Christopher Golda

In this month’s Wired, Chris Anderson discusses “Free”:

There is, presumably, a limited supply of reputation and attention in the world at any point in time. These are the new scarcities — and the world of free exists mostly to acquire these valuable assets for the sake of a business model to be identified later.

Suffice to say, the best investors lack interest in business models. Radical and disruptive business models are created through experimentation, iteration; they can’t be designed or planned. Ironically, giving a product away for free should be part of your business model. Free maximizes the potential for value creation (by increasing market size, etc) and free, abundant goods/resources make existing scarce resources more valuable. Alex Iskold at ReadWriteWeb thinks that’s too complex:

The downside of freeconomics is a monopolistic market, with barriers to entry, and little incentive to innovate. In addition the middle-man and transactional complexities are the other side effects of this new economic trend.

Free doesn’t create monopolies — it just helps kill incrementalism. That gives you more incentive to innovate. As usual, Umair says it best:

Liberating value creation from the strictures of price is the story of nearly every radical innovator in the last 5 years. It’s the story of Google - how far would Google have got, if at it’s birth, it worried about free vs not free, and charged us all pennies for search? Clearly, not very far.

I read this Q&A with Lego CEO, Jørgen Vig Knudstorp, in the first issue of Monocle magazine almost a year ago. It’s a fascinating look at innovation; rethinking strategy, advantage, etc. When faced with pressures of globalisation and shifts in consumer behavior, Lego made drastic changes to its business. Namely, transforming into an “open source”, “platform” company, developing formal innovation processes, exploring new business models (most notably, Lego Factory) and collaborating with select global partners.

Successful innovators have ways of seeing the world that throw new opportunities into sharp relief. They have developed, usually by accident, a set of perceptual “lenses” that allow them to pierce the fog of “what is” in order to see the promise of “what could be.” How? By paying close attention to four things that usually go unnoticed:

1. Unchallenged orthodoxies—the widely held industry beliefs that blind incumbents to new opportunities.
2. Underleveraged competencies—the “invisible” assets and competencies, locked up in moribund businesses, that can be repurposed as new growth platforms.
3. Underappreciated trends—the nascent discontinuities that can be harnessed to reinvigorate old business models and create new ones.
4. Unarticulated needs—the frustrations and inconveniences that customers take for granted, and industry stalwarts have thus far failed to address.

Gary Hamel