Blown to Bits: How the New Economics of Information Transforms Strategy FROM OUR EDITORS
A 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
Emily Burg is a correspondent covering Internet stocks for worldlyinvestor.com, a financial web site dedicated to bringing investment opportunities to savvy investors.
FROM THE PUBLISHER
Richness or reach? The trade-off used to be simple but absolute: Your business strategy either could focus on "rich" information - customized products and services tailored to a niche audience - or could reach out to a larger market, but with watered-down information that sacrificed richness in favor of a broad, general appeal.
Much of business strategy as we know it today rests on this fundamental trade-off.
Now, say Evans and Wurster, the new economics of information is eliminating the trade-off between richness and reach, blowing apart the foundations of traditional business strategy. Blown to Bits reveals how the spread of connectivity and common standards is redefining the information channels that link businesses with their customers, suppliers, and employees. Increasingly, your customers will have rich access to a universe of alternatives, your suppliers will exploit direct access to your customers, and your competitors will pick off the most profitable parts of your value chain. Your competitive advantage is up for grabs.
To prepare corporate executives and entrepreneurs alike for a fundamental change in business competition, Evans and Wurster expand and illuminate groundbreaking concepts first explored in the award-winning Harvard Business Review article "Strategy and the New Economics of Information," and present a practical guide for applying them. Examples span the spectrum of industries--from financial services to health care, from consumer to industrial goods, and from media to retailing. Blown to Bits shows how to build new strategies that reflect a world in which richness and reach go hand in hand and how to make the most of the new forces shaping competitive advantage.
SYNOPSIS
Blown to Bits reveals how the spread of connectivity and common standards is redefining the information channels that link businesses with their customers, suppliers, and employees. Increasingly, your customers will have