The ROI of now vs. later

Today we defended Seth Godin in BusinessWeek over the debate, if you missed it, of whether he should post public conversations about brands without their permission. Some said Seth was brandjacking. We say, get over it, let him play with public data. The issue is really much broader — of how controlling any idea is an outdated mindset, and how letting go of control of your brand, methodology, or secrets is required if you want to scale within the new networked world.

Call it the ROI of now vs. later. In the 20th century companies profited in the moment by controlling their concepts — because, after all, if you owned Coke’s secret formula, you made a killing adding sugar to water. Control made you money, and because communications to the public were also easily controlled, there was little incentive to worry about the ripples outside your boardroom walls.

But in the 21st century the new networked world creates huge opportunities outside your office or factory. A common marketing dream is to “go viral,” but as we know from watching Skittles or Subservient Chickens, viral requires letting customers play with your concepts. What happens if you release your ideas into the wild and let strangers abuse them? Why, you might spark conversations among millions of people, all of whom could become customers. You give up making money today for a broader impact tomorrow. The economics of open systems require a huge leap of faith, and many companies may never get there (we can’t imagine Coca-Cola giving up its secret formula anytime soon). But if you think about the millions most companies spend on advertising, it is silly not to add a free component to the mix that could have 100 times the impact — or, at least not to evaluate the financial upside carefully.

Idea manipulators as the fifth force

The reason ideas must be free is the competitive landscape has tilted toward a new entrant — the public, holding video Nanos and editing software, hungry to play. In his Five Forces model, management guru Michael Porter suggested that companies face five gravitational pulls as they try to make a profit: competitors in their space, suppliers and buyers who are upstream or downstream, substitutes that customers might flee to, and potential entrants. Companies in the past locked up information because they feared competitors might steal it, match them, and thus kill their business. They wanted tight control over costs from suppliers and margins from customers. In Porter’s theology, “potential entrants” would be the OxiClean guys popping up out of nowhere to give P&G a run for its money. But what if in the new networked world, consumers repurposing ideas are the potential entrants? What if their tide is unstoppable, a fifth force with exponentially more impact that the old supplier-competitor-customer loop? Is ignoring it an option?

Or, to use another metaphor, like children trying not to eat a marshmallow today, perhaps trying not to control you message tightly will give you more rewards tomorrow.

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