When It Pays To Close Your System

The battle between Apple and Microsoft isn't just about two competing technologies, but also two competing philosophies, open versus closed.


This month marks the seven-year anniversary of Apple’s iPhone. It was just one of a series of groundbreaking inventions to come from the company’s late founder and CEO, Steve Jobs. Throughout Jobs’s successful career at Apple, he introduced the world to revolutionary products like the iPhone, iTunes, and iPad, but in addition Jobs proved that businesses could flourish by adopting closed systems. Social scientists define an open system as one that allows interaction between internal elements and the environment. An open system, such as Microsoft or Google, permits consumers to use the product or application with any hardware. A closed system, such as Apple’s, requires users to have certain hardware to use the company’s software. With few exceptions, Apple products use a closed system.

So which are credit unions? Are they Microsoft or Apple, with either an open or a closed system? On the surface, most cooperatives run open systems, sharing everything from branches to ATMs and sometimes even key staff with other credit unions.

Like credit unions, this website, creditunions.com, also relies on an open system that includes data and anecdots shared by cooperatives. However, there are areas where the genius of Jobs’s closed system still applies to credit unions. A closed system allows the producer to control every aspect of production and delivery. Jobs, a control freak, relished having complete ownership over every detail.

Credit unions pride themselves on understanding their memberships and providing great service with humility and a smile.

Although it's true cooperatives rely on an open system to deliver cutting-edge technology, Jobs's preference for a closed system offers credit unions potential for improving customer service and member relationships. That's what one credit union discovered when it brought its call center back in house after seven years of outsourcing it. In an article that will appear on Creditunions.com next week, the credit union makes the case for having complete control over the member's experience. Yes, it was more expensive, but the institution decided that controlling its brand and the people representing it was more important. That's the kind of thinking Jobs would have agreed with.

Sure, credit unions should take advantage of the efficiencies that come from sharing resources, which are the classic advantages of an open system. But in the spirit of one of the 20th century's greatest inventors, identify the parts of your operation that are integral to your organization and brand, and own them.