THE RECIPROCITY ADVANTAGE
A NEW WAY TO PARTNER FOR INNOVATION AND GROWTH
STEP 4: Creating Scale
Creating your reciprocity advantage will allow you to make a big difference for a long time. Reciprocity is good, but massively scalable reciprocity is growth that reshapes industries. This requires designing for scalability from the beginning. You will know your reciprocity advantage is ready to scale when your service or product meets three criteria—it’s desirable, viable, and ownable.
Amplifying to create scale
Consider the reciprocity advantage that Apple created with its App Store—and the scalability amplifier that it has become. The introduction of the iPhone in 2005 forever changed the digital landscape. Sales of iPhones have been spectacular, but the spread of apps has been much more surprising. The App Store represents both an enormous reciprocity advantage for Apple and a small business creation engine.
We recognize some will see irony in including Apple as an example of reciprocity advantage. Yet, the iPhone is the platform that made a new reciprocity advantage possible. All around the world, entrepreneurs have started small businesses by writing apps and posting them to the App Store. Apple gives away access but charges for the software developer kit and pockets a large percentage of all App Store sales. However unpopular this action might be, the iPhone right-of-way is so valuable that Apple can command the fees. It’s merely executing the option to take a piece of the business it helped create. We may not like giving Apple a large percentage of the sales from our apps, but the iPhone's right-of-way created by the app store and the software developer kit made the new business possible and the partnerships work to create value for both.
Cloud-served supercomputing will disrupt the practice of scaling
Like so many other emerging technologies in the past, the cloud has been oversold and—so far—has underdelivered. That, however, is about to change. The cloud is not just about outsourcing information technology functions and providing storage. Soon the cloud will function like a supercomputer, providing a virtual overlay on the physical world to allow us to do things we’ve never done before. As an early signal of this, Nike created a virtual pop up store in New York City.
Cloud-served supercomputing will fuel global innovation and propagation—especially in emerging markets. Infrastructure in emerging markets could leapfrog capabilities in established markets—just as cell phone technology leapfrogged traditional landlines. Small players will get access to large resources regardless of where they are.
The cloud will amplify reciprocity and it will introduce new risks of criminal hacking.
Airwalk invisible pop up store
How and when to scale massively
You will know your reciprocity advantage is ready to scale when your service or product meets three criteria—it’s desirable, viable, and ownable. New businesses are never desirable, viable, and ownable from the start. Ideas need to be nurtured through rapid experimentation to solve for the missing pieces of the puzzle.
So, how will you know if your idea is desirable, viable and ownable? We have created a score card to direct your development efforts. Each of the three areas is divided into two opposing measures:
Is it desirable? To scale it must be transformational and intuitive.
Is it viable? To be viable it must be affordable and structrually attractive.
Is it ownable? It needs to be feasible at your intended scale and have a source of sustainable competitive advantage.
The breakthrough occurs when you resolve the three pairs of opposing forces. When you have all six parts working for you, run! Your idea is now no longer risky. Until then use keep experimenting cheaply.