PLENTITUDE NOT SCARCITY

Avoid proprietary systems.

Sooner or later closed systems have to open up, or die. If an online service requires dialing a special phone number to reach it, it’s moribund. If it needs a special gizmo to read it, it’s kaput. If it can’t share what it knows with competing goods, it’s a loser. Closed systems close off opportunities for others, making leverage points scarce. This is why the network economy–which is biased toward plenty–routes around closed systems. One could safely bet that America Online, WebTV, and Microsoft Network (MSN)–three somewhat closed systems–will eventually go entirely onto the open web, or disappear. The key issue in closed-versus-open isn’t private versus public, or who owns a system; often private ownership can encourage innovation. The issue is whether it is easy or difficult for others to invent something that plays off your invention. The strategic question is simple: How easy is it for someone outside of the host company to contribute an advance to their system or product or service? Are the opportunities for participating in your own network scarce or plentiful?

 

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-- KK