Social networks are being labeled as "hype" that will wither away because traditional business views look through a lens of short term economic models that produce short term returns for analyst and shareholders.Reference to the Dot Com boom and crash is being used as a means to downplay the the significant evaluations given to the likes of Facebook.
On one end of the spectrum there are those that see the value and chase it and on the other end there are those that discount it as hype with no lasting value. Who is right?
Shifts in Business Thinking
The business models of The Relationship Economy turn the old school business models upside down and inside out.
In his book "The Rules of the New Economy" Kevin Kelly writes "The most popular operating system for web server workstations is not sold by anyone. It is a product called Linux, a Unix-compatible program that was originally written by Linus Torvalds, and given away for free. In the manner of building medieval cathedrals, hundreds of software engineers volunteer their time and expertise to refine and improve Linux, and to keep it free."
"Beside Apache and Linux, there are many other free software suites, such as Perl and X-Windows, maintained by a network of programmers. The engineers don't get paid in money; rather they get better tools than they can buy, tools that can be easily tweaked by them for maximum performance, tools superior to what they can make alone, and tools that increase in network value, since they are given away."
"As Stewart Brand says, the main event of the emerging World Wide Web is its current absence of a business model in the midst of astounding abundance. The gift economy is one way players in the net rehearse for a life of following the free and anticipating the cheap. This is also a way for entirely new business models to shake out. Furthermore the protocommercial stage is a way for innovation to fast-forward into hyperdrive. Temporarily unhinged from the constraints of having to make a profit by next quarter, the greater network can explore a universe of never-before-tried ideas. Some ideas will even survive the transplantation to a working business."
The Rules of The Relationship Economy
The Relationship Economy starts with freedoms enabled by networks. Freedoms that enable people and businesses to increase reach and richness beyond anything previously experienced. An economy is developing before our eyes but it starts with the free and turns to money by applying a whole new set of business rules. We will expound on these rules in later post but for now here is our list of the top ten.
- Make your product or service initially free.
- Make your first product or service valuable and unique
- Anticipate cheap, think about the mass
- Turn off the meter, charge for increasing the value proposition
- The ancillary market is your market.
- Find where value is being given out for free now, and then follow with more value
- Renew your mind to think beyond old business models
- Identify under served segments and create attraction and traction
- Learn the "system" of the virtual world and never stop learning
- Educate everyone, everywhere and do so with a passion
What say you?
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