Back in 2014 I read some truly original thinking by John Battelle of sovrn Holdings where he introduced the idea of the information first company.
Battelle makes the case organisations can be viewed as living systems composed of flows of information, energy and matter. He argues traditional businesses are organised to maximise use of energy and matter, such as people and factories, whereas category-disrupting companies place data at the heart of their organisations. These new types of companies are information first - they map flows of information, so people can see something new.
The Rise of the Information First Company
Businesses organising around people and factories made sense in the industrial-era, but in the internet age a new approach has come to the fore. The new reality is organising information is often more valuable than owning it. Just look at Google, Indeed or TripAdvisor.
This may sound abstract, so let’s look at information first companies and the industries they are disrupting:
Hospitality behemoths typically built hotels and spent money persuading people to book a room. However, Airbnb studied the flows of information and invested in creating a system that made it easy to find and book rooms. Today, Airbnb is valued at $25 billion - making it more valuable than Marriott and Hilton. By becoming information first, they have transformed how people find places to stay.
Having food delivered from your local takeaway used to be dependent on whether or not you had their telephone number or menu closeby. Just Eat, an online ordering service which aggregates menus has changed that. It’s a fine example of a company not owning information, but creating an infrastructure which displays it in a more useful way. In 2015 the company announced revenues and pre-tax profits were up by more than 50%.
Uber offers a tantalising glimpse into what the future holds for not only the taxi, but transportation industry. Taxi operators used to request you queue at a rank, whereas Uber have put information (and in my opinion the consumer) first. Bill Maris of Google Ventures thinks Uber could turn into a $200 billion company. When you consider Google are piloting driverless cars, you can begin to see the untapped potential of Uber.
Time and time again we’re seeing companies spring up and create a marketplace that removes friction between customers and businesses. These companies have put customer experience and information at the heart of their design. It’s a big bet, but when executed well, a company can become the market.
Oftentimes this is accompanied by established players being usurped. Many businesses have been guilty of not imagining a better or different way of doing things. But why would a business want to change if its current business model is working? It’s the classic innovator's dilemma, although it’s worth noting how Intuit guards against such hubris - and you as a startup advisor or leader should too.
But the truth is what works today, is not guaranteed to work tomorrow. If recent history is any guide, big corporations should not be scared of their competitors, but the startups they’ve not yet heard of. Increasingly, it’s the unknown, unknowns which disrupt and change entire industries.