How Radical Openness Can Transform Your Business

09/20/2016 01:37 pm ET
Apple built a digital empire with its open platform.
Credit: Matthew Yohe | Wikimedia Commons
Apple built a digital empire with its open platform.

This September, all eyes were again on Apple as it unveiled its latest iPhone. Considering how common iPhones have become (an incredible 230 million were sold in 2015), it’s easy to forget that almost no one outside Apple had heard of one before Jan. 9, 2007—the day Steve Jobs walked onstage with the very first model.

How exactly did the iPhone get so big, so fast? The answer has less to do with technology than with philosophy.

Apple pioneered the modern smartphone by opening it up as a platform for outside hardware and software developers to build upon. By inviting everyone to create apps and products, the company made the iPhone a more powerful tool than any mobile device before it.

And it’s not just Apple, of course. Companies from Uber to Amazon have embraced this radically open way of doing business. Here’s a look at how and why this model works, from the frontlines of my own company, which has used an open approach to grow to one of the world’s biggest online portals for home improvement supplies.

What does it mean to be an open business?

To see the difference between an open organization and a closed one, let’s start with a tale of two encyclopedias. For 244 years, people turned to the Encyclopedia Britannica for knowledge. Then along came Wikipedia in 2001. At first, it seemed a longshot to match the scope of established encyclopedias. But by opening its publishing tools to the broadest number of people possible, Wikipedia drew upon limitless knowledge and expertise to create content. It now features 5.2 million articles, compared to the 40,000 articles in the 2010 edition of Encyclopedia Britannica — the last edition sent to print.

This is precisely the advantage of being an open business. By enabling your suppliers, customers and employees to offer input and solve problems, you’re able to build something much stronger and more enduring than anything you could think up and execute behind closed doors.

But what does that look like at a practical level? Here are a few critical ingredients of a radically open business:

  • An open technology platform: On the technical level, having an open platform is key. In the old days, a company built a hunk of proprietary software that only its own people could change or build off of. But the whole world of “open APIs” — data firehoses that companies willingly share with outsiders — has changed all that. Google is the best example of open APIs at work. Think of all the third-party apps, sites and tools that integrate and piggyback on data from Gmail, Google Maps, Adsense and more. Result: more features for more users. We’ve taken a similar approach, opening our API to allow developers to build apps that tap into data on home improvement suppliers and customer demand.
  • A marketplace for everyone: For retailers, an open API goes hand in hand with an open supplier marketplace. What does this mean? Traditionally, retailers decided which suppliers they would do business with, and dictated which products they would buy, and how many. The model set by Amazon, Airbnb, eBay and others instead provides an open marketplace for suppliers to interact transparently with customers. Rather than gatekeepers, these new companies act as portals between consumers and a limitless number of suppliers and products.
  • An honest feedback loop for customers: Another critical piece of an open business: sharing information with customers in a radically transparent way. Amazon’s product pages are packed with comprehensive product information. Unvarnished customer reviews let buyers know the good and the bad. Building trust is critical when personal safety is at stake, so home-sharing services like Couchsurfing.com and Airbnb give hosts and guests opportunities to see details, ratings and reviews of one another.
  • A culture of internal transparency: None of this openness means much, however, unless you’re willing to be open in the one place where it really counts: inside your company. Companies built on transparency and trust are more nimble because they can act more quickly with fewer formal rules and bureaucracies. But that spirit has to start at the top. At my company, for example, we hold regular all-hands meetings where I face the fire about where I’m leading our company. When there are tough decisions to make, people trust they’re being made for the right reasons and are quicker to get on board.

Yes, there are some secrets a company shouldn’t share. But a spirit of openness can take business growth to the next level. Customers get more choice. Suppliers gain better insight into what sells and what doesn’t and are able to align with your success and use it to propel their own. And your company is able to expand its range of offerings and its customer base, growing bigger and faster. Amazon, Airbnb, Uber and other monumental successes of the last decade offer powerful proof: the future of business is open.

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