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You might think that Web 2.0 was set to totally disrupt and displace the big players in the IT industry. New players have risen in the last 15 years; Google, Amazon, eBay, Facebook, Myspace, to name but a few. All these new guy’s propositions are based on amassing large volumes of data on individuals and businesses to match preferences and intent to content. Their brand presence and penetration is phenomenal. Ask any kid and they’ll know these services intimately. Game over for the traditional players like Microsoft, IBM and Oracle you may claim. But if you’d walked around the Web 2.0 Expo 2008 in San Francisco you’d have seen that the traditional players had the biggest presence. The technologies that underpin the propositions of the new entrants are products of the big guys, i.e. database servers, analytical processing tools, middleware, integration gateways, etc. The big players can afford to be brash. The new stars will always find it difficult to displace the traditionals because of their dependence on them to enable their business.
The same goes for all industries at this time who are dependent on fossil fuels. The hike in oil and natural gas prices is not just because of resource deficiencies, in some countries like the UK, the price of these commodities is inflated by purposeful capping of supply by European suppliers. The restriction on supply means prices increase and profits with it. This is another case of the power of enablement.
The Power of Enablement is based on a total or partial dependency on someone or something else.
The economy of modern business is rife with this power being exerted. It is a form of reward power, and it is phenomenal. Dependence on someone else to dispense the ‘reward’ (i.e. resources, technology, etc for a price) creates a serious vulnerability. Would eBay be able to run their business if they didn’t have a database system? No way! Will Oracle start putting up prices unreasonably to increase their profits? I don’t know, but they could do. With consequences.
This is precisely why most governments take particular exception to monopolization. Any product that has an unfair monopoly can wield enormous power. Imagine if Oracle were the only database system on the market. Who would then be creaming off the profits from eBay, Facebook, etc? Oracle. Competition in a marketplace means good for business.
The implications for Corporates are fairly obvious; building a dependency on another company’s product or service creates a vulnerability that must be managed. The ability to swap providers of the services you depend upon is key. Should a provider begin to hike prices, or change the features of their service not in favor, the organization must be able to change providers without subjecting itself to enormous cost and service disruption. For eBay, the cost of engineering out Oracle, say in favor of IBM DB2, would be huge. It may mean that all other projects and innovation is put on hold for a number of years. The dilemma here is that preserving an ‘agnostic’ position like this means that the organization won’t be able to optimize its supply-chain to its provider’s service. This in itself can drive down efficiency and drive up costs. Provider’s know this. Often, providers will create unique features of their service to strengthen their foothold in their customers, with the objective of increasing their customer’s dependence. For example, Oracle has a unique set of features that eBay is no doubt taking advantage of. The dynamic of these situations is complex!
I think the above paints a good picture that can be used as an analogy for individuals. Like the situation for providers to corporates, individuals can wield the Power of Enablement. It’s often said that in business, nobody is indispensable. Just like Oracle isn’t indispensable to eBay. But often the cost of recruiting an equivalent replacement for an individual is high if the individual provides a lot of value and has a unique set of personal attributes, such as leadership behaviors, technical knowledge, creativity, communication skills, etc.
I am not going to comment on the ethics of using the Power of Enablement – I think that speaks for itself. Overuse of this power is generally bad for business, and bad for both sides of the supply/demand relationship. As an individual, having a strong sense of the value you add and your uniqueness in your organization is positive, so that you get a fair wage and ample opportunities for continued personal growth. Abusing your Power of Enablement may make you a quick buck today, but think about the long term implications to your career development. Managers who are responsible for recruitment should really understand these implications to avoid stalemate situations.