The Future of Advantage: Sharing and Serving

As I've noted before, I often find Umair Haque's posts a little, er, opaque. But either he's getting clearer (possible) or my brain is improving (unlikely), because I not only understand this one, I find its ideas comfortingly familiar:

The future of advantage is radically different from the past for a simple reason: because it's economically better. 20th century advantage focuses firms on simply extracting resources from people, communities and society — and then protecting what they extract. 21st century advantage focuses firms on creating new resources, and allocating them better. The former is useful only to shareholders and managers — but the latter is useful to people, communities, and society. The old Microsoft was useful to shareholders, but a lot less useful to society — and that's exactly how Google and Apple attacked it, and won.

This is just the open source way: give away your products, and make money from providing services - you know, things that *serve* people.

I do, however, have my concerns about the positive examples he chooses to illustrate his ideas:

The future of advantage:

Allocative. Google's advantage was built on allocating attention to content and ads better than its rivals. Google's real secret? Relevance, media's measure of how efficiently attention is allocated. Match.com is building an allocative advantage in, well, matching people with partners. Allocative advantage asks: are we able to match people with what makes them durably, tangibly better off — and can we do it 10x or 100x better than our rivals?

Creative. Apple's advantage is, of course, radically creative: built on creating insanely great stuff that turns entire industries upside down. Next month, the iPad promises to do what the iPhone and iPod did before it. The power's in the creativity, not just the technology: Apple's thinking different yet again. Creative advantage asks: is our strategic imagination 10x or 100x richer, faster, and deeper than our rivals?

But the ones he chooses in contrast are pretty significant:

And the past:

Extractive. Over two decades, Microsoft has honed its extractive edge, coming up with cleverer and cleverer ways to extract profits from customers and suppliers. But Microsoft's just a flea on Wall St's elephant — who mastered extractive advantage by finding ways to, ultimately, extract trillions from you, me, and our grandkids. Extractive advantage asks: how can we transfer value from stakeholders to us, 10x or 100x better than our rivals?

Protective. Think Microsoft's the master of 20th century advantage? Think again. Monsanto's Round-up Ready strategy protects genetically modified crops with proprietary herbicide that crops need to flourish. The result? A protective advantage: Monsanto's made sure that farmers are locked in to Monsanto as tightly as possible. Protective advantage asks: are buyers and suppliers locked in to dealing with us, 10x or 100x more tightly than to rivals?

Hmm, Microsoft and Monsanto, what a combination - and interestingly, it's the latter that is singled out as clearly the worse of the two (which is why I am writing increasingly about the company and its activities.)

Clever chap that Haque; now, if I could just understand him more often....

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Haque on Hacking Economics

And yes, it's all about openness, collaboration and respect:

companies who can build authentic, honest, open, collaborative relationships with consumers are significantly more profitable (and sustainably profitable) than companies who treat consumers deceptively, antagonistically, and manipulatively.

Openness is the Solution to the (Double) Subprime Crisis

As I listen to all this talk of lack of trust in the banking system, of inflated values ungrounded in any reality, of “opacity”, and of “contaminated” financial instruments, I realise I have heard all this before. In the world of software, as in the world of finance, there is contamination by overvalued, ungrounded offerings that have led to systemic mistrust, sapped the ability of the computer industry to create real value, and led it to squander vast amounts of time and money on the pursuit of the illusory, insubstantial wealth that is known as “intellectual property”....

On Linux Journal.

Haque Really Hacks It

I'd stopped reading Umair Haque's posts on Bubblegen because I was beginning to find them increasingly incomprehensible (probably old age on my part). This one is crystalline in comparison - and highly germane to everything I've been writing about on this blog:

Central banks and governments are throwing money at an economic superstructure rotting from the inside - but given the severity of the situation, that's like trying to put out a fire by throwing Molotov cocktails at it.

So what should we do - what can we do - about it? Here's my answer.

...

That's the third, simplest, and most fundamental step in building next-generation businesses: understanding that next-generation businesses are built on new DNA, or new ways to organize and manage economic activities.

Think that sounds like science fiction? Think again. Here are just a few of the most radical new organizational and management techniques today's revolutionaries are already utilizing: open-source production, peer production, viral distribution, radical experimentation, connected consumption, and co-creation.

Openness, sharing, etc., etc., etc. (Via David Eaves.)