Tim O’Reilly: ‘Create More Value Than You Capture’

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

For media CEO and web visionary Tim O’Reilly, the key to continuous business success – and publishing success for that matter – is to create more value than you capture.

Microsoft is, for better or worse, a classic example. The huge value it created during the rise of the personal computer was arguably marginalized as it hung to legacy models and techniques.

“Consider Microsoft,” O’Reilly told MIT researcher An- drew McAfee during an interview at SXSWi, “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. As Microsoft’s growth stalled, they gradually consumed more and more of the opportunity for them- selves, and innovators moved elsewhere, to the Internet.”

While it’s easy to beat up on the big companies, the idea is that an ecosystem is essentially a com- pany’s communal lifeblood. O’Reilly implies Microsoft would have been much more successful in its most recent decade had it been less of a black hole.

“If you have too small of a group capturing value, then the whole ecosystem breaks down,” he says.
O’Reilly urges business leaders to stay focused on big, audacious goals, claiming the greatest companies always have a higher sense of purpose.

Google, for example, was famously driven to not “be evil” and to organize the world’s information. However, O’Reilly says, “as Google is increasingly dominated by economic concerns, they will become less successful.”

McAfee, who co-authored the book Race Against the Machine with Erik Brynjolfsson, says the rise of automation and outsourcing and the replacing of people with machines and overseas labor are taking a toll on the economy.

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

Take Apple’s Siri application, for example. A few more innovations in robotic voice-assistance could mean less human-powered customer service, especially in e-commerce environments.

In peer-to-peer consumption, however, business- es can reap the value harnessed inside passionate communities of users to create value for consumers and themselves. O’Reilly cites Couchsurfing and Airbnb as examples.

Manufacturing, government, and education are O’Reilly’s
top three areas where huge opportunities for value creation lie.

“Government should focus on being a platform provider instead of a solution provider,” he explains. This would give innovative technologists the opportunity to build solutions that create lasting value.

For publishers and content marketers, the analogy is clear: by creating content that serves an audience rather than the creator, one can build enormous respect and eventually capture value from loyalty. By not publishing advertisements under the guise of editorial content, marketers will better serve their audiences and themselves.

In other words, don’t get greedy.

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

Image courtesy of Flickr, inUse Consulting