A couple of weeks ago, I was listening to a young man talking about bitcoins and comparing them to tulip bulbs traded in Amsterdam in late medieval times. True, the business concept or the trading concept is similar in both cases. What changed is the underlying instrument. Using modern technology does not necessarily mean applying a brand-new business model.
Business models are about customers, about the value delivered to them, about suppliers or resources we use, about processes, and finally, cost and revenues. In a business model, we use strategies or approaches, like supply and delivery strategies or pricing strategies. It is sometimes strategies to get rid of the competition. Most of those strategies had been invented and applied years ago.
Prepping for yet another series of lectures in 4.0 economy, I was just thinking what of that what happened in the last decade we can indeed consider a ground-breaking idea in doing business. Of strategies that had been invented 20 or 25 years ago or at least I know of them for so long, but they are possible only in the IoT, AI, and robotics era is pull strategy, real-time pricing, and mass customization.
Peer-to-peer sharing and transactional platforms that service those trades as one-stop-shop but not being a traditional middleman is another business innovation of the 21st century. Selling goods as a service on demand, like on-demand streaming, car sharing for minutes already called mobility as a service or selling computing power in a cloud on-demand is high on the list too. The latter is based on the assumption that the same good or capacity may be used by many customers, but they would need it in different time slots, so we sell the same capacity to many people, but for the most time, avoid bottlenecks. In fact, this is a kind of pooling service.
But, the most brilliant business idea or business model of the 4.0 era I find businesses based on crowdsourcing. A few big companies, we all know well, mastered that strategy to perfection. They do not work for us, really. We work for them sometimes even not knowing what is that what we really render.
The first of the masters in crowdsourcing is Microsoft that pushed testing and quality check off the company. Technically we can use Windows operational system for free. But the price we pay is quite high. It was not so as Windows started. For the time being, the system was a quality in itself. Some even claim Windows is not the same without Bill Gates. The status quo changed, as Microsoft expanded to almost a monopolist and started to behave like that. Today, this is customers, the system users, who make the testing and quality check. If the system fails or updates continuously, this is, we who are paying the price of time losses, disappearing work, or being on the edge of a nervous disorder. Microsoft is not taking any responsibility if the system crashes. This is us who must somehow restore the system, sometimes even finding professional help and pay for it out of our purse. Technically there is no way of getting any indemnity if the system crashes or an extensive update that falls on us unexpectedly does not allow us to keep a deadline. And as I understand, they even convinced some aspiring IT people to help them to make the system better for the greater good. Those people work for free, and this is the Microsoft and Microsoft bosses who are paid, quite well paid. Brilliant is it not?!
The other master in crowdsourcing is nobody else but Google. I read once in some journal for management, this was an asymmetric business model they invented. The users use Google and its apps, but the money is made on adds. Maybe some time ago and perhaps officially. But the most valuable good at the disposal of Google is data, and by far, this is not only data that can be used by advertising companies. Look at Google Maps and finding the routing software. We get it as a free service. But in the meantime, Google owns detailed traffic data and generally transport behavior patterns. For the purpose of traffic modeling ordered by transport authorities at the national or local level, this data could be a goldmine worth amounts counted in millions. The Android system seemingly for free is servicing apps developed mostly by other companies. In exchange, Google has access to data and information flowing through those apps. For example, this is the access to millions of hashtagged photographs. The latter, in significant numbers, are necessary for AI training. That what is crowdsourced by Google, giving us access to some free services is data that can be monetized and resources that can be used for R&D purposes and … later monetized. It is not an asymmetrical business. The business lies somewhere else than perceived by the outer world. An the world is delivering en mass.
Facebook is, of course, for years doing the same. Cambridge Analytica opened our eyes. It is not about content that people provide, as many initially thought. On the Internet, you can still find opinions that say Facebook is about content that they provide, although not generate it. No, Facebook is not about content, or at least not any longer. It is about data on people, their behavior, and preferences collected through IoT, harvested, and monetized. And all of that at the cost of people who sometimes indeed use Facebook for being connected. People do much for collecting likes on Facebook or Instagram. But only a few really earn on it. Those who do not earn think that they don’t earn yet, but they will, or they collect likes for vanity. Just look only under the list of things you can be banned for on Instagram. It is not only about bad content. You can be, for example, banned for the same list of hashtags used under many posts. The rule is simple. Users work for Facebook and not the other way round. They need hashtag differentiation. For what purpose? No, idea. We can assume there is a business reason for everything. Sure, with time, we will find out.