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The Entrepreneurial Web: Wired World, Real People

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The rapid advance of computers and communications technology is generating so many changes that the thinking of yesterday is likely to be irrelevant today. Those with the right mindset and understanding, together with the necessary conceptual tools, can ride this current wave of change successfully. Those able to realize that it is about strategy and communication rather than the technology alone will be able to run rings around the pure ...
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Overview

The rapid advance of computers and communications technology is generating so many changes that the thinking of yesterday is likely to be irrelevant today. Those with the right mindset and understanding, together with the necessary conceptual tools, can ride this current wave of change successfully. Those able to realize that it is about strategy and communication rather than the technology alone will be able to run rings around the pure technologists. The environment is fast-moving, where early successes and innovations are richly rewarded.

Incomplete knowledge is a fact of life in e-business. No one can possibly have all the 'essential' knowledge in this unpredictable, changing environment. Game theory strategies allow for such 'knowledge gaps', using a type of thinking that is outside conventional business models. Solutions cannot be planned or designed in unpredictable competitive environments, they have to be grown from the bottom up. Success isn't about prediction and structural design, it is about being able to cope with the uncertainties and the complexities of this new medium better than others.

The Entrepreneurial Web is about understanding the implications of the Internet and the World Wide Web for business and commerce. It is about imaginative, people-to-people communication strategies that are likely to change all the rules for competing in highly competitive markets. It looks at how ideas should be allowed to evolve and respond to changes in order to succeed - something that many large corporate concerns have ignored - to their cost.

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Product Details

  • ISBN-13: 9780273650362
  • Publisher: Pearson Professional Education
  • Publication date: 5/4/2000
  • Series: FT.COM Series
  • Edition number: 1
  • Pages: 372
  • Product dimensions: 6.75 (w) x 8.30 (h) x 0.85 (d)

Read an Excerpt

PREFACE:

When the spreadsheet had to go

In 1979, I bought an Apple II computer and a VisiCalc spreadsheet program. I'd bought them on the advice of my accountant to enable me to create a business plan: a business plan that was to get me a $150,000 loan.

My first impression had been that this system appeared to be some kind of elaborate calculator that could make calculations and lay out all the results in neat, orderly tables. But I hadn't been working on the business plan for very long before I realized that a computer, with a spreadsheet program, had the potential to be something far more sophisticated than a calculator: it could provide a modelling environment for any kind of business idea I could come up with.

I also learned - by losing all of the $150,000 loan - that spreadsheet modelling is fallible. It can handle situations where conditions are reasonably stable and predictable, but a model can be rendered totally useless by unknowns or unexpected turns of events. Despite this serious limitation, spreadsheets can still provide an invaluable aid to business planning as long as care is taken to keep away from situations that are totally unpredictable.

For nearly 15 years, a computer and a spreadsheet program became an indispensable part of my business life; more than just tools, they became an extension to my brain. Whatever business ideas came into my mind, I could model them on the spreadsheet, try out different possibilities, test the risks, manipulate the cash flows.

In 1993, I discovered the Internet. At first, it seemed no more than a social recreation, but as I began to explore the various news groups andlist serve discussion forums it became apparent that this was far more than simply a social environment: it was a rich source of valuable information and business contacts. This had no real impact on me until the advent of the World Wide Web, then it dawned upon me that this was the start of a completely new way of doing business - with virtually limitless possibilities.

There was only one snag. This new environment was totally unpredictable: full of unknowns, unknowables and unexpected changes. In short, it tendered my spreadsheet program completely and utterly useless. For a businessman, this is on a par with suddenly becoming blind. Business is about planning and thinking ahead, yet here was a business environment that precluded the use of any predictive modelling.

How then, with the obvious potential of the Internet and the World Wide Web, would it be possible to create a sensible business strategy in order to become a successful competitor in this new communication environment? It was an intriguing challenge.

A totally new world

Until I entered the digital world of electronic communications, I thought I'd learned to become a fairly shrewd and capable businessman. I'd joined the very first rush into the new technological revolution when CD-ROMs first came out. I got badly burned. The world of computers and digital communications was like nothing else I'd ever encountered before. There was too much change and too much information to deal with. I seemed to be back to square one, where I'd have to start learning how to do business all over again - from scratch.

As fast as I'd buy a piece of hardware, or a software application program, something new would come along and cause it to become out of date or redundant altogether. It wasn't simply the cost in money that was the problem, it was the time needed to get my head around the new dimensions that each new change introduced. Before very long I became totally confused because the amount I was needing to know and learn was spinning out of control. What I felt I had to do was to get off of the giddy roundabout of continuous change, step back and start from basics.

Fortunately, my educational background had been science and technology so I could get to grips with the theoretical issues. My specialities were electronic control mechanisms and systems theory; to these I'd added game theory and evolutionary biology. Mixed with a professional knowledge of marketing, finance and investment, these had seen me through many varied and exotic entrepreneurial adventures. I figured that this background was about as good as any for trying to find out what this new world of digital technology was really all about.

First I had to get at the very core of computer technology. This led to a five-year flirtation with the arcane world of computer programming. At the end of this time I began to get a glimmer of what this whole technological revolution was about and how it integrated with the everyday world of people.

