Eeee You

Developing a new business, of a sort, is getting very cheap these days.

An example would be, say, a new bike light.

The first step is to design it on a computer and then build a working prototype using 3D printed parts and other bits cannibalised from existing bike lights.

This is then used in a slick little video made using an iPhone and some simple-to-use online editing software.

The sophisticated operator might even do a little professional Design for Manufacturing work here. But that’s usually parked as a problem to be solved later by people that don’t even know that they are doing so.

And then the video is launched on Kickstarter which serves to both fund the company by (a) finding thousands of customers willing to pre-order the thing, and (b) market the product.

Those pre-orders are used to get the product into manufacturing and then delivered to those pre-order customers.

Thereafter, if the product is any good it will be picked up by distributors and it can also be sold on-line through any number of outlets such as the company website, Amazon, eBay, & online specialists retailers.

Boom! What would have taken years and many dollars of equity investment in the past, is now done in a year without have to deal with any dickhead investors.

Things are even easier if there is no hardware involved. Once the code is written, the product can launch.

Therefore is it any wonder that some government agencies have gotten in on the act?

Noticing that they have all sorts of hidden assets such as databases full of information and access to every customer in the land, some agencies are now developing apps and online services which are far more sophisticated than what they have offered in the past.

Often these services are provided for free because this is easier for them than figuring out if they are actually even allowed to make profit.

Their motivation to do all this is simple; they need to be seen to be staying relevant, especially to their political overlords in this IT era.

This acts as a barrier against either privatisation or decimation. In essence, the more ‘public good’ they can market, the more secure their funding and their jobs.

The irony is that, in doing so, they are penetrating further into service areas that are the domain of private operators. But by offering services for free the government agencies are destroying these market segments.

Whereas once government agencies had crown monopolies through acts of parliament, now they also have them through the provision of free services.

The free market analog of this behaviour is readily accepted. No one questions free email, free data storage or free search engines; these are provided free so that Google can drive its advertising revenues.

I can’t see any philosophical argument against government agencies also finding ‘loss leader’ opportunities that leverage existing capabilities and new technologies.

Unless of course, a government comes up with some weird sort of IT-specific anti-trust regulation that prevent loss leader behaviour in the IT era. That would be Europe, of course, if it ever happens.

In the meantime, if you happen to be in a business segment in which a government agency has just burnt your lunch, then your only option is to pivot, and bloody quickly.