Monday, March 4, 2013

One large vs many small - who has the advantage

As I use the heroku ecosystem of services, add ons etc and I compare it to what you get in a larger centralized organization I almost always end becoming more confident that the business model of small well defined business services, small in terms of "employees", small in terms of funding required, small in terms of time that it took to get the service started is a much more attractive than that of a bigger company. The obvious question that comes to mind is whether a set of small companies like that can address an important need of a large population segment. I think yes but thats not the argument that I want to make right. As I was discussing the above with a friend he asked me what are the intrinsic advantages of a larger organization?
Is it reliability of services, Is it efficiciency? After discussing both of these for a while we concludes that a large enough, maturing marketplace of such business services would be addressing both problems.
As a small service creator I would have both reliable and less reliable third party to services to use and I would probably need tp resort into do-it-yourself solution as often as a product manager in a larger organization.
However, there is one thing that the larger organization will always have a big advantage against a set of smaller independent ones:

It would have access to a data warehouse that it contains the aggregate knowledge of all the pieces of the business, while in the other case every small service/business will not be able to see/understand things beyond its small sphere of data that it relates to. The larger the organization, the more it has the advantage (even if because of bureaucratic issues it doesn't use it) of knowing and understanding more of the world. That warehouse, full of relatively private data is typically given access to a controlled small team of business analysts, data scientists and such and ends up being the driver behind everything from product feature changes to strategy changes, pricing changes, acquisitions, reorganizations and such.

How would you address that inherent weakness?

One extreme possibility could be an extreme GPL-style model for data.
- You create a co-op network of companies that share a certain common rules for sharing open-data
- An individual that gets access to the open-data promising that any future companies/services that it creates for a period of xx months/years will follow open-data practices as well.
- An individual that is working/contracting/collaborating/influencing a close-data company is not allowed to get access to the data.
- End-users of open-data services accept a relatively lower level of privacy - to not asphynnxiate the system from privacy controls.

Another extreme (in diff ways)  possibility is to create the framework for data-leasing.
Essentially a set of legal contracts that allow a company to get "warehouse access" to your company for a fee. Why would a company ever do that? For funding purposes for example. A fundor is willing to risk a certain amount of money but for what benefit? Small private companies do not have necessarily exit paths, or dividents. But If the company succeeds its data would be more useful. If it needs/keeps the data for itself the investor can access it.  The framework could require that any persistent store used by the company enables a mirror or a daily backup process - enabling the entity that bought data access to incorporate the data if it wants in its granter data warehouse.



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