Shaping the Economy

Concentrations of power can shape the world around around them. How is the question.

For example, market power, those with it can shape their markets.  While, small players skitter looking for niches and opportunities; big players can shape their niche.    In all cases firms question the vitality of their complements.  The innovator decides measures risk of each new technology. Large firms can control the health of their complements, for them it becomes actionable. In extreme cases they can make their own weather.

Two classic examples. Microsoft successfully killed Netscape by cutting off their air supply. Of course getting caught was a mistake but on the whole it may still have been worth the cost. Microsoft blew it when they made their hardware complement into a commodity. When your relationship with a supplier is perfectly commoditized then they have no loyalty to you. Commodity hardware enabled Linux.

Powerful market powers do shape the world, that’s the key point. Nobody is immune. Open source giants – e.g. Wikipedia, Mozilla, FSF, ASF, Sourceforge, etc. etc. – are not immune to this syndrome. Nor are large standards bodies like Oasis, the IETF, or the W3. What, presumably differentiates these classes of actors in how they answer the question: given the power now what?

Each class of actors legitimizes their actions in different ways. The discussion of legitimacy if both an internal one and one had with audiences outside the organization. While those dialogs are rarely in perfect alignment, over time they have to be kept consistent.

The process of solving the problem, the problem of how to deal with market power, includes at least three aspects: values, governance, and execution. These also must be consistent over time.

This question can not be avoided. Concentration, and hence power, happens.

0 thoughts on “Shaping the Economy

  1. Ian Holsman

    while it is true that large giants can wipe out the little guys, it doesn’t mean they shape the market in all cases.

    in some cases they are the incumbents, forced to support a product space which isn’t necessarily the most profitable area, and with management in those companies too focused on internal politics then noticing the environment changing on them until it becomes a major issue.

    some examples:

    amazon vs barnes and noble.
    netflix and blockbuster
    large telcos and VOIP
    google and yahoo (when google was in beta, not now)

    small players can build up momentum in a particular niche that the big player is ignoring, and use that to enter other niches/areas that directly compete with the big player.

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