EMBA的小眼睛

Capitalism vs. lock in

Free markets encourage organizations to take leaps, to improve products, to obsess about delighting customers. One reason that this happens is that competition is always nipping at your heels... if you don't get better, your clients will find someone who does.

But once lock-in occurs, the incentives change. When the cost of switching gets high enough, the goals of the business (particularly if it is a public company) start to drift.

Google doesn't need to make search more effective. They seek to make each search more profitable instead.

Apple doesn't need to obsess about making their software more elegant. They work to make the platform more profitable now.

[For example, iMovie, which has destroyed all possible competitors because of lock-in pricing, but continues to badly disappoint most reviewers.]

Verizon doesn't need to make its broadband faster or more reliable. Just more profitable.

In many ways, it's more urgent than ever to engage in free market competitive thinking when you start a small business. But as network effects increase, we're getting worse at figuring out what to do about restoring free markets at the other end of the spectrum, at places where choices aren't as free as they used to be.

We all benefit when organizations that believe they have lock-in act like they don't.