In those five years, I produced two books that were a reflection of my learning process. The first explained the essence and power of computer programming: Lingo Sorcery - the magic of lists, objects and intelligent agents. The second book, Magical A-Life Avatars - a new paradigm for the Internet, expanded on the first, to explore how a programming environment in a computer memory could be used almost like an extension to the human brain - allowing humans to communicate more efficiently with each other.

By the time I'd got to grips with the fundamental concepts of computer and digital communication technology, the World Wide Web had exploded into being. For me this was especially exciting because I could combine my 20 years of entrepreneurial experience with the ten years I'd spent on the technological issues.

As I started to look around at what other people were doing, none of it was making any sense. I found a world being run by technologists, who were creating all kinds of clever and amusing tricks, but hardly any of it relating to the fundamental principles of business and commerce. It was as if the whole world of digital communication had been given over to artists and programmers to play games - impressing each other with their cleverness. This wasn't so surprising really because the people with the expertise to create this new technological environment had spent so much time acquiring the necessary knowledge and skills that they simply hadn't spent enough time in the real world of commerce to learn how to apply it efficiently.

Usually, commercial guidance for technological advance is provided by astute entrepreneurs and professional managers who have the knowledge, experience and business acumen to prevent effort being wasted on impractical solutions. Unfortunately, most hard headed business people were so completely lost in the technology that they were either ignoring it altogether or handing over the reins to technologists who were, in the main, commercially naive.

Most perplexing of all was the gold rush mentality of investors. As I'd spent some time in the City of London writing a correspondence course in investment finance, I had a fair understanding of the basics of investments and what I observed was not investment in any sense of the word; it was out and out speculation with values being placed upon Internet-based, start-up businesses without any regard for fundamental values. Investment valuations seemed to be anticipating the most wildly optimistic scenarios with no attempt at all to discount any of the downside risks or the emergence of competition. It is at such times, when fools rush in, that vast fortunes can be made and lost.

I read everything I could lay my hands on. I subscribed to dozens of Internet discussion forums and newsletter services. I studied multimedia techniques, Web site design technology, server side hardware and software solutions, back-end technology. At every turn, I ran into new chasms of information and `essential to know' knowledge. I looked at thousands of Web sites, studied many emerging Internet business strategies. For two years I ran around like a headless chicken, climbing one learning curve after another, drowning in a sea of information and getting nowhere.

Then the penny dropped. It wasn't about learning and technology at all. Neither was it about planning. It was about communication and game playing. It wasn't necessary to know everything because that was impossible. It was about being able to cope with the uncertainties and the complexities better than others. This needed a radically different way of thinking from the spreadsheet mentality I'd acquired in the world of bricks and mortar.

What the book is about and who it is for

When I first started to write this book, the publisher and the readers of the draft chapters would ask me: `What is the target audience? Who are you writing this book for?' They were always a bit disappointed when I told them that the target audience was me and I was writing the book for myself. But it was perfectly true. Writing this book gave me the opportunity to gather together all my thoughts from the experiences and knowledge I'd gained over the previous ten years of trying to understand what the digital world was all about.

What made my approach different from many others though is that the ten years I'd spent in the digital world came on top of over 20 years of experience I'd had as a pragmatic entrepreneur. Contrary to the stereotyped image, the entrepreneur is just as much a skilled practitioner as any technical expert and like any specialty profession the expertise is acquired as a result of much practical experience.

Unlike conventional specialists and technicians though, an entrepreneur has to avoid most technicalities and detail in order to be able to concentrate on more abstract issues - those involved with the higher levels of system functioning and organization. This is a woolly world where there are no logical answers to problems, no boiler plate solutions. It is a world of change and competition; where success isn't about knowing all the right answers but about making more intelligent guesses than others.

There are innumerable magazine articles and books written about digital technology, e-business and e-commerce. This published information is dwarfed by the amount of information available on the Web. It's impossible to even estimate the extent of all this knowledge let alone absorb it. What makes things even worse is that so much of the information is contradictory. Seemingly, there are few general agreements on any issues. As if that isn't bad enough, technology, techniques and recommended business strategies are changing so fast that whatever is read is almost always certain to be out of date by the time anyone gets around to understanding and applying it.

To my entrepreneurial mind, it seemed common sense that nobody could .ever hope to understand what the world of digital communication is about by delving into this morass of unstable information. The only route to understanding would have to come through creating a practical working model in your mind that could be used to rise above the detail. Only in this way would it be possible to make pragmatic decisions.

Every successful entrepreneur I've ever known has worked this way. They rise above the detail which they leave to hired helpers - in order to concentrate on a broader issues. From this high-level view of the world, they create simple, rule of thumb formulae that can be used as the basis for decision making. These loose strategies then become the engines for their success. This book is about trying to create such an engine: an abstract model that can be used to guide decision making in the seemingly incomprehensible world of digital technology.

This book is about concepts and strategies

Entrepreneurs never use books and published information as step-by-step guides to success. They are more interested in looking for abstract ideas and concepts they can apply in novel ways. 'How to' books are of little value because if a technique has been published it means somebody else has done it before. To do the same as someone else is to play catch up, a game for technologists not entrepreneurs. Entrepreneurs leave the studying of instructional knowledge to their manager, while they concentrate on adapting and developing concepts in new and unexplored territories.

