Building business environments

Etsy/Folksy/Dawanda meets Instructables

Open and distributed models of product development create an environment in which products can evolve, advance, and be produced as needed, where needed. However designers and innovators attitudes repeatedly return to “yes very nice, how am I going to get paid?”

Financial reward does not flow from the idea, it flows from the market. Therefore a system which allows for both innovators, and producers to profit should be market focused. If the innovator owns the market, then they can allow anyone to create the goods and charge for them, but take a slice of the proceeds by managing the marketplace, and making it easier for producers to access the market through them, than it is to undertake the exercise themselves.

If someone wants to replicate the product it makes more sense to service the market, than it does to establish their own market. If a larger company wants to circumvent the system (indeed this is possible even with patents) then they could, however the products they would supply would be vastly different from those supplied by the marketplace (with the marketplace being able to offer a higher speed of innovation, diversity of product, service offering, and localised support). A clever company should recognise that by working with the market they can get the best of both worlds, combining skills to offer rapidly evolving products which benefit from scale of production. See diagram below for an explanation of how such a marketplace might function.

openinnovation

By “owning” the marketplace, the innovator creates a focal point for their innovation, around which interested customers can gather. Producers can service the customers needs in a way that benefits them, with the innovator taking a slice for providing the virtual space in which this happens. Innovators can also derive profits from suppliers looking to serve both the “Producers market” and the “DIY customers market”. The innovator provides know-how to all parties, and also is responsible for creating the space and ensuring market growth.

I believe it’s likely that for such a system to work, further elaboration will be required to include further actors – such as marketeers and evangelists. Also requiring exploration is what happens when someone builds upon an innovation, how is a fair system of reward maintained?

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