Verizon’s leap into opening the use of their cell phone software to other companies is the result of a slow recognition of what Bill Gates’ Microsoft learned several decades ago. Gates was leapfrogging before the term came into use! Verizon saw the benefits of being open with their strategy.
They took the ritual of the industry’s slow evolution of thinking beyond the boundaries of organizational resources, product and core competence hugging plus the willingness to tolerate what appeared to be greater risk by experimenting with outsourcing and open sourcing before some of the behemoths of the industry.
There are of course always multiple factors that contribute to the kind of strategic decision Verizon has made. Certainly one factor is that it is often cheaper to buy hardware than to manufacture it given today’s manufacturing processes and low cost global labor. This is not far from the long-time practice of leasing facilities and equipment rather than buying, which leaves greater cash available for marketing, sales, research, innovation, application and service – to name a few, and of course much greater flexibility to move quickly.
In addition, advancing technology now allows the integration of many applications into one small piece of hardware such as the cell phone. As Gate’s has proven, the opportunity cost of limiting software design and application to the hardware a company uses limits opportunity to sell what all customers want…to combine the features we think are best for our own particular use. Verizon’s decision expands their market opportunity by creating software and services that can be used by millions more customers.
It would not surprise me that a major contributor to Verizon’s decision was information they gathered through Social Network Analysis. By this decision alone, Verizon has opened their SNA opportunities to collaborate, learn, innovate, and expand their market presence, as well as reduced the constraints of hugging on to the limitations of their own equipment. Further, Verizon may now leverage and enhance their software applications based on the advanced hardware features of their new clients. Certainly an incentive to their clients will be their ability to use Verizon’s great transmission networks.
In the end, we will see more of this type of strategic decision making as the years go by, and at a much greater pace. We are just beginning to share knowledge and integrate that shared knowledge. Probably in the industrial age when things were slower and changes held static for decades it was wise not to share. However, that is a counter productive way of thinking and acting at the pace we work today. The sooner a company realizes the benefits of SNA and the advantage of being open to collaborative endeavors the sooner they will find that the risk is in not being open for business.
~ Bill Becker, Principal
Axelrod Becker Consulting