This worked for Trump

The power of open business models.
Through technology, businesses have access to ideas and skills all over the world. The successful ones are going to be those who use this to their advantage. Picture: Shutterstock

It is almost two decades since the label “open source” was coined to describe software that makes its source code available for anyone to modify and improve. This was shortly after Netscape had done exactly this, on the pragmatic business argument that if anyone, anywhere could work on and improve the software, it would become a better and more valuable product.

To many people, this still seems counter-intuitive. If your business has a valuable product, they would argue, the last thing you want to do is tell everybody how you make it. Coca-Cola, for instance, is famously jealous about the recipe for Coke to prevent it from being copied.

However, speaking at the 2017 Growth, Innovation and Leadership Summit, Frost & Sullivan partner, Dorman Followwill, argued that we are entering a world where more and more successful businesses are going to operate open business models, because it makes good business sense.

“In a way, this is exactly what Donald Trump did in the presidential election,” said Followwill. “Candidates have always used the media to talk to the public, but he decided to go direct. That’s taking an open model to something that is traditionally closed. I’m not endorsing what he says, but he broke open a closed system.”

Businesses, Followwill argued, need to consider how this kind of thinking might apply to them.

“In the world of social media, smartphones, wearables and gamifaction, you have access to the entire world,” he said. “This doesn’t just refer to the way you market products. You can actually leverage global resources to drive product development.”

He pointed out that, through technology, businesses have access to ideas and skills all over the world. The successful ones are going to be those who use this to their advantage.

“Think how the individual entrepreneur today gets to be something very different from the traditional entrepreneur,” Followwill said. “In the past, they might have been sitting in their garage coming up with cool ideas. That was an entirely closed, proprietary environment. But the entrepreneur of today can be sitting in a loft in Cape Town and still have the world at their doorstep.”

This has significant implications for their offering. Using the internet they can test the idea, receive feedback, modify it, improve it, and find potential collaborators. All of this can take place at high speed and low cost.

“Some might say that the entrepreneur will lose their competitive advantage by doing this, but at the same time they could also gain partners and scale in weeks that could otherwise take years,” said Followwill. “I think we have to get beyond the fear of interaction and say that maybe through collective processes and democratising our approach, we can come up with products and services that are even better.”

This is not a purely theoretical argument either. There are already examples of how this kind of approach has worked in some really big business environments.

“Drug discovery is one of the most proprietary business processes known to man,” said Followwill. “But a very striking thing happened not very long ago. A drug company in the US posted some of its fundamental research data as open source online, and created a game system to encourage people to find the best way to analyse it.

“What happened was that a mathematician from France figured out a way to analyse it and came up with some really interesting ideas,” Followwill explained. “Now, before we had this technology, how on earth would a drug company in the US connect with a French mathematician?”

These are the kinds of interactions that technology is making possible. To benefit, however, businesses have to be prepared to be open in their approach, and their thinking.

“There has never been a greater time in history to think about how you can access the world, and how the world can benefit you,” said Followwill. “There are opportunities around that are phenomenal.”

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