Developing ideas is seldom something that can be done in isolation. The human mind is not omniscient, there are very large gaps in anyone's knowledge and nobody can avoid having biases or limitations due to things they do not know very well or are not aware of at all. This is particularly true with anything involving the digital world of e-business and e-commerce, where the horizon is continuously expanding at breakneck speed in all directions.

Entrepreneurs can offset their lack of knowledge and counteract their biases by sharing ideas with others (it is usually the mark of a novice when they want to keep ideas to themselves). This airing of ideas can expose fallacies, reveal lack of knowledge, prompt additional information and promote fresh thinking. In the world of bricks and mortar, I'd often used cafes, restaurants, wine bars, pubs and clubs for this purpose. It is surprising how effectively informal discussions in a relaxing, social environment can help to develop and refine new ideas.

It seemed sensible then that I should use such a method to write this book. If I could gather together a suitably representative group of experts and specialists who were involved in all kinds of different aspects of the digital world, perhaps I could get them to look over my shoulder as I was writing. Better still, if I could get them all together in a cafe, and get them to read each chapter as I wrote it, they could then discuss the content between them and come up with all kinds of comment, criticism and suggestions. Being all together, they could bounce ideas off of each other, create a synergy that would be inspirational.

Fortunately, the technical programming books I'd written had been modestly successful. The spin-off from this had been that it had brought me into personal contact with very many people from all over the world who in various ways had become involved in different aspects of e-business and e-commerce. It occurred to me that this might be an ideal pool of knowledge to draw upon to help me with the writing of the book.

The trick would be to bring them all together to sit in a cafe with me, to read and discuss every chapter as I wrote it. In the physical world this would be impossible, but in the magical world of the Internet this ideal scenario was a practical reality. First I emailed about 400 of my contacts. I explained I was writing a book on e-commerce and asked if they would like to read and comment on the chapters. About 50 of them responded positively. Here is the email I sent to each of them:

Thank you for offering to read and comment on the chapters of my new book on e-commerce.

In the book, I shall be discussing various conceptual tools to help deal with the complexity of the Internet. One of these is a virtual cafe, where 48 of your special colleagues or contacts are present: sitting around the cafe at tables. The conceptualization is that you can go and sit with any of these contacts to have a discussion with them (by email), or invite a selected group of them to sit with you at a table for a group discussion (by email). In this way, the socializing aspects of a cafe can be simulated, even though the people in the virtual cafe are actually located in many different parts of the world.

Sounds silly, but in fact this idea can help create some very interesting communication strategies. Since I'm covering this in the book I thought I might use it now to see how it works. I'll be describing it in more detail in the book, so I'll explain it here just enough for you to see how it is being used for this book review process.

The cafe of reviewers starts with about 48 people. Most are people I've had correspondence with at various times on a variety of subjects, some I've contacted recently specifically to ask for help with this review. The 48 represent a very wide range of people - although in one way or another, each has some connection with e-commerce or digital communication technology.

They come from all over the world. Some are well-known experts in their fields; some run large companies; some are students; some are teachers. There are programmers, designers, artists, writers, hackers and entrepreneurs. Some run servers, some host Web sites. There is an extraordinary mix of different people here, most of whom I've met through the writing of my previous books or on Internet discussion forums.

I shall be randomly dividing the 48 people into six groups of seven to nine people (tables in the virtual cafe). So, when I send out the draft chapters, I shall be sending them separately to each group with the names and email addresses of all the people at the table in the 'To:' header.

What I should like you to do, if you have any comments, is to send them not just to me but to all the people in your group. In other words this acts like a mini list serve where everyone is responsible for serving their own posts to their own small list of people at their table. It is as if you are making comments to a table full of people in a cafe.

Unlike regular lists, these lists are temporary and last for two weeks only. For each new chapter there will be a random rearrangement of the tables so that the groups consist of a different mix of people each time. Not only might this random mixing of people generate some interesting discussion, it will give everyone a chance to meet a wide variety of very interesting people whom they might otherwise never have had an opportunity to meet.

Of course, I have no idea whether this will work (although I've experimented with this technique already with some quite remarkable results). It is an experiment and I'll include the results (for better or for worse) in the book. I'm very curious to see how such an arrangement might generate different kinds of discussion.

There is of course no obligation to comment. As in a real-life situation, some people just listen, others are prompted into discussion while others simply add a few apt remarks. I would appreciate, however, everyone adding at least some small comment on each chapter, so that I know they are keeping up and ready to receive the next.

Thanks again for offering to take part and I hope I can provide you with some interesting and informative reading.

The first two chapters produced a variety of responses. Unlike conventional books, I hadn't specifically stated what was going to be in the book. I had a good idea what I wanted to be in it, but I couldn't know how it was going to turn out because I was going to let the feedback from the discussions determine the exact nature of the book. This upset a lot of the readers who wanted to see a conventional table of contents and the conclusions stated right at the beginning.

I explained that I was looking at the book like a detective story: where we start with bloodstains on the carpet; find a body; discover clues; work out the motives - and then draw appropriate conclusions at the end to come up with the name of the murderer. Or, in this case, a viable way to think about e-commerce.

