Wired magazine recently announced on its cover that the Web is Dead. I confess I really like the magazine despite some of the hyperbolic rants that Chris Anderson, Wired’s editor creates like his book “Free” — which is completely indefensible from an intellectual or factual standpoint. In this case, I think the magazine is “right” — more and more digital traffic is going non-web mechanism but rather in peer to peer activities like Twitter, or Netflix’s movie streaming, or listening to Pandora radio. We are less and less interacting with the “traditional” web. Anderson and co-author Michael Wolff note that Marc Andreessen famously said that applications would be open, free and out of control — and here we are.
But how radical is this? I believe it is just another turn of what I call the modularity cycle. Modularity cycles tend to come from two sources. Either, you have an innovator who comes up with a complete design — the way Edison and Westinghouse did for their electrical infrastructures. This type of systemic innovation creates an entire value chain and business model. Alexander Graham Bell did the same thing with the telephone. Over time, these “systems” become more open and each module of value from the phone to the phone line, become fiercely competitive. Big, successful systemic innovations create entire industry clusters — as Swift did for meat, Sears for retailing, and DuPont in chemicals.
I don’t see many entirely new business systems occurring in the digital world right now. (You could argue that Google and Apple are close.) I believe this lack of systemic innovation is due to the fact that too many parts of the infrastructure — especially access to bandwidth — are so heavily regulated, making it difficult for new business models to completely arise. For example, if there were free access to a chunk of spectrum on a national basis, it would be possible for Ford or GM to launch an entirely peer to peer telecommunications infrastructure — with their cars becoming transceiving stations. Car use goes in the same density as telecommunications demand, so it would give rise to bandwidth in a pattern shaped like the demand for the bits. Given that many households spend around as much on entertainment and communications as they do on a car payment, one could imagine these companies finding entirely new profit pools. But, given the regulatory infrastructure such a radical, systemic, innovation is unlikely in the new world.
The other way for the modularity cycle to begin is for a very simple application or product to become popular and more and more functionality can be layered on top. For example, Twitter is starting to build its own applications to compete with more open platforms. Today, they released their own application for the iPad and iPhone which will compete with the likes of Tweetdeck and Twitteriffic. I believe Twitter will try to continue to incorporate more and more functionality in it’s “base” product.
So, the observation of the folks at Wired is simply noting that the sun is going down, before it is to rise again. Modularity versus systemic innovation is an old and well documented story. (It is also true that publications are often in the business to hype variance, not seek truth — so, all cycles are turned into impending trends to grab attention.)
For businesses, one important thing is to make sure that you can sample functionality and integrate new things on top of your “systems”.
You need to be able to enable your internal applications with existing, external applications as they arise from the modularity cycle. Here are three thoughts:
- Can you easily grab your employees information from their public pages on Linked-In? Why not, it will save you time and money and connect them more easily to customers and recruits.
- Can you map your customers onto a Google map, along with their revenue and growth? Why not? Wouldn’t you like to be able to “see” your demand?
- Can you get access to all and any information about your brand and your customer’s brand’s easily — a brand radar if you will? If not, why not?
Wired’s Anderson is right about one thing, you do need to be able to access this new ecosystem of modules and I’d add, you should understand the emerging systemic innovations too!