Wednesday, March 11, 2009

How Open Systems Change Economies

One of my favorite activities is thinking about ways in which radical ideas can completely change existing rules. While this typically doesn't happen as a "radical change=new rules" model (not that simple), what does frequently happen is a small change with built-in flexibility can radically change the rules. The secret ingredient is typically to allow people (users/partners/etc.) to be able creatively modify the change, usually in ways that you never image.

I was originally going to write about this topic because I'm exploring certain aspects of the Freemium business model for my Strategic Marketing course. With the drop in online advertising due to the economic downturn, I'm interesting in exploring how companies that have grown through Freemium (or just Free), will survive. Will their growth drive enough ad revenue, even at low CPMs? Will they begin to charge for corporate usage or partnerships? Or will they develop new business models that change for newly created value (whatever that might be)?

Reading through the blogosphere this evening, I came across this interesting article about how the adoption of cell-phones in Kenya, and the subsequent creation of phone-minute based economy has evolved the country. Nobody could have predicted that the country would begin using a non-currency as the currency for trade, but it happened because the originators of the system allowed it to remain open, even after it began expanding beyond their original model. It allowed the market to define their own "value" and evolve around it. The incredible line in that piece was,“Within about a year, (Safaricom) became the biggest bank in East Africa.”

Imagine if your company had that opportunity placed in front of it? Could you react to that much change? Would you be willing to allow that much change to happen?