My bloodstains on the carpet were the difficulties many large companies are having in making any progress in the world of e-commerce. It seemed as good a starting place as any because it is a mystery. Why are many large companies having difficulties?

By the third chapter, the conclusion was drawn that the traditional structures and techniques of large corporations weren't suitable for e-commerce because it is not a stable environment. This requires a way of thinking that is quite foreign to most corporate trained managers and executives. The environment was likened to that of a complex dynamic system: a popular subject of current research, which can be described and analyzed in terms of chaos theory. This approach suggests dealing with complex environments by growing solutions rather than planning them.

I lost a few of the review readers at this point because it seemed to them to be too esoteric. They couldn't see how it was possible to build a business without a structured plan that could be closely monitored and controlled. Those that did see the logic of growing a solution began to discuss the implications and the table discussions roared into life, with some people anticipating the contents of the next chapters even before I'd finished writing them.

Up until this point, I'd been assigning the readers to tables randomly, but it became obvious that the range of different viewpoints was too wide for discussions to make any real progress without excessive disruptive discord. I began to group people at tables according to how they'd responded at previous tables. I put those who were appreciating the idea of growing solutions into groups together, separating them from those who were fixed upon the idea of having plans and managed teams. Some people weren't into the strategic aspect at all and were more concerned with technical detail; these I separated out to their own special table. I also had a table from hell: those who simply wanted to be critical and make no positive contribution to where the book was heading.

To obtain the maximum of interaction, I used a rule that if there was no response from somebody over two chapters they were deemed to have left the cafe. This had the result of reducing the number in the cafe to only those who maintained a constant interest. This also put me under pressure to try to deliver interesting chapters otherwise I'd have ended up with an empty cafe before I'd finished the book.

Altogether, the cafe produced more than 1,000 emails. A whole variety of views were put forward at each chapter. Some were critical, some helpful. The readers were adding information, introducing fresh ideas and viewpoints. I was quickly corrected when somebody disagreed with what I'd written and I was given numerable real-life examples to back up some of the theory. It was truly inspirational.

Having feedback at each chapter while I was writing the next allowed me to fill in more detail where necessary, provide extra explanation, and most importantly be able to appear to anticipate readers' thoughts. The only problem was the wide diversity of people who were reading the chapters. Some were narrow niche technologists, others were not technologically oriented at all. This has resulted in many of the explanations being repeated in several different ways in order to cater for different types of people.

The biggest problem was the explanation of the more abstract concepts. Chaos theory gave the greatest difficulty and I had to remove the original explanation and replace it with a very brief synopsis (some of the original, more obtuse theoretical stuff that was taken out can be seen on my Web site at www.avatarnets.com). Chapters 6 and 7 were problematic as well, when I dealt with object-oriented thinking. Several of the readers dropped out at these chapters.

Perhaps the most controversial area was explaining the idea of working without plans and letting solutions evolve. Some readers couldn't accept this at all. The problem was compounded when this approach exposed the weakness of using managed teams for the Internet side of an e-business operation. Even I was surprised at this outcome and it took an extra chapter of explanation to convince most people that this really was a rational approach.

Bringing it all together for a conclusion was the biggest challenge. Until I reached that point I didn't even know myself how everything could be tied together. Happily, it produced just the kind of result I'd been looking for when I started the book: a simple conceptual framework that could be used as a basis to confront the complexity of the Web and provide a foundation for a competitive approach to e-business and e-commerce.

Peter Small
January 2000

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Table of Contents

Acknowledgements.
Prologue.
Introduction.

I. TRANSITION INTO CHAOS.

1. Anomalies and Enigmas of the Information Age.
The Observation of Sherlock Holmes. Where Do We Start to Look for an Alternative? Learning on the Fly. Forward Planning in the Information Age. Using Emergence to Win at Poker. Industrial Age Reactions to Information Age Ideas. A Conceptual Divide.

2. The Old Ways Don't Work Now.
The Transition into a New Age. Deduction, Induction and Paradox. An Example of Industrial Age Attitudes. The Way of the Industrial Age. What is the Alternative to the Industrial Age of Thinking? Dealing with a Complex Environment. the Information Age is not about Technology — It is about Communicating with People.

3. In the Land of the Blind the One-Eyed Man is King.
Corporates and Entrepreneurs: Contrasting Mindsets. The Zen Thing. The Mathematics of Zen-ness. What Type of Playing Field is the Internet? Zen-ness from Chaos Theory. A Real-Life Example of Chaotic Turbulence. Phase Transitions. The Ubiquitous Role of the Exponential.

II. LOOKING FOR CLUES.


4. Stumbling Around Looking for Clues.
It Isn't Possible to Understand the Internet. How Do You Get into the Game? The Square One Position. The First Inklings of a Strategy. Searching for a Strategy. Thinking about Thinking.

5. Clues from the World of Investment and Finance.
Into the World of the Professional Investor. The Enigmatic Nature of Interest Rates. Discounting for Risk. Spreading the Risk. Examples of Spreading the Risk. The Resolution of Some Paradoxes. The Strategy of an IT Department.

