Saturday, September 15, 2007

"New" Web Business Models in Lafayette

Food For Thought Dept.

Here's something worth thinking about: Arguably a Lafayette firm is running its business based on what web-folk will tell you is the hottest new cutting edge business model. That firm, as reported by the Advertiser's Bob Moser, is Fugro Chance. Fugro Chance is a survey company specializing in the Gulf of Mexio. It sells its ability to locate things accurately on a map. That is its product. But Chance appears to know that what has really kept in it in business for 30 years is trust: its customers believe that they can trust them to locate things accurately and they trust Chance isn't about to turn their special knowledge into an excuse to rip off their customers. So their customers return...

What got Furgo Chance an admiring piece in the paper is that they gave away their most valuable product, a comprehensive map of the pipelines, old and new, active and inactive, in the Gulf, for free. Apparently no one else has the history and focus to match their expertise and after the storms of '05 ripped up the Gulf offshore platforms an accurate map of the pipelines was crucial to quick, efficient recovery. Everyone from FEMA to 200 industry insiders needed the map. They got it. From the story:

They could have charged thousands of dollars for this map, and most would have paid it. But this mainstay of oil and gas mapping knew what was right, says Marine Data Manager Lionel Cormier. Plus, generosity builds loyalty.

"We e-mailed pdf files (of the map) possibly to 200 people within a few weeks of the hurricanes, it was a handout to the industry," Cormier said. "We felt we were the only one who could produce that map in that timeframe. ... There was more to win than to lose."

That might not strike you as exactly a hot, new, cutting edge business strategy. It might seem remarkably long-sighted in a business climate that trumpets short-term gains and ruthless, immediate, exploitation of every advantage over you customers as a some sort of business virtue leading to "maximizing ROI." You may remember a time when people understood that greed wasn't good business. But this approach to business probably doesn't strike you as new; rather it seems like the "old" model.

But that might be because you're from down the bayou...from a place where shopkeepers used to give away lagniappe in an effort to
give "a little extra" in the form of an inexpensive treat for the kids or the customer. That little extra served to prove that the transaction wasn't purely motivated by faceless profit-taking; that the store owner was willing to give a little back in a form that acknowledged the life of the customer.

Not everybody has that, or a similar experience, in their history.

There's a lot of hoo-ha online about "new" business models (for example, Google) that involve giving away valuable products (like maps or search) and showing respect for your customers (by not abusing their trust) in return for customer loyalty toward your product (in Google's case a tolerance for their advertising). Similarly Linux's open source business model is built around a free "product," the Linux operating system. What is sold is the expertise to extend the product and to provide high levels of support and integration. In a word: trust.

That trust-based business model is reported to be some sort of new discovery driven by network economics and constructed by brilliant young bi-coastal entrepreneurs and especially suited to the internet's economy.

Now giving away your central product--as Google arguably does with its search engine results—might seem a new element that would justify.

But right chere in Lafayette, cher, there is the example of Furgo-Chance; who operates successfully in the cutthroat oil industry to prove that the gift economy—the framework for understanding Google, Commons-based peer production, and the open source buisness model—isn't particularly new nor something particularly suited to the internet.

The old and the new collide in Lafayette. It'd be a good thing—and a wise thing—if local tech businesses were to learn the lessons taught by both Linux and old french shopkeepers: business is about Trust. Dollars are a by-product.

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