A Simple Message From Tim O’Reilly: Create More Value Than You Capture

Image from Flickr, Via InUse Consulting

Value is a term that’s thrown around quite a bit these days. And when it lives in the context of the corporation, it tends to get scrutinized even more.

If you’re familiar with media CEO and web visionary Tim O’Reilly, you know he’s been pitching a simple message around value for some time: create more of it than you capture. During last month’s SXSWi session, “Create More Value Than You Capture,” MIT researcher Andrew McAfee and O’Reilly analyzed its role in the rise of sustainable business, outsourcing, and machine-driven automation.

“Consider Microsoft, whose vision of a computer on every desk and in every home changed the world of computing forever, and created a rich ecosystem for developers. But as Microsoft’s growth stalled, they gradually consumed more and more of the opportunity for themselves, and innovators moved elsewhere, to the Internet.”

While it’s easy to beat up on big companies, the idea is that an ecosystem is essentially a company’s lifeline. And Redmond, for better or worse, is a classic example because so much of its software business rides on the integration and development expertise of channel partners.

“If you have too small of a group capturing value then the whole ecosystem breaks down,” he told McAfee. Soon after, O’Reilly eased up on the Microsoft example, saying it had never been an evil empire. Almost on cue, the other favorite evil empire, Google, surfaced. O’Reilly urged business leaders to stay focused on big, hairy, audacious goals, and described how some of the greatest companies always have a higher sense of purpose.

“As Google is increasingly dominated by economic concerns, they will become less successful,” he said. “Our job is to work for all of us, not for this or that interest group.”

From there, the conversation turned to areas where technology-driven disruption is occurring, something McAfee researched and co-authored in his book with Erik Brynjolfsson, Race Against the Machine.

McAfee touched on the rise of automation and outsourcing, commenting that the gains from replacing people with machines and overseas labor is taking a toll on the economy.

“It seems the value is be going into the paychecks of CEOs, instead of back into society. More and more jobs are being taken over by machines,” said McAfee.

One of the scenarios mentioned was connecting Apple’s SIRI application to Moore’s Law. Both men agreed the result could be less human-powered customer service, especially in e-commerce environments.

The other business models mentioned revolved around peer-to-peer and collaborative consumption as the basis for unlocking value. Both strategies are built on the idea that there’s plenty of value within a community of users. Unlocking that value is where the magic happens, and what eventually leads to value creation and monetization, explained O’Reilly. He went on to reference Couchsurfing.com and AirBNB.com as examples.

Both panelists were asked to elaborate on other areas ripe for disruption.

Not surprisingly, manufacturing, government, and education were the top three picks from O’Reilly. And while manufacturing might be having the biggest renaissance, he seemed to think government could be the biggest opportunity of all. His comparison was one the tech-rich audience appreciated.

“Government should focus on being a platform provider instead of a solution provider,” he explained. As the session ended, a humble O’Reilly recapped some of his ideas, all grounded in his consistent message of working on stuff that matters.

“Find people as passionate as you are,” he said. “It’s important to create value for society and make the world a better place to fill in the needs.”

A Simple Message From Tim O’Reilly: Create More Value Than You Capture