6. Clues from the World of Computer Programming.
Object-Oriented Thinking. Top-down, Object-oriented Design. Object-oriented Techniques in the World of Computer Programmers. At the System Level. Out of the Hands of the Technical Specialists. What is an Object? An Object-oriented Software Product. Viability of Breaking up a Project into Small Objects. The Christmas Tree Light Problem.

III. ABSTRACTIONS AND STRATEGIC THINKING.


7. Growing Rather Than Planning Solutions.
Bottom-up, Object-oriented Design. The Uncertainty of Prediction. The Business that Designed Itself. Starting in the Kitchen. A Serious Communication Problem.

8. Abstract Models to Think With.
Directing a Bottom-up Design Process. Strategy in the World of High Fashion. It's about Communication Strategies. Starting with a Green Frog. A Strategy that can Ignore the Unknowns. The Abstraction of this Model. Strategies in Hilbert Space. Hilbert Spaces within Hilbert Spaces. Where this is Taking Us.

9. Difficulties in Thinking with Abstract Models.
The Difficulties Caused by the Green Frog. Stumbling Around in e-Commerce Solution Space. Strategies within a Solution Space. A Hilbert Solution Space Where the Dimensions are Hilbert Solution Spaces. Emotional Anomalies in Hilbert Solution Space.

IV. STRATEGIES FOR COMPETITION AND COOPERATION.


10. Competing for Cooperation.
Choice and Competition. Games of Competition. Competing for Cooperation. Applying Keynes' Thinking to e-Commerce. The Value of an Act of Cooperation. Allowing for Risk in Contemplating Cooperation. From the Solution Builder's Point of View. From the Expert's Point of View.

11. The Industrial Age Concept of a Team is not Appropriate for Collaboration on the Internet.
Why There are No Examples or Case Histories. The Puzzling Post. A Group Does Not Necessarily Imply a Managed Team. Examining the Industrial Age's Approach. An Event-Driven System. A Planned Approach to the Fashion Business. Feedback from a Rich Source of Information. Mapping Across the Internet. The Design-side Solution Point in the Internet Environment. The Group as an Information Source. The Midwich Cuckoos.

12. Communication Strategy.
The Supply-side Strategy. The Dynamics of the Middleman. Keeping up with Technological Changes. The Strategy of the Producers. Limitations of the Managed Team. The Alternative to a Managed Team. The Paradox of the Unmanaged Team. Mapping the Unmanaged Team Across to a People Space.

13. The Strategy of the Individual.
A New Perspective for the Individual. The Essence of Game Theory. A Strategy for Seeking Cooperation. Placing a Value on Relationships. Replacing a Team with a Network. The Fragmentation Effect of the Internet. Creating a Profitable Hub.

V. PUTTING THE CLUES TOGETHER.


14. Inheriting Knowledge and Skills.
A Real-world Example of a Wealth-producing Network of Contacts. Mapping the Abstraction Across to the Internet. Extending the Concept to Information Exchange. The Magic of Ancestry and Inheritance. Parenting and Child Objects. The Structure of the Connectivity. Coping with Too Many Experts and Specializations. What Makes a Good Solution Provider?

15. The Optimum Strategy.
Summing Up the Situation. The Two Elements of a Strategy. Giving Yourself an Identity on the Web. Multiple Personalities. The Strategy of the Expert or Specialist. The Viewpoint of the Expert or Specialist. Up- front with the Costs. Attaching to the Network. Dealing with the Complexity. Getting Attention and Cooperation. A World of Groups. Parallel Worlds. The Private Virtual Café. Using the Café.

Epilogue.
Appendix.
Index.
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Preface

When the spreadsheet had to go

In 1979, I bought an Apple II computer and a VisiCalc spreadsheet program. I'd bought them on the advice of my accountant to enable me to create a business plan: a business plan that was to get me a $150,000 loan.

My first impression had been that this system appeared to be some kind of elaborate calculator that could make calculations and lay out all the results in neat, orderly tables. But I hadn't been working on the business plan for very long before I realized that a computer, with a spreadsheet program, had the potential to be something far more sophisticated than a calculator: it could provide a modelling environment for any kind of business idea I could come up with.

I also learned - by losing all of the $150,000 loan - that spreadsheet modelling is fallible. It can handle situations where conditions are reasonably stable and predictable, but a model can be rendered totally useless by unknowns or unexpected turns of events. Despite this serious limitation, spreadsheets can still provide an invaluable aid to business planning as long as care is taken to keep away from situations that are totally unpredictable.

For nearly 15 years, a computer and a spreadsheet program became an indispensable part of my business life; more than just tools, they became an extension to my brain. Whatever business ideas came into my mind, I could model them on the spreadsheet, try out different possibilities, test the risks, manipulate the cash flows.

In 1993, I discovered the Internet. At first, it seemed no more than a social recreation, but as I began to explore the various news groups and listserve discussion forums it became apparent that this was far more than simply a social environment: it was a rich source of valuable information and business contacts. This had no real impact on me until the advent of the World Wide Web, then it dawned upon me that this was the start of a completely new way of doing business - with virtually limitless possibilities.

