consume web services at locations and in the form of the consumers' choosing.

In many ways, DVR, RSS, personalized home pages reflect the demise of the top down architecture that requires program managers and companies to produce, edit, and package content and services on the users behalf. Whether time shifting, JavaScript-service integration, customized feed readers, users are rewriting the rule book regarding how they expect to be served. Today, companies that are architected to be open and to leverage distributed innovation and consumption are architected for success.

Standards and technologies are allowing for a free market, where users are in control. If we consider "openness" a virtue and the "right" side of history, then similarly we can point to "closed" walled garden strategies as being on the "wrong" side of history. We can easily compare and contrast the vibrancy of the PC web with the backward nature of the mobile industry. In mobile, gate keepers, lack of standards, fragmented platforms, massive porting costs, and a subscription mentally are robbing users and the market of the opportunity for innovation, new services, and wealth that are the treasured hallmarks of the PC-based web.

Command and control economies fell victim to the simple fact that central governments are incapable of making better decisions than millions of individuals exercising their personal preferences.

Today, an "iron curtain" mentality still exists in certain industries. The PC web is quickly creating a new digital divide - one between the consumer utility of an open ecosystem and the crap available from product managers at Verizon and AT&T, who are working with their OEMs on what will be "best" for us.

Eliminating friction points that frustrate the freedom to choose when, what, and where to consume represents not only a worthy goal in itself but more importantly recognizes that it is impossible and unwise to under estimate the individual's desire to define utility.

As entrepreneurs think about architecting start-ups for 2007, I suggest thinking about how to best facilitate atomization, syndication, user-defined utility, and the advancements of others.

1 comment:

  1. Supporting Network Neutrality would be a start...