How to Lose Control Appropriately
In the tech world, as with the rest of the business world, we use terms like “attack”, “capture”, and “defense” and other martial terms to describe the endless challenge of gaining customers, hanging on to them over time, and growing them into ever-more profitable sources of revenue.
Indeed, at first glance, almost everything in business seems to be about the idea of control. That is, you control your employees and suppliers in order to control the quality and cost of your production. Meanwhile, through marketing and advertising you attempt to control the desires of the marketplace – converting consumers into your customers. And then, once you capture those customers, you do your best to hang on to them – to control them – and keep them from buying your competitors’ products or services. . . and make them into regular, upgradable long-term clients. At the same time, you also do your best to control your investors, shareholders, and regulators so that they do not become an impediment to your operations.
Control, control, control. We celebrate those Titans of Industry who have, through brains, aggressiveness and luck, manage to establish near-monopolies – that is control – over their market sectors. Sam Walton, Bill Gates, Steve Jobs, Pierre Omidyar of eBay, Mark Zuckerberg of Facebook: each have become legends for their skill at capturing control over billion dollar markets – and enjoying the enormous wealth and influence that results from such an achievement.
If you add to this history the enormous unpredictability and risk of high technology entrepreneurship, it’s no wonder that control is endemic to the digital world. And yet, there is another, bigger story that is often lost in all of this. It is that real success in high tech (and, in fact, in most industries) almost always is the result of a loss of control. . . or more precisely, the art of losing control appropriately.
What do I mean by that? Well, a good way to start is to revisit some of those famous success stories and take a deeper look.
For example, consider Bill Gates. Microsoft has long been portrayed, not without reason, as the archetypical high tech monopoly, using its dominance of the PC operating system (that is, with Windows) to crush competitors and use its vast installed base to roll sideways over other industries, as it did with Internet Explorer and Office.
Okay, but what enabled Microsoft in the 1980s and 1990s to race past competitors such as Apple, with its clearly superior OS, to capture global dominance? The answer, contrary to the company’s subsequent reputation, was that from the beginning, Microsoft chose to surrender some of its control over Windows by making its core code available to outside developers. The result was an explosion in new applications software – especially in games – that quickly filled the computer stores and overwhelmed competitors like Apple.
And Apple? Steve Jobs was famous (some would say notorious) for retaining complete control over all of Apple’s products, suing anyone who tried to clone the company’s products, built aftermarket add-ons or create software for the Apple line without the company’s license. Yet, despite this ruthless control, Apple has been one of the most successful corporations of the 21st century.
So how does this square with the notion of an advantage conferred by losing control? Look closer. There were a lot of MP3 players in 2002: what made the iPod the clear winner? The user interface for sure. But even more important was iTunes: Steve Jobs managed to convince the troubled music industry to loosen its crushing grip – to give up some of it control – over its vast inventories of recorded music. The iPhone? In an unexpected move, Jobs handed over the tools – gave up design control – to the creation of new application software (“apps”) to independent software designers. The resulting explosion of hundreds of thousands of iPhone apps proved to be decisive to the product’s success.
In fact, everywhere you look in the history of high tech, it is the same story. There were scores of online auction companies before eBay let its users conduct their own transactions. Facebook blew past MySpace by not interfering with social networking by imposing unwanted advertising. And what became of those companies who held too tightly to control? You know the answers: most disappeared and are long forgotten, others were sold for pennies on the dollar, and few still limp along, managing a dwindling pool of legacy customers.
The information processing industry is undergoing just such a challenge to control right now. The entire history of computers – from mainframes to minicomputers to personal computers – has been that of the careful, and appropriate, loss of control from the Pharisees of the IT department into the hands of millions of everyday private users.
Less celebrated has been a similar democratization of software. And in fact, it too is currently undergoing a challenge to its control. And the lines of battle have formed.
On the one side are the Controllers – the Centralizers, the internal IT operations of established companies. Their argument, for keeping information inside the company, are long established: control over data, standardization, security, and economies of scale and scope. They also play on the natural fear of any organization about loosening its grip on proprietary company information.
On the other side are the Empowerers – the DeCentralizers, the business users, mostly within new companies, who want the access, the extensive portfolio of tools, and the lower start-up and upgrade costs of taking company information to the Cloud. Besides pointing to these intrinsic advantages to cloud computing, the Empowerers also make the case that corporate information itself is increasingly decentralized (think of all of those spreadsheets on PCs out there in the corporate offices) and that, even as modern industry is increasingly empowering its employees to assume great decision-making responsibility, it is absurd not to move the information they need to make those decisions out to those employees as well.
The Controllers have tradition on their side – as well as some powerful advocates inside organizations (i.e., the director of IT); but the Empowerers have something more important: history.
That’s something to keep in mind in the months and years to come as you watch the battle play out between traditional corporate IT and Cloud-oriented business users – or more importantly, if your organization itself is facing just such a decision. Whatever short-term successes are claimed by either side, in the long run, victory will go to the Empowerers – because they represent the next step in the appropriate de-control of the computer industry. The battle may be short or long, depending upon the competence of Cloud companies and the desperation of the IT departments, but in the end the Cloud will win.
If that prospect frightens you, if you are worried about losing control of your business information, then remember this: like it or not, you have already lost control of that information. And if you want to get back any of that control, you can only do it by joining your employees in a common cause. Your only choice is to lead them — or let them go and try to manage the aftermath.
This story orginally appeared on Forbes.com