Symbiotic Relationships in Play

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Nilofer's Strategy Blog

Thursday November 30, 2006

One of the fundamental truths about the high technology market today, is that consumers have tremendous power.

Market power used to be much like a big castle surrounded by high walls and a moat to control access — Dell, Intel, and the former AT&T are all examples of companies that fared well under that model. In much the same way that peasants who supported the castle had little power because they depended on the castle for protection and the king controlled the drawbridge and the gates, the industry titans controlled supplier relationships and customers had little choices and access to information.

That model is so passe. Used to be that if you kept customers ‘in the dark’, they didn’t have access to alternatives, price comparisons, web. The first wave of the Internet put the kibosh on that. The early Internet gave all consumers access to information and it fundamentally changed buyer power.

If the old school world was the castle and the moat, the new model is more like the aerial view of San Francisco — lots of paths in and out. Customers, suppliers, buyers all have much different relationships. With mashups allowing technology integration, developer platforms enabling new offers that layer on top of other solution and the ever-present access to influencer opinions, Consumers can find out more about offers, price shop, blog about customer service, etc. If anything the new era has a new market power model. I believe it is more about being “permeable” as a strategic advantage. Those that can play well with others and create value through that process, wins.

What is also interesting is that consumers today get a LOT of things for free because of different monetization practices.

All that’s good.

But here’s the rub. Companies that produce great content, and provide customer service and all the things that create great experiences - those need investment. Ultimately, when companies give too much away for free (funded by investors, of course), and they’ve not left enough in the bank for a rainy day, to invest in next level of growth, and to continue creating excellence in the marketplace.

Until we all get real about the relationships needing to be symbiotic between consumers and companies for long-term flourish, we’re going to see a hard fall to come in this web 2.0 world.

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Emerging Software Trend, Developers, Web 2.0