Tuesday, 7 April 2009

Key to survival in business: Create a larger market

Just an idea but I think I'm not alone in this. I've always felt that the best way of ensuring your survival as a company is to make the market larger rather than kill off all competitors.

I feel that in essence that's a key difference in business model between Googles, Facebooks and Flickr's whose products are free and, in some cases open source and Microsoft and Apple who charge for most things and lock in users. 

I feel googles suite of products, in general, focus on enabling us all to do more and get things done faster and better than before. By providing these tools free it's a no lose situation for the customer. Google gains because customers get use to the ease of use with the new technology. Google also gets to try things out, less people complain because their products are in beta anyway. The advantage to all who follow in Googles and others wake is that more and more people are flooding online and willing to spend their hard earned cash. 

All the tools and products these companies are creating and making easy to use help other companies generate further revenue. Much like symbiosis. The point is that the internet has the potential to be, effectively,  unlimited so companies can generate vast fortunes without encroaching on others space. Done properly then each company will contribute a little to making their market larger. Thus if they encroach on others then they should also make the market larger too. 

I dont' mean to bask Microsoft or Apple, they're just doing what companies do. I just like to promote business models that I prefer. I like symbiosis. They don't do that. They both control their markets very tightly and actively discrouage others from entering. I understand why, they do have their reasons. I just feel it's shortsighted and in fact they're shooting themselves in the foot. 

They focus on profit first and serving customers second. Well as other competitors come along, and as progress marches on more competitors are evolving, customers will be less and less likely to put up with those companies that forced their approach on them. It probably sounds harsh but I hear many people complaining how linux and other free and open technologies get less than active support. 

I'm very close to leaving microsoft behind. They're silly licensing and product support approach is just the last straw. Once I've gone I won't be coming back. I don't think I'm alone. My knowledge of how they work will be gone and that's what locked me in in the first place. I never thought they were better than anyone else.

Apple is the same. I never got an ipod despite my wife telling me repeatedly I should. I've got a sony ericsson music phone. Sure they lock you in too but atleast the phones hardware, memory, battery etc, can be upgraded and swapped out. I'm really waiting for Google Android because I'll be able to, in theory, run the same operating system on many devices and benefit from real symbiosis. All my apps will be able to share with each other and life will be easy again.  Until of course Google and others get too big for their boots and start locking us in!!!!

I know that's dumbing down things and also that some have tried this before, created a larger market and then been swallowed up themselves by the companies that began to dominate the market. 

My answer to that would be that this is likely in any market no matter what it's size. If a company gets swallowed up it's like a fish in the ocean. It wasn't looking around and staying out of danger and maybe it didn't develop sufficient defences. 

The idea that inspired this post is that with the advent of the internet I think it's now possible for those with this kind of ethos to survive.  Mainly because it's easier than ever before to create and sustain a market and easier to get customers to shift to your product. Of course it's also easier for them to drop it too. 

So why create a larger market? 
That way there's plenty of room for everyone. Much like a fish tank or an estate for humans. Pack them too close together and restrict food and resources and fights are going to ensue. The stronger will win out. The cunning will survive but eventually size will always win. Yet give them enough space and make food and resources more freely available and they won't have to fight any more. The cost of fighting is high for the community so it's actively discouraged. 

Ok, I know this is a bit simplistic and I'm not interested in delving too deeply. It is my belief though and is a pattern that I feel works in communities, in nature and in business. If business is about profit, that's the food and energy of business. Without it everything stops and shuts down. Well a larger market with more customers than there are providers conflicts aren't so necessary. You'll obviously get companies who encourage loyalty by locking customers in. But customers can also get wise to this and lose faith in those who locked them in. It's not hard to view it as a sign of weakness on the companies part that they weren't good enough on their own. 

Just thought I'd put it out there. Show my hand and see if anyone else wants to show theirs. You see I don't think we're experieincing technical progress. Evolution is occurring in all spheres and business models underpin our lives today. I genuinely believe it's possible to create companies that give back as much as they take and then some. Much like seeds growing in soil can eventually lead to a forest where supporting hundreds of different species all connected to each other but helping each other all the same. 

Everything in balance. It's a dream. Nature has achieved it many many times. I think business and technology both reflect nature, natural selection and evolution. So I think it's only a matter of time before this becomes reality. 
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