The fruitseller

Enrique Dans. Professor. Instituto de Empresa

29 March 2005

I remember when, some years ago, a friend who knew I was “into that technology thing,” called me to have a look at her father’s business because they had a problem with the software.

The enterprise was a wholesale fruit stall in Mercamadrid. The owner, after seeing his daughter do all kinds of nice, sophisticated things on her computer, wanted to know why he couldn’t get things to work like that in his business. I went to see with all the will in the world, ready to have a look at the system. But the experience took a dramatic turn. I came up against computers running on something I found very strange: an operating system in French which, to top it all, was used exclusively on the fruit stall, and a remote satellite spinning around Pluto. At least that’s what it seemed like to me.

Phosphorescent green on a black screen, and mysterious ways of adding articles, prices and dates. Any error when entering a code, shown on a worn-out sheet of paper stuck to the wall, caused a crisis that the company’s inhouse genius had to go and sort out. The program was difficult and awkward. In other places, my friend’s father saw simple touchscreens and data that could be exported to the spreadsheets he’d seen his daughter make. Computers had changed, but not for him. How did the fruitseller get into this situation?

Simply the fact that a company - the one that developed the program - had built barriers to protect itself. For example, using a strange operating system nobody had heard of. And it lived off selling programs and providing a service if the program, which was of critical importance for its clients, stopped working. In a niche with no competitors, the company lived reaping the rewards of the innovation it had produced years ago, converted into a standard and surrounded by impenetrable obstacles.

There are those who think that in capitalism a company’s goal is to do things so well that it becomes a hypothetical monopoly. If it manages to do that, it could control the industry, regulate progress and adapt it to its economic interests, maximizing profits to the joy of its shareholders. For such a company, anyone trying to change a system that has enabled it to amass its fortune would be seen as a danger, even a “commie.” But this week IBM, a company hardly suspected of communism, stepped onto the stage and in one unprecedented move changed the system. It decided that instead of building barriers, it will open up 500 of its prized patents, in which it has invested valuable resources, so others can work on them.

There are others who think that the best way to motivate innovation is by allowing the innovator to construct barriers as high as possible around the creation. Thus you devote your time to reaping the rewards of what you once innovated. You try, and you even lobby for the world not to change. You want to carry on reaping and simply reserve the privilege to give the market another version of your product when you decide it’s ready. But that’s not right. The world could progress another way. Value should come from what a company does every day, not from the position it reached thanks to things it did some time ago.

IBM’s decision shows that another kind of world is possible. IBM is the blue giant, not the red giant. It’s not a commie. But it does think it’ll be better off in a world that moves forward because its capacity for innovation will defend its position and become its competitive edge. It wants to define the use given to its innovations so that others can work on them and help it progress. That’s not communism. It’s simply an efficient model. A better one.

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