There was only one snag. This new environment was totally unpredictable: full of unknowns, unknowables and unexpected changes. In short, it tendered my spreadsheet program completely and utterly useless. For a businessman, this is on a par with suddenly becoming blind. Business is about planning and thinking ahead, yet here was a business environment that precluded the use of any predictive modelling.

How then, with the obvious potential of the Internet and the World Wide Web, would it be possible to create a sensible business strategy in order to become a successful competitor in this new communication environment? It was an intriguing challenge.

A totally new world

Until I entered the digital world of electronic communications, I thought I'd learned to become a fairly shrewd and capable businessman. I'd joined the very first rush into the new technological revolution when CD-ROMs first came out. I got badly burned. The world of computers and digital communications was like nothing else I'd ever encountered before. There was too much change and too much information to deal with. I seemed to be back to square one, where I'd have to start learning how to do business all over again - from scratch.

As fast as I'd buy a piece of hardware, or a software application program, something new would come along and cause it to become out of date or redundant altogether. It wasn't simply the cost in money that was the problem, it was the time needed to get my head around the new dimensions that each new change introduced. Before very long I became totally confused because the amount I was needing to know and learn was spinning out of control. What I felt I had to do was to get off of the giddy roundabout of continuous change, step back and start from basics.

Fortunately, my educational background had been science and technology so I could get to grips with the theoretical issues. My specialities were electronic control mechanisms and systems theory; to these I'd added game theory and evolutionary biology. Mixed with a professional knowledge of marketing, finance and investment, these had seen me through many varied and exotic entrepreneurial adventures. I figured that this background was about as good as any for trying to find out what this new world of digital technology was really all about.

First I had to get at the very core of computer technology. This led to a five-year flirtation with the arcane world of computer programming. At the end of this time I began to get a glimmer of what this whole technological revolution was about and how it integrated with the everyday world of people.

In those five years, I produced two books that were a reflection of my learning process. The first explained the essence and power of computer programming: Lingo Sorcery - the magic of lists, objects and intelligent agents. The second book, Magical A-Life Avatars - a new paradigm for the Internet, expanded on the first, to explore how a programming environment in a computer memory could be used almost like an extension to the human brain - allowing humans to communicate more efficiently with each other.

By the time I'd got to grips with the fundamental concepts of computer and digital communication technology, the World Wide Web had exploded into being. For me this was especially exciting because I could combine my 20 years of entrepreneurial experience with the ten years I'd spent on the technological issues.

As I started to look around at what other people were doing, none of it was making any sense. I found a world being run by technologists, who were creating all kinds of clever and amusing tricks, but hardly any of it relating to the fundamental principles of business and commerce. It was as if the whole world of digital communication had been given over to artists and programmers to play games - impressing each other with their cleverness. This wasn't so surprising really because the people with the expertise to create this new technological environment had spent so much time acquiring the necessary knowledge and skills that they simply hadn't spent enough time in the real world of commerce to learn how to apply it efficiently.

Usually, commercial guidance for technological advance is provided by astute entrepreneurs and professional managers who have the knowledge, experience and business acumen to prevent effort being wasted on impractical solutions. Unfortunately, most hard headed business people were so completely lost in the technology that they were either ignoring it altogether or handing over the reins to technologists who were, in the main, commercially naive.

Most perplexing of all was the gold rush mentality of investors. As I'd spent some time in the City of London writing a correspondence course in investment finance, I had a fair understanding of the basics of investments and what I observed was not investment in any sense of the word; it was out and out speculation with values being placed upon Internet-based, start-up businesses without any regard for fundamental values. Investment valuations seemed to be anticipating the most wildly optimistic scenarios with no attempt at all to discount any of the downside risks or the emergence of competition. It is at such times, when fools rush in, that vast fortunes can be made and lost.

I read everything I could lay my hands on. I subscribed to dozens of Internet discussion forums and newsletter services. I studied multimedia techniques, Web site design technology, server side hardware and software solutions, back-end technology. At every turn, I ran into new chasms of information and `essential to know' knowledge. I looked at thousands of Web sites, studied many emerging Internet business strategies. For two years I ran around like a headless chicken, climbing one learning curve after another, drowning in a sea of information and getting nowhere.

Then the penny dropped. It wasn't about learning and technology at all. Neither was it about planning. It was about communication and game playing. It wasn't necessary to know everything because that was impossible. It was about being able to cope with the uncertainties and the complexities better than others. This needed a radically different way of thinking from the spreadsheet mentality I'd acquired in the world of bricks and mortar.

What the book is about and who it is for

When I first started to write this book, the publisher and the readers of the draft chapters would ask me: `What is the target audience? Who are you writing this book for?' They were always a bit disappointed when I told them that the target audience was me and I was writing the book for myself. But it was perfectly true. Writing this book gave me the opportunity to gather together all my thoughts from the experiences and knowledge I'd gained over the previous ten years of trying to understand what the digital world was all about.

What made my approach different from many others though is that the ten years I'd spent in the digital world came on top of over 20 years of experience I'd had as a pragmatic entrepreneur. Contrary to the stereotyped image, the entrepreneur is just as much a skilled practitioner as any technical expert and like any specialty profession the expertise is acquired as a result of much practical experience.

