The recent acquisition of Summly by Yahoo! is a good example of the Organization is Profit principle on two levels:
- Companies buy other companies because the target firm has organized a solution that the acquirer decided was cheaper to buy outright, rather than replicate. Thus, the target firm has organizational value — a value from their existing system of delivering an organized solution to customers.
- Summly’s organizational value is from delivering a re-organization of existing content into summaries that are relevant to humans.
As this article on Reuters suggests, “The real value in Summly: Not summarizing the news. Summarizing the Internet.” Nick D’Aloisio organized a new way of looking at semantic information and packaged it well. Literally he organized a solution that re-organized existing information in a new way, thus creating value. His profit came from packaging this solution into a firm with high profile investors and a viral message, attracting all sorts of the right attention. Yahoo! saw Summly’s value both inherently as well as a way to acquire a needed solution for its own purposes at a lower cost than competing.
In the coming weeks I will write more about how the real value in any endeavor is organization. Not organizing your closet (although there is value in that), but organizing a solution for someone else where they pay you above your costs so you generate profit.