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From Barnes & NobleA Brave New E-World
The barrage of commercials for Internet companies on TV lately could make you think that every business is an e-business.
Commercials for web sites like the search engine Alta Vista, online brokerage firm E*Trade, software solutions company SAP, and this very online bookseller are all over America's prime-time viewing screens. Based on the sheer volume of these commercials, you'd think that there isn't a company out there that hasn't added a dot com to its name.
Well, that's far from the truth. Take a drive around any town or city, and you'll be struck by just how many bricks and mortar businesses, from Joe's Plumbing to your family doctor's office, haven't moved onto the web frontier yet. And many of them have no plans at all to join the e-commerce revolution.
Philip Evans and Thomas S. Wurster, authors of the new bestseller Blown to Bits: How the New Economics of Information Transforms Strategy, argue that these companies are in danger of becoming extinct if they don't reconfigure their strategies to embrace the information revolution. The authors declare that no business or sector, no matter how seemingly dominant, is immune to the drastic transformations of today's information economy. Although they refrain from prescribing an exact solution for how to be a winner in the new e-conomy, they outline what has led to the deconstruction of the old system and highlight cases in which companies have made the most of the new system.
Plenty of widely recognized companies have fallen by the wayside of the information revolution. Encyclopedia Britannica, a company whose "near demise" is discussed at length in Blown to Bits, is one. Although Britannica has since made the controversial decision to offer its content for free on the Web at Britannica.com, there was a time when it seemed that this brand-name company would be completely trounced by the way the Internet changed the access to and delivery of information.
The rise of the information economy prompted Britannica, and countless other companies, to fundamentally change their strategies. At one time, Michael Dell, Charles Schwab, and Bill Gates all had to figure out how to use information technology to make their companies soar. Evans and Wurster argue that these leaders were able to succeed in the age of information by transcending a now-antiquated model of business—the one that defined business systems merely by their richness and reach.
"Richness means the quality of information, as defined by the user: accuracy, bandwidth, currency, customization, interactivity, relevance, security and so forth.... Reach means the number of people who participate in the sharing of information," Evans and Wurster explain. "The blowup is driven by connectivity."
Evans and Wurster argue that the Internet's ability to connect businesses and consumers to immeasurable amounts of information radically alters how businesses must model their strategies. In today's information-driven economy, the old paradigm, which sought to balance richness of information with reach of critical mass, gets destroyed, or blown to bits. What replaces it is a system in which the access to information dictates the way a business engages with the fundamental economic laws of supply and demand.
Because technology drastically changes operating platforms for businesses and their relationships with consumers, winning businesses will use technology to balance out the disparities between richness and reach, thereby creating new business models.
"When the trade-off between richness and reach is blown up, there is no longer a need for the components of these business structures to be integrated. The new economics of information blows all these structures to bits. The pieces will then recombine into new business structures, based on the separate economics of information and things," Evans and Wurster write.
Blown to Bits offers a compelling analysis of how businesses' and consumers' relationships to information have changed. It goes beyond the glitz of the dot com world to examine how the fundamentals of economics have been altered by technology.
Blown to Bits is an indispensable guide for CEOs and entrepreneurs trying to figure out how to capture the changing nature of information and how to use it to their competitive advantage, through a thorough analysis of the current tectonic shift in business and economics. It's far from your average e-commerce analysis. Instead, it's a thoughtful, thought-provoking theoretical investigation into our brave new e-world.
Emily Burg is a correspondent covering Internet stocks for worldlyinvestor.com, a financial web site dedicated to bringing investment opportunities to savvy investors.