To prepare for the Open Data Startup Weekend event, I’ve been reading The Innovators Solution, which makes me think in more depth about the benefit of open data and open source technology to networks, communities, and organizations.
Let’s start by focusing on open source technology, which I see as an essential element for innovation as described by the “The Law of Conservation of Attractive Profits”:
“When attractive profits disappear at one stage in the value chain because a product becomes modular and commoditized, the opportunity to earn attractive profits with proprietary products will usually emerge at an adjacent stage.”
Simply put, open source technology and methodology have an impact on innovation by commoditizing one element in the network while enabling greater profit generation opportunities at other elements.
For example, Linux commoditized the server operating system, so the opportunity for profit generation transferred to the server itself, as well as the database, middleware and application layers, and opportunities for service providers/system integrators. As a result, you see the explosive growth of companies like IBM, Google and HP. Linux, the open source software, enabled other elements of the network to monetize and flourish while also expanding our toolset to include new systems that help individuals problem solve at every level. This stimulates innovation, which may actually lead to an increase in demand and profitability for the network as a whole.
Now let’s think about this as it relates to Open Data Startup Weekend, which is an event intentionally hosted for the purpose of using open data in an open source environment to artificially commoditize an element in the network.
Right now, many of the organizations liberating data do so for the purpose of transparency. They fail to realize there may be economic opportunity, along with innovation, that can be derived from open data.*
Revisiting the law, we reframe the explanation in terms of the use of open data for civic innovation:
“When attractive profits disappear at one stage in the value chain because a product becomes modular and commoditized (public transit/taxi service) the opportunity to earn attractive profits with proprietary products will usually emerge at an adjacent stage (Web/mobile apps like Ridescout/Uber/Lyft)”
Instead of waiting for organizations that are contributing data to commoditize an element, Open Data Cincy and Startup Weekend Cincinnati have decided to play an active role in accelerating the delivery and implementation. Both organizations hope to encourage startup profit opportunities to adjacent elements - through the creation and use of websites, mobile apps, database architecture, algorithms, and so on. Drawing a parallel to the Law, we hope the use of regional open data spurs innovation locally by social entrepreneurs activating their problem solving skills to build solutions for the challenges in our community.
*One can also deduce, the more open data - the more opportunity for civic innovation.
Sidenote: I am writing this on a plane. It might only make sense to me. Much of it is jumbled together from what I’ve read/learned from Clayton Christensen, Michael Raynor, and Tim O’Reilly.