Can Business Win From Being “Closed”?

by Jay Deragon on 11/11/2010

Business leaders have two choices when it comes to all things social. Be open and win or be closed and lose. What is the difference?

Chris Dixon writes: The next important distinction is whose interest you are considering when asking what and when to open or close things.  I think there are at least 3 interesting perspectives:

The company: In a nutshell, there are times when a company, acting solely in its self-interest, should close things and other times they should open things.  As a rule of thumb, a company should close their core assets and open/commoditize complementary assets.  Note that I think there is absolutely nothing wrong with Google and Facebook or any other company keeping closed or trying to open things according to their own best interests.

The industry: When I say “what is good for the industry” I mean what ultimately creates the most aggregate industry-wide shareholder value.  I assume (hope?) this also yields the maximum innovation.  As an active tech entrepreneur and investor I think my personal interests and the tech industry’s interests are mostly aligned (hence you could argue I’m talking my book).  Unfortunately it’s much easier to study open vs. closed strategies at the level of the firm than at the level of an industry, because there are far more “split test” cases to study.  What would the world be like if email (SMTP) were controlled by a single company?

Society:  I tend to think what is good for the tech industry is generally good for society.  But others certainly have different views.  Advocates of openness are often accused of being socialist hippies.  Maybe some are.  I am not.  I care about the tech industry.  I think it’s reasonable to question whether moves by large industry players are good or bad for the industry.  Unfortunately most of the debate I’ve seen so far seems driven by ideology and name calling.

Read more here:

Is the Question of Open vs. Closed Still Relevant?

The emergence of revolutionary technology is indeed revolutionizing our thinking.  Who would have thought five years ago about the very questions surrounding open vs. closed?

The issues surrounding privacy on line and the social chasm of identity fuel the Social Overton Window. Social media is causing markets to react to the open discourse about everything, anything, everyone and anyone. It is the open discourse and reactions that create “windows” of public sentiment towards everything.

All things social are just beginning to gain mass market acceptance. However the initial acceptance is still at the early stages of understanding of the related dynamics. Ideas and innovative approaches to the use of social technology fuel the intrigue and pull more of the public into the dialog. The degrees of acceptance of the public’s use of social technology can be described in six behaviors as:

  1. Unthinkable: Some firms do crazy things with social technology that do not fit into the “norm” of public sentiment. Consider some of the things that the young adults have done on MySpace that are “unthinkable” i.e sexually explicit videos and trash talk. Think of some of the stupid things brands have tried using social technology only to create a negative response from the public. On the other end of the spectrum of Unthinkable are those individuals and organizations that do innovative things that no one else even considered, i.e. Pepsi Refresh. The Unthinkable applies to both the good and bad things people and organizations end up doing. Consider Facebook’s attitude towards privacy.
  2. Radical: Social media are creating radical changes in publishing, broadcasting and traditional forms and models of media. Radical uses of social media are marked by a considerable departure from the usual or traditional tending or disposed to make extreme changes in existing views, habits, conditions, or institutions. Many industries and individual organizations from all business segments are just beginning to feel the impact of just how radical social media can be when they discover what their customers are saying about them
  3. Acceptable: The initial uses of social media have been aimed at marketing and PR. Traditional practices are being applied to the radical nature of social media. What marketing and PR professionals are learning is that what was once an acceptable practice is no longer acceptable. The consumer now defines what is acceptable and is now “connected” to others with a collective voice.
  4. Sensible: Social media initiatives designed around having, containing, or indicative of good sense or reason. The sentiments of “sensible” are influenced by the human network in response to institutional messages and marketing tactics applied to use of social technologies. While consumers understand the old school marketing methods most are not responsive to these same tactics applied to social media. Subsequently brands that do not understand the relational dynamics of all things social are considered nonsensical. In other words the message has no importance or value to the consumer.
  5. Popular: Messages of or relating to the general public’s interest. If your message doesn’t fit with the market you are trying to reach then you is not likely going to create a “popular” appeal. Consider the unpopular responses to traditional marketing and organizational spin to public issues. What was once a “popular” method for managing public relations, marketing and advertising is now becoming unpopular and new methods are being introduced by the populous.
  6. Standard Practice: When more and more people and organizations do the unthinkable and radical things the more the general public considers such things as acceptable, sensible and popular then ultimately they become standard practice throughout the entire marketplace.

The Social Overton Window is a means of identifying which ideas define that range of acceptance of people’s ideas and their media fall into. Media is used to persuade or educate the marketplace so that the window of behavior either “moves” or expands to encompass them. Opponents of changes caused by media, policies and politics seek to convince people that these should be considered unacceptable.

The open vs. closed debate will continue. However the window of consumer demand for open will rise and the subsequent pressures will force organizations to rethink being “closed”.


{ 3 comments }

Joseph Condron November 11, 2010 at 10:17 pm

Yes, I don’t know whether it is a question of which is a better model or not. I think it is a question of necessity. The openness of the Internet has made being closed almost redundant.

There are less and less places to hide in this world. Be it for companies or even governments. That is just the reality of the situation. After that it is either adapt or sink.

Gabriele Maidecchi November 11, 2010 at 10:43 am

I think it comes down to the single case, some part of your company/technology can stay open, some should be kept closed, eventually it’s a matter of finding the best way to innovate with the instruments/technology at hand.
Social media provides a whole new set of tools whose use we’re still learning to maximize day by day. Business models risk changing dramatically at each new little social media brick laid down.

Daniel Rose November 11, 2010 at 5:09 am

Thanks for the article!
I’m very strongly of the opinion that if you own it, you should feel free to keep it closed 🙂 Socialist hippies away!

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