Unlike conventional specialists and technicians though, an entrepreneur has to avoid most technicalities and detail in order to be able to concentrate on more abstract issues - those involved with the higher levels of system functioning and organization. This is a woolly world where there are no logical answers to problems, no boiler plate solutions. It is a world of change and competition; where success isn't about knowing all the right answers but about making more intelligent guesses than others.

There are innumerable magazine articles and books written about digital technology, e-business and e-commerce. This published information is dwarfed by the amount of information available on the Web. It's impossible to even estimate the extent of all this knowledge let alone absorb it. What makes things even worse is that so much of the information is contradictory. Seemingly, there are few general agreements on any issues. As if that isn't bad enough, technology, techniques and recommended business strategies are changing so fast that whatever is read is almost always certain to be out of date by the time anyone gets around to understanding and applying it.

To my entrepreneurial mind, it seemed common sense that nobody could .ever hope to understand what the world of digital communication is about by delving into this morass of unstable information. The only route to understanding would have to come through creating a practical working model in your mind that could be used to rise above the detail. Only in this way would it be possible to make pragmatic decisions.

Every successful entrepreneur I've ever known has worked this way. They rise above the detail which they leave to hired helpers - in order to concentrate on a broader issues. From this high-level view of the world, they create simple, rule of thumb formulae that can be used as the basis for decision making. These loose strategies then become the engines for their success. This book is about trying to create such an engine: an abstract model that can be used to guide decision making in the seemingly incomprehensible world of digital technology.

This book is about concepts and strategies

Entrepreneurs never use books and published information as step-by-step guides to success. They are more interested in looking for abstract ideas and concepts they can apply in novel ways. 'How to' books are of little value because if a technique has been published it means somebody else has done it before. To do the same as someone else is to play catch up, a game for technologists not entrepreneurs. Entrepreneurs leave the studying of instructional knowledge to their manager, while they concentrate on adapting and developing concepts in new and unexplored territories.

Developing ideas is seldom something that can be done in isolation. The human mind is not omniscient, there are very large gaps in anyone's knowledge and nobody can avoid having biases or limitations due to things they do not know very well or are not aware of at all. This is particularly true with anything involving the digital world of e-business and e-commerce, where the horizon is continuously expanding at breakneck speed in all directions.

Entrepreneurs can offset their lack of knowledge and counteract their biases by sharing ideas with others (it is usually the mark of a novice when they want to keep ideas to themselves). This airing of ideas can expose fallacies, reveal lack of knowledge, prompt additional information and promote fresh thinking. In the world of bricks and mortar, I'd often used cafes, restaurants, wine bars, pubs and clubs for this purpose. It is surprising how effectively informal discussions in a relaxing, social environment can help to develop and refine new ideas.

It seemed sensible then that I should use such a method to write this book. If I could gather together a suitably representative group of experts and specialists who were involved in all kinds of different aspects of the digital world, perhaps I could get them to look over my shoulder as I was writing. Better still, if I could get them all together in a cafe, and get them to read each chapter as I wrote it, they could then discuss the content between them and come up with all kinds of comment, criticism and suggestions. Being all together, they could bounce ideas off of each other, create a synergy that would be inspirational.

Fortunately, the technical programming books I'd written had been modestly successful. The spin-off from this had been that it had brought me into personal contact with very many people from all over the world who in various ways had become involved in different aspects of e-business and e-commerce. It occurred to me that this might be an ideal pool of knowledge to draw upon to help me with the writing of the book.

The trick would be to bring them all together to sit in a cafe with me, to read and discuss every chapter as I wrote it. In the physical world this would be impossible, but in the magical world of the Internet this ideal scenario was a practical reality. First I emailed about 400 of my contacts. I explained I was writing a book on e-commerce and asked if they would like to read and comment on the chapters. About 50 of them responded positively. Here is the email I sent to each of them:

Thank you for offering to read and comment on the chapters of my new book on e-commerce.

In the book, I shall be discussing various conceptual tools to help deal with the complexity of the Internet. One of these is a virtual cafe, where 48 of your special colleagues or contacts are present: sitting around the cafe at tables. The conceptualization is that you can go and sit with any of these contacts to have a discussion with them (by email), or invite a selected group of them to sit with you at a table for a group discussion (by email). In this way, the socializing aspects of a cafe can be simulated, even though the people in the virtual cafe are actually located in many different parts of the world.

Sounds silly, but in fact this idea can help create some very interesting communication strategies. Since I'm covering this in the book I thought I might use it now to see how it works. I'll be describing it in more detail in the book, so I'll explain it here just enough for you to see how it is being used for this book review process.

The cafe of reviewers starts with about 48 people. Most are people I've had correspondence with at various times on a variety of subjects, some I've contacted recently specifically to ask for help with this review. The 48 represent a very wide range of people - although in one way or another, each has some connection with e-commerce or digital communication technology.

They come from all over the world. Some are well-known experts in their fields; some run large companies; some are students; some are teachers. There are programmers, designers, artists, writers, hackers and entrepreneurs. Some run servers, some host Web sites. There is an extraordinary mix of different people here, most of whom I've met through the writing of my previous books or on Internet discussion forums.

I shall be randomly dividing the 48 people into six groups of seven to nine people (tables in the virtual cafe). So, when I send out the draft chapters, I shall be sending them separately to each group with the names and email addresses of all the people at the table in the 'To:' header.

