If you've been reading here for a while, you'll know that I am a big proponent of the idea that crowds of people doing things can create synergistic outcomes which are much greater than the sum of the parts.
I know that some of my statements in that area have been somewhat controversial: for example, I suggested that 20 graduates with 1 year of experience may result in better outcomes than 1 senior manager with 20 years of experience.
Regardless of age, though, there is one fact about crowds which is impossible to ignore: they will often rally themselves around specific problem spaces in order to make themselves a solution which works.
In other words, they'll take the set of resources they have access to, including the products and services of other companies or groups, and recombine them uniquely to make something for themselves.
I was put in mind of this, the other day, when I discovered the Hackintosh movement on netbooks. The lack of an Apple product in this category has resulted in groups of people who have "hacked" the Apple operating system so that it runs on commodity PC hardware. Neither Apple, nor the manufacturers of these commodity systems had expected or designed for this, but it is being done anyway.
There are so many examples of this going on. I've been watching a project that Chris Anderson, author of recently released book Free has been running for a few years. He decided that he'd be interested in creating a DIY UAV (unmanned aerial vehicle). It started with a remote control airplane and a robot made out of Lego Mindstorms. Then they made autopilots out of mobile phones. Now they are selling open source autopilots (that's right, open source hardware) with specific capabilities for UAVs.
Not that this kind of thing is anything very new. Kids have been modding their cars, their game consoles, and every other sort of comsumer device for years.
The thing is, though, that most of the time till this point, companies have been trying to make sure that their products are not composed into other things without their permission. Apple, for example, apparently had a behind-the-scenes fight to get Dell to discontinue their mini-9 netbook. It was, I'm told, too easy to turn into a Hackintosh. Now this may just be a rumour circulating around the Hackintosh community,or it might be real. But we do know that Apple are very dedicated to controlling every aspect of their product's eco-systems.
The change that is coming is that organisations are realising that no matter what they make, someone else is going to make something of it. They key question is whether they will fight to stop it, or build innovation to encourage it.
It is my view that the most successful companies will be active in trying to encourage this kind of modding of their services. And that goes even for banks and other service organisations. The power of a community that depends on you for a key part of a solution to a problem – even if the problem has nothing to do with the products and services you sell – is significant.
Of course, this brings into question the whole question of where exactly competitive advantage will come from in the future. For bankers and service organisations, it's traditional to believe that customer experience is that advantage. But when you let just anyone in to mash together new things, you don't really have control of experience any more. This is why so many companies are so rabid about making sure their stuff can't be used in unauthorised ways.
But for companies that allow their products to be recombined and recreated, competitive advantage does not come from the product itself. It comes from the number of new products that depend on the original. In other words, the advantage is having the biggest crowd of people dependent on you for solving some other problem.
How do you get the biggest crowd? By making sure your platform is the easiest to modd, of course.
Now, if only I could think up a way to make banks agree that opening everything up and letting people build new things for themselves was safe and responsible…