Last week, Baldur Bjarnason at the FutureBook blog shared his impressions of their 2011 conference. He write about the directions that various publishing companies are moving in the market.
The future might look something like this: A product innovation and commercialisation company develops a property into various products. They partner with a infrastructure management company like Ingram to provide the backbone that keeps everything together and moves everything from the right spot to the next right spot. Sometimes they partner with another former publishing company, that now emphasises publishing services instead of products, to fill in the gaps in their own capabilities. And they partner with a customer relationship company like Amazon and Kobo (for ebooks), or Apple and Google (for apps), for the ever so important end point of selling something to a consumer. The issue of one customer relationship company effectively owning all customers in a single sector is mitigated by the fact that the product company isn’t tied to doing a single kind of product.
Bjarnason properly credits John Hagel and John Seely Brown for the strategic construct. The long version can be found in their book The Only Sustainable Advantage. The shorter version can be found in a 1999 HBR article that Hagel wrote with Marc Singer titled Unbundling The Corporation. In the latter source, Hagel and Singer actually lament Amazon’s strategic choice to be both a customer relationship company and an infrastructure company. It would be interesting to hear their rebuttal to Amazon’s recent and growing movement in the third space of product innovation as a book publisher.
The question I have pondered in this three part structure is if product innovation and customer relationship are better paired together. Look at the incredible success of Apple’s move into retail and the role that has played in their growth. The Lean Startup methodology suggests that you can’t make what the customer wants unless you are close to the customer.
Or look at Louis CK’s choice this week to offer a new show directly to his fans for five dollars (and smartly asks during the checkout if you would like subscribe to get email updates). It’s Kevin Kelly’s 1000 True Fans riff is about finding people “who will purchase anything and everything you produce.” In so many cases, you want to create great art and own the customer relationship.
P.S. Chris Dixon wrote last week about how the separation of design and manufacturing creates an environment for “garage ready” startups. So, the separation of innovation and infrastructure makes space for new companies to grow. It also creates the need for someone to build the interface and the tools so these two disciplines can talk to each other.