by Mark Raskino | April 19, 2013 | Comments Off on Shouldn’t we be seeing a rise in industry collaborative platforms?
Recently I noticed a Bloomberg news story suggesting that Visa Inc. might buy Visa Europe. Visa was founded decades ago as a cooperative organisation by many banks, to manage payment processing services. A few years ago it split in two and the US banks sold their stakes by IPO to form Visa Inc. The European part remained as a separate cooperative entity owned by many European banks. Now, the press speculates, those European banks need cash and selling their stakes might help raise it.
But why does this “cooperative” institution exist in the first place? Back in the 1960s and the 1970s industries like aviation and banking had to build their own networks and their own computing infrastructures to do industry wide and international processing. It made sense for them to spread the risk and capital investment load involved in such vast high tech endeavors. It also made sense to create a level playing field platform for core, somewhat commodity processes. Competitive differentiation opportunities lay elsewhere.
Fast forward to the second decade of the 21st century. The cloud is making it possible to build new industry platforms of a kind we could not conceive 20 years ago. Storage, bandwidth and processing can economically deal with real-time high definition video or instant retrieval of set of records from a lifetime’s transactional data. The business capabilities and industry models that could be built on top of this – will be amazing. But who will be in control?
When the banks and airlines created entities like Visa and SITA decades ago, there was no competition for the platform. If they didn’t collaborate to create it themselves – it wouldn’t happen. Nowadays of course, IT industry players are only too happy to use their impressive resources to create cloud based platforms for industries to gradually evolve into. However, CEOs should be wary of the smiling technology company executives lining up to offer an easy path to the future. The risk is that once they control the platform, they control your destiny.
It seems that some large, smart companies are aware of the trap. I was very intrigued by General Motors very public move last year to in-source most of its IT, including building its own data-centers. Like most car companies, GM can see that the future is the cloud connected vehicle. It might drive itself or at least park itself. It might be insured or taxed by the minute or by the mile. It will stream usage data out and media entertainment in. Now – if those are the reasons you make your buying choice – do you think the car companies should control that capability and innovating with it? Or should it be Google, or Amazon or some other – yet to emerge – technology platform player?
The book publishers have already lost a lot of control. They could have built an industry collaborative platform for distributing e-books. They didn’t club together and do that – even though the the fate of the music industry was in right front of them, as a clear example of the price of inaction. Now Apple and Amazon and Google have a big say in how the book industry works, what the price and format of a ‘book’ will be and who gets paid what share in the value chain.
I have written about this before but I think it bears restating. Look at your industry. Look at the forces of digitization ahead – including the Internet of things. Now ask – can you build a single enterprise platform that will protect your future? If the platform must be industry-wide.. who will build it? Do you trust those parties more or less than your current competition?
If the banking and aviation business leaders of the 1970s, so early in the information age, could collaborate on visionary industry-wide technology platforms – why is the current generation of business leaders, with all their IT enabled business experience, being so timid by comparison?
The ‘enemy’ you know is often the easier foe to manage. I think a lot more business leaders should be reaching out to their competitors and thinking more radically about *cooperating* to build the future platform for their own industry, before someone else takes control.
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