Every year around this time, I write about 4 or 5 things I think will happen in the next. But this year, I only have one thing to say.
I think 2011 is going to be the year when people finally realize the pointlessness of what I call dark ages competitive advantage.
Competitive advantage from the dark ages is anything you do which denies access to resources to competitors.
Denying access to resources is dark ages because it hurts not only competitors but customers as well.
Copyright and patents are a dark ages response to protecting competitive advantage. If you’re the creator of something, you get to tell people when they can use it, usually in exchange for a fee. You get to tell competitors they can’t use it at all.
But in both cases, all you’re really doing is setting up a situation where everyone you constrain is highly motivated to break your constraints. I mean, you only have to look at the music industry to see this. That’s an industry that trained a whole generation that breaking the law is OK, entirely because of the constraints it attempted to impose.
How dark ages.
Trade secrets are just as silly. You deny access to knowledge by keeping it a secret. This is dark ages because the observation that something can be done, encourages others to do it too. As soon as they work out how, maybe by reverse engineering, maybe by espionage, or by some jedi mind trick perhaps, that’s any advantage gone.
On the internet, everyone has the capability to observe everything.
Anyway, I think 2011 is the year when people cotton onto the fact that this stuff doesn’t drive value at all. At least, not value that’s long term enough to make all the effort of denying resources to competitors that worthwhile.
There are, however, new sources of competitive advantage available now which are just as potent as the old strategy of denying access. The primary source of this value is relationships that are enabled by products and services, rather than the products and services themselves.
In this new world, you get more value from a product or service the more you use it. You aren’t penalized for doing so, unlike the traditional model which imposes a tax for use. That’s what a price is, by the way.
Is there really anything in Facebook that’s all that valuable from a technology perspective? Not really, but it does help practically everyone manage their relationships with each other. The fact that my friends are all on Facebook makes it valuable to me, and the more I use it the more valuable it is.
Why is the iPhone and AppStore such a hit? Not because there’s anything very special in the iPhone, clearly. What is special is iPhone is about managing relationships between customers and providers of Apps. Apps let customers do things that Apple never dreamed of. The more Apps there are, the more valuable the phone is to me.
There are so many examples of this now. Examples where the product itself isn’t really all that exciting, but where all kinds of relationships are made that create value.
Where the product creates a relationship between customers, or between suppliers and the customer, or between the customer and the product.
Why is this so much better than dark ages stuff?
Because relationships aren’t portable. Once they’re there, embedded in whatever platform they formed on, they’re fixed. Competitors can only win if they can make more powerful relationships than you can.
Relationships are better because they don’t have taxes every time you use them.
And, relationships are better because they’re based on giving things to customers, not taking them away. They’re formed on an ethic of sharing, not of denying access.
So I do think this is the year people will give up on the dark ages stuff they’ve been doing. Otherwise, I think it’s the year they’ll be going out of business.