Opinion: Startups should ‘move fast and break things,’ but not recklessly

Photo credit: Mashable

Let’s be honest. We’re always excited whenever Silicon Valley shows us how easy it is to conquer indomitable global industries with the switch of an algorithm.

The romantic story of a college dropout who dreamt of a product that could forever change the world was pretty cool because his story became so relatable. So, the revelation of Facebook’s data leak jolted us wide awake. It made us question the fundamentals of why we entrusted an app to basically run our social lives to such a large extent, making us question the power of its very business model and the lessons it preaches.

Open platform

Among business consultants and academics, the “network effect” is a common term that explains the rise of open platforms like Facebook, Google, Uber, and Airbnb. The value of a platform depends, in large part, on the number of users. The more people who use the platform, the more inherently attractive the platform becomes, leading even more people to use it.

Because of this network effect, users are willing to pay more for access to a bigger network. This is why Facebook has become obsessed with growth. The more people who hang out on Facebook or Snapchat, the more willing big brands such as Coca-Cola, Procter & Gamble, and Nike are to buy ads there.

But Facebook didn’t invent the open platform concept, which explains the success when a platform is open to external/third parties. The likes of Snapchat, WeChat, and even big players like Microsoft have also practiced this business idea (Adobe Photoshop, Autodesk, and countless other video games are sitting on top of Microsoft Windows as complementary offerings to enhance its attractiveness).

Apple, as protective and controlling as it is, understands this too. Steve Jobs, no matter how perceptive to the end-consumer’s needs, could not have predicted that some of the most prominent features of his iPhone would be used for hailing a cab and taking automatically erased pictures. No single company could have come up with both of these killer apps internally.

Google caught up in the smartphone sector despite being a latecomer only because Android is more open than Apple’s iOS. This allowed Samsung, HTC, and Huawei to build their own phones while using Google’s software. This is open platform at its best. Google gets to focus on software development—it’s core competence—while the Asian handset manufacturers get to focus on hardware production. The result was a division of labor and expertise.

A product’s best feature will never be invented in-house. Killer apps must be invented by outsiders instead.

WeChat did the same too. Its official account allows millions of businesses—from mom-and-pop stores to big airlines and banks—to provide their services to the WeChat user base. That’s how the platform is becoming an indispensable mobile tool for booking doctors’ appointments, settling hospital bills, filing police reports, reserving restaurant tables, accessing banking services, and much more. The big idea here is the realization that a product’s best feature will never be invented in-house. Killer apps must be invented by outsiders instead.

But herein lies Facebook’s downfall. By embracing an open platform to the extreme, it has failed to review apps that are using its social network. Apple CEO Tim Cook even said that he “wouldn’t be in this situation” because of Apple’s more stringent requirements, foregoing speed for quality.

What can we learn?

So what can Asian business learn from this? For entrepreneurs, family business owners, and executives of multinationals, we must ask ourselves critical questions while embracing an open platform.

To what extent does my business need to mobilize external parties to co-create new offering that will excite end users? And when doing so, how do we effectively enforce a standard of community behavior in order to uphold quality and transparency? And more importantly, where and how far will information be shared among third parties?

Recent history has shown that the power of an open platform is very real. The rise of many tech giants in Asia—from WeChat to Huawei to Samsung—are testimony of such strategic approach. And yet, the historic motto of “Move fast and break things,” which is synonymous to Silicon Valley, is now viewed as nothing more than corporate recklessness. With these learnings in mind, the future now belongs to those who can integrate both discipline and agility, succeeding in fulfilling the two opposing demands at the same time.