What I should like you to do, if you have any comments, is to send them not just to me but to all the people in your group. In other words this acts like a mini list serve where everyone is responsible for serving their own posts to their own small list of people at their table. It is as if you are making comments to a table full of people in a cafe.

Unlike regular lists, these lists are temporary and last for two weeks only. For each new chapter there will be a random rearrangement of the tables so that the groups consist of a different mix of people each time. Not only might this random mixing of people generate some interesting discussion, it will give everyone a chance to meet a wide variety of very interesting people whom they might otherwise never have had an opportunity to meet.

Of course, I have no idea whether this will work (although I've experimented with this technique already with some quite remarkable results). It is an experiment and I'll include the results (for better or for worse) in the book. I'm very curious to see how such an arrangement might generate different kinds of discussion.

There is of course no obligation to comment. As in a real-life situation, some people just listen, others are prompted into discussion while others simply add a few apt remarks. I would appreciate, however, everyone adding at least some small comment on each chapter, so that I know they are keeping up and ready to receive the next.

Thanks again for offering to take part and I hope I can provide you with some interesting and informative reading.

The first two chapters produced a variety of responses. Unlike conventional books, I hadn't specifically stated what was going to be in the book. I had a good idea what I wanted to be in it, but I couldn't know how it was going to turn out because I was going to let the feedback from the discussions determine the exact nature of the book. This upset a lot of the readers who wanted to see a conventional table of contents and the conclusions stated right at the beginning.

I explained that I was looking at the book like a detective story: where we start with bloodstains on the carpet; find a body; discover clues; work out the motives - and then draw appropriate conclusions at the end to come up with the name of the murderer. Or, in this case, a viable way to think about e-commerce.

My bloodstains on the carpet were the difficulties many large companies are having in making any progress in the world of e-commerce. It seemed as good a starting place as any because it is a mystery. Why are many large companies having difficulties?

By the third chapter, the conclusion was drawn that the traditional structures and techniques of large corporations weren't suitable for e-commerce because it is not a stable environment. This requires a way of thinking that is quite foreign to most corporate trained managers and executives. The environment was likened to that of a complex dynamic system: a popular subject of current research, which can be described and analyzed in terms of chaos theory. This approach suggests dealing with complex environments by growing solutions rather than planning them.

I lost a few of the review readers at this point because it seemed to them to be too esoteric. They couldn't see how it was possible to build a business without a structured plan that could be closely monitored and controlled. Those that did see the logic of growing a solution began to discuss the implications and the table discussions roared into life, with some people anticipating the contents of the next chapters even before I'd finished writing them.

Up until this point, I'd been assigning the readers to tables randomly, but it became obvious that the range of different viewpoints was too wide for discussions to make any real progress without excessive disruptive discord. I began to group people at tables according to how they'd responded at previous tables. I put those who were appreciating the idea of growing solutions into groups together, separating them from those who were fixed upon the idea of having plans and managed teams. Some people weren't into the strategic aspect at all and were more concerned with technical detail; these I separated out to their own special table. I also had a table from hell: those who simply wanted to be critical and make no positive contribution to where the book was heading.

To obtain the maximum of interaction, I used a rule that if there was no response from somebody over two chapters they were deemed to have left the cafe. This had the result of reducing the number in the cafe to only those who maintained a constant interest. This also put me under pressure to try to deliver interesting chapters otherwise I'd have ended up with an empty cafe before I'd finished the book.

Altogether, the cafe produced more than 1,000 emails. A whole variety of views were put forward at each chapter. Some were critical, some helpful. The readers were adding information, introducing fresh ideas and viewpoints. I was quickly corrected when somebody disagreed with what I'd written and I was given numerable real-life examples to back up some of the theory. It was truly inspirational.

Having feedback at each chapter while I was writing the next allowed me to fill in more detail where necessary, provide extra explanation, and most importantly be able to appear to anticipate readers' thoughts. The only problem was the wide diversity of people who were reading the chapters. Some were narrow niche technologists, others were not technologically oriented at all. This has resulted in many of the explanations being repeated in several different ways in order to cater for different types of people.

The biggest problem was the explanation of the more abstract concepts. Chaos theory gave the greatest difficulty and I had to remove the original explanation and replace it with a very brief synopsis (some of the original, more obtuse theoretical stuff that was taken out can be seen on my Web site at www.avatarnets.com). Chapters 6 and 7 were problematic as well, when I dealt with object-oriented thinking. Several of the readers dropped out at these chapters.

Perhaps the most controversial area was explaining the idea of working without plans and letting solutions evolve. Some readers couldn't accept this at all. The problem was compounded when this approach exposed the weakness of using managed teams for the Internet side of an e-business operation. Even I was surprised at this outcome and it took an extra chapter of explanation to convince most people that this really was a rational approach.

Bringing it all together for a conclusion was the biggest challenge. Until I reached that point I didn't even know myself how everything could be tied together. Happily, it produced just the kind of result I'd been looking for when I started the book: a simple conceptual framework that could be used as a basis to confront the complexity of the Web and provide a foundation for a competitive approach to e-business and e-commerce.

Peter Small
January 2000

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