Why Every Business Has the Apple iPhone Problem

Why Every Business Has the Apple iPhone Problem

Posted by John Sviokla on June 25, 2008 8:53 AM

The most important strategic question facing executives today is how open to be.

• "How open should I be with customers?"


• "Should I allow my employees to access their social network sites at work?"


• "Should I open my product so that people can augment it or should I hold control close?"

A recent Financial Times article criticized the new iPhone for being too closed, and I agree that their lead is being squandered – with very poor uptake in Europe – because of this. Imagine an iPhone that had easy, cheap, standard, memory upgrades. The easier it is to upgrade, change, and improve the product – the more likely it is that people will adopt it, make it better, and an entire ecosystem of products and services can grow up around it. But since its founding, Apple does a great job of launching the first product and then refusing to open up to achieve market dominance.

On June 19, the Obama campaign said that they will not take public financing. Why? Because the openness of their interaction with their supporters is so great, and their social networking so successful that they can afford to refuse the $84,000,000 in public support. The Clinton campaign knew that the world was changing but refused to create an interactive web presence that engaged their audience – and suffered the consequences.

The same thing is happening at your organization. Is your firm open with customers? Are you embracing the dialog that is happening about your products and services in the Groundswell that Josh Bernoff and Charlene Li have so eloquently written about? Inside your firm, do you allow or even encourage your employees to be part of the social network and blogosphere? Is Facebook allowed during work hours or does your firm limit access?

I was just consulting with the top management of a Fortune 100 company that dropped their policy this month of barring Facebook at work it because they were losing promising young employees who refused to go to work for a company that would not allow them access to their lifeline. As my friend John Perry Barlow noted, the internet reroutes around censorship. Likewise, traditional notions of control are obsolete, and executives need to get comfortable that all products, services must open up faster, and customers and employees expect openness at all levels.

We need a new management paradigm that embraces the fact that we are not in control, but in a dialog with all our constituencies including customers, employees, shareholders, and suppliers. Nokia’s Mosh site allows clients to create and upload new wallpapers and ring tones and Staples has a entire process for allowing customers to propose new innovative products for the company to sell – just to name two. But, letting go of control is never easy, and there are risks. If you don’t think carefully about the few things that you keep closed, you can lose your strategic advantage.

In this new setting managers must consider carefully where they can continue to extract value – even as things become more open. The most extreme example is Craig’s list, which only charges for job ads and gives all else away for free -- and yet they are very profitable.

How is your organization dealing with this new challenge?

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