Value is created at the edges but captured at the hubs.January 29th, 2009 View Comments |
Even though I’m trying to focus more on “translating business strategies into financial models”, I can’t help but explore. Pardon me for a bit of rambling thought…
Back in late November and early December I wrote two posts about new platforms and new trends for entrepreneurs to leverage.
While, yes, it is all about the network, the Internet is not the only network. The idea of creating and leveraging networks doesn’t need to only apply to consumer-oriented Internet applications.
Focusing on transportation networks for a minute…
What trends can entrepreneurs leverage to create new businesses? One of many:
Stabilizing the economy is going to fall to government intervention and investment.
What will the government invest in? What themes did we see in the campaigns? Off the top of my head: Iraq, energy independence, infrastructure investment and revitalization, economic and financial stabilization. Obama has already declared his intention to create jobs by investing in transportation and energy infrastructure projects. While these may not sounds like obvious areas for startups, they are probably more meaningful than another desktop or mobile Twitter client or a new way to share photos.
What is the next platform for new businesses? Pointing out one:
Transportation
Venture capitalists and entrepreneurs have traditionally stayed away from opportunities that require big, inflexible, systemic changes to succeed. The required scale is simply to large, the risks are simply to big, the timeframes too long. But how could the government create a new platform in public transportation for entrepreneurs to leverage? How could entrepreneurs develop businesses based on existing transportation networks?
As usual, I’m not the only one thinking about the concept; Chris Timmerman of Brand Avenue, Interstate Redux highlights Karrie Jacobs of Metropolis Magazine, Rethinking the Interstate:
[Obama] has been talking up a huge economic-stimulus package and saying he’ll “rebuild our crumbling roads and bridges.” Infrastructure is suddenly a buzzword…
The Dwight D. Eisenhower National System of Interstate and Defense Highways, created when Ike signed the Federal Aid Highway Act of 1956, was a symbol of everything that was both right and wrong about this country. That we were able to plan and execute something so ambitious—more than 46,000 miles of highway—seems, at this juncture, wondrous. Of course, the system undermined our cities, encouraged suburbanization and sprawl, and solidified our dependence on the automobile. This tends to undercut the glory of the achievement.
But it’s time for us to look at the interstate system not as an aging network of highways in need of repair or replacement but instead as we might look at a navigable river.
… What if we thought of [interstates] as the backbone of a new, more diverse 21st-century transportation system? “It’s time for a different vision, Blumenauer says. “And a principle for that is how we coax more out of existing resources.”
How could the existing transportation network be leveraged?
Where is the value created and where does it go in networked industries?
Value is created at the edges but captured at the hubs.
Remember, that while the activity is in the tail, the money is in the head.
And our transportation and energy networks (not just the United States, but anywhere in the world) might hold the biggest heads (and tails) of all.
Obviously solving our transportation and energy infrastructure problems is not an easy task and requires extensive integrated planning between agencies for “highways, energy, rail, transportation, housing, and urban development.” Solving large, complex problems through coordinated large-scale systemic overhaul isn’t exactly what venture capitalists and entrepreneurs do well.
Given that it’s probably not possible to radically restructure markets in the transportation industries right now, perhaps thinking about shaping strategies will create better frames for thought.
But to think there aren’t opportunities would be pretty short-sighted…
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Related
- Alex Tabbarok at Marginal Revolution, Infrastructure: Roads and The Smart Grid.
- Also from Chris Timmerman at Brand Avenue, Building a Better Big Box.
- Alan Patrick at Broadstuff, There’s life in them thar Long Tails yet….
- Rhonda Germany and Raman Muralidharan , strategy + business, The Three Phases of Value Capture: Finding Competitive Advantage in the Information Age.
March 19th, 2009 at 16:39
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May 19th, 2009 at 06:51
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May 30th, 2009 at 15:25
[...] Value is created at the edges but captured at the hubs., Jan 29, 2009. [...]
July 14th, 2009 at 22:10
[...] If you want to build a new business, it has to have a business model built in. If you want to capture value as a hub, you better create a lot of edges. [...]
July 31st, 2009 at 15:16
[...] to new opportunities; it’s where we find growth and create new value, it’s where we find new edges; it’s the source of innovation and insights we would not have seen otherwise. It’s why we care [...]
January 14th, 2010 at 09:20
[...] Because the interesting and truly valuable stuff happens where edges hit cores. Where the core of the online hits the core of the offline. Where the core of the known [...]
January 19th, 2010 at 23:17
[...] For me, for now, that means I need to live in one place and build a core to bring together the edges I’ve opened throughout the [...]
February 2nd, 2010 at 01:39
This one has got me thinking.
March 27th, 2010 at 17:32
[...] have I moved from the Lower Garden District to the French Quarter, but I’m a bit more worn around the edges. The core is the same. The same adventurous spirit. The same desire to get out and see all there is [...]