In the previous part of this series, we were looking at the ways the designer, supplier, and user could interact to create a technical product cooperative. We'll continue with a closer look at the revenue stream.
Another income source for designers is through ongoing engineering support to both suppliers and users on a fee or other basis. Designs require maintenance and design refinements occur over time, as engineers perfect them through increased understanding of the design and of technical concepts affecting them. Traditional companies have product maintenance engineering departments that fix design faults that made their way through to production, and that semi-customize products for large orders.
Suppliers and users have access to designers and, like lawyers, this access comes in varying degrees at a price. A designer might devise improvements in an existing design and, for compensation, offer the new, improved version of an evolving design to suppliers. Suppliers that want a competitive edge will be attracted to the improvements.
This handling of designs, through an evolving design lifetime rather than “destroy the molds and start over” every design iteration brings technological stability to the industry. Some traditional companies introduce new products that, upon closer inspection, are a new iteration of a technology undergoing refinement. Tek 'scopes were in that category in earlier decades, where a few engineers designed all of them. Decades of product refinement are paralleled by decades of refinement of the ability of their refiners.
The traditional company is burdened with the need to have both competent designers and suppliers. Both must succeed for the company to succeed. In the co-op scheme, designers become visible to both the public and to suppliers. Neither designers nor suppliers are limited to a one-to-one correspondence. Designers can provide their designs and engineering support to multiple suppliers of the same product. Designers are differentiated by the quality of their designs and the kinds of technology they address.
Suppliers are differentiated on the basis of geographic regions, technology niches, price, quality of manufacture, quality of after-sales and pre-sales support, and breadth of product-line offering. Suppliers can be differentiated by the price-quality tradeoff they choose. Designers can customize their designs to suit the supplier marketing strategy. Multiple suppliers not only give the market (users) a wider range of choices for purchasing a given design; designers also have a wider range of clients for their designs. A new supplier might want to build a product that an existing supplier is making but with some differences. The designer then has another client and more design work.
Suppliers likewise have a choice of designers from whom to select product designs. This not only gives a manufacturing and sales company more options, it also lowers the barrier to market entry as a supplier. Young business graduates eager to be entrepreneurs but having few resources or sources of capitalization, and (not having been in the engineering world) have not connected with a good engineer such as a Howard Vollum or Bill Hewlett (as in the cases of Tektronix and H-P) can call upon designer companies for a low-priced starting deal.
A free, open-source design can be selected by a startup and designer fees paid only for subsequent technical consultation. This can lead to future designer-supplier business. A prospective entrepreneur can enter into a low-barrier-to-market agreement with designers by offering them returns on the effort in various forms (revenue-sharing, company part-ownership). This benefits designers in that by being visible to the public as an enterprise, entrepreneurs can find them and provide them a clientele of suppliers. Design and supply companies can develop without having to be both, and this lessens the market entry barrier for both kinds of enterprises.
In the next (and last) part of this series, we'll finish looking at this business philosophy with an example and some suggested directions to take to move the process forward.
- The Electronics Cooperative Concept, Part 1
- The Electronics Cooperative Concept, Part 2
- Is There a New Way Ahead for Electronics Enterprise? Part 1
- Is There a New Way Ahead for Electronics Enterprise? Part 2
- Is There a New Way Ahead for Electronics Enterprise? Part 3
- Is There a New Way Ahead for Electronics Enterprise? Part 4
- Is There a New Way Ahead for Electronics Enterprise? Part 5
- Is There a New Way Ahead for Electronics Enterprise? Part 6