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How the Open API Movement Can Help Your Brand
In an analysis of innovative companies, Razorfish has found that its not just the organizational culture or leadership that creates innovation; its the willingness to allow consumers and developers to identify new uses for existing data and infrastructure via open digital services. Whether the goal is adding new revenue streams or extending global reach, embracing an open digital service model is an imperative step.
When executives are challenged to innovate, they often try to take old routes to new business ideas. While analyzing innovative companies, weve found that its not just the organizational culture or leadership that creates innovation its the willingness to allow consumers and developers to identify new uses for existing data and infrastructure via open APIs. Innovation leaders like Google, eBay and Twitter process billions of digital service calls every day, adding real business value to more categories and brands than once thought possible. Whether your goal is adding new revenue streams or extending global reach, embracing open APIs is a step you must consider to help ensure success.
For brands steeped in technology like Best Buy, Netflix, eBay or Amazon this is easy. In the last few years, open API adoption has grown many times over. According to ProgrammableWeb.com, in 2010, more than 2,800 brands offered data or service over open API. That means 25 times more brands are taking advantage of the open API movement than five years ago. But lets not be fooled by this growth. Razorfishs analysis shows that this growth comes mainly from Internet/social brands, and not from those that are considered traditional. Others may be scratching their heads as they think about how open APIs and community participation can help their traditional businesses.
We are living in a fast-changing environment with steady proliferation of applications, platforms and devices. Data is growing, as are the number of transactions, and cloud computing is making things easier and faster. On top of these shifts, user expectations and behaviors are changing, too. This calls for rapid and continuous innovation to maintain competitive advantage. Keeping up with change is necessary, but shifting the focus of your workforce can be a major distraction. Opening data and/or services to the larger community provides greater access to community brainpower, thus, more opportunities.
Theres a major opportunity for more traditionally minded brands to take advantage of exposing their data and/or services through open API. For evidence, look no further than a company engaged in one of the most traditional of business activities: gold mining.
Thars gold in them thar hills
In early 2000, businesses were breathing a sigh of relief after the non-event that was Y2K, and the Internet bubble was still at its peak. On March 10, 2000, NASDAQ reached a record high of 5132.52. Stock investments were lucrative and the gold market was depressed. In that economic environment, gold producer Goldcorp Inc. was not only suffering from market trends, but also from internal organizational issues. CEO Rob McEwen knew his mines had great potential, but lacked resources to identify where to mine in the vast, 55,000-acre Red Lake area in Northwestern Ontario. Having learned about technological advances during a seminar at MIT, he was fascinated by the open-source code movement and the success of Linux operating system, which programmers across the globe had built for free. This concept of community involvement caught McEwens attention, after which he knew exactly what he needed to do.
At an industry meeting in March 2000, McEwen unveiled the Goldcorp Challenge, an open invitation to experts around the world to participate in a competition to help Goldcorp identify where to mine. About 400MB of Goldcorps confidential, proprietary geological data was made available to more than 1,400 scientists, engineers and geologists from 50 countries around the world who downloaded the data and started virtual exploration. Within days Goldcorp started to receive entries. The winner was a collaboration of two groups in Australia The firm formerly as Fractal Graphics, and Taylor Wall & Associates, which together suggested five specific locations to mine and developed a powerful 3D, graphical depiction. Each one of the locations yielded gold, and the Goldcorp Challenge changed the companys fortune. In exchange for a small award to the winners, Goldcorp found metal worth more than $6 billion.
Since then Goldcorp has seen its share price increase from the single digits to more than $50, and it has become the second-largest gold mining company by market capitalization. With mines in Canada, the U.S. and Mexico, and a pipeline that includes other spots in Latin America, its widely considered an industry leader. How did it get there? By opening itself up to a community that could help it improve. The lesson here is simple You dont need to be an e-tailer or a country whose DNA was twirled together in Silicon Valley in order to take advantage of the wisdom of the crowds. When you recognize the value in that wisdom and find a way to leverage it, the benefits are clear.
New revenue stream. Using open APIs can create a new sales channel. For instance, Best Buys platform, BBYOpen, allows a worldwide community to freely access product information, store details and reviews via a set of RESTful APIs. This enables developers to create apps that facilitate purchases from Best Buy. The BBYOpen initiative started as a small IT venture today it is one of the primary sales channels for the company.
Cost savings. New device proliferation demands different digital experiences around products across different interfaces. However, creating unique experiences for each interface can prove costly even for big brands. Open API allows developers to create those experiences free of charge. Twitter, for example, didnt launch its first official application for iPhone until 2010, but a multitude of Twitter apps for the device have been available in the App Store since the launch of iPhone in 2007. The developer community filled the gap.
Brand equity. Utilizing open APIs can engage brand evangelists in a meaningful way, creating stronger community and as a result increases equity. Once the community is engaged, the cycle of innovation grows exponentially. Facebooks total user base increased four times in less than a year after May 24, 2007 when the company announced the open platform for the developer community to build social applications.
Brand goals. Finally, open API allows staff and talent to focus on brand goals because staff is less distracted by continuous noise in the technology landscape. Additionally, feedback from the community helps facilitate better product roadmap planning.
How to do it
Despite hard facts and evidence, traditional brands are wary of sharing proprietary data. Theres often an organizational inertia that slows the pace of change but, while change is hard, it is the only constant. There has been some progress, especially in the healthcare and financial services industries which traditionally resist such ideas but the progress is minor at best. A model of crawl-walk-run can help:
- Start small. Open up one data set or service.
- Engage with the community and give people the freedom to express their needs and wants.
- Seek feedback and track progress. Community feedback and the experience that community creates can help make a case that can help move the organization in the right direction.
Open API initiatives will not make you glamorous overnight. It is a slow process of energizing brand evangelists. In the next few years, it will be de-facto to have a http://developer.<your brand name>.com entity. Smart brands will get there faster and laggard brands will follow. It is up to you to decide where your brand falls.