Commoditizing our complements
In business and economics, there is a concept that is often expressed with the phrase “Commoditize your complement”. A complementary product is has some form of necessary connection to the product in question…the usual example is automobiles and gasoline. As Joel Spolsky puts it:
A complement is a product that you usually buy together with another product. Gas and cars are complements. Computer hardware is a classic complement of computer operating systems. And babysitters are a complement of dinner at fine restaurants. In a small town, when the local five star restaurant has a two-for-one Valentine’s day special, the local babysitters double their rates. (Actually, the nine-year-olds get roped into early service.)
All else being equal, demand for a product increases when the prices of its complements decrease.
Thus the concept of commoditizing (making available uniformly and interchangably) your complement. If you can decrease the cost of your complement, you by necessity increase the cost of your product. Microsoft learned this very early, and went on to great success, making hardware (the complement to it’s product, software) a commodity product…it didn’t matter if you bought from Dell, or Gateway, or Asus, or IBM, or Lenovo, or…the list goes and on. Those companies struggled to make money in a market driven to complete interchangability, while Microsoft made billions on software. A reversal of this strategy, as Marco Arment has pointed out, is Apple is attempting to commoditize software via its iOS and Mac App Stores, because its product (where they make their profit) is the hardware.
My questions to the library world: What is our product? What should we be commoditizing in order to make our product more valuable? The concept isn’t just about money, it’s about market values, even when the market in question isn’t measured in dollars but in reputation, importance, and community value. What should we be pushing to commodity so that our business becomes more valuable to our communities?
I have my theories, but want to hear yours.
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- 04.19.12 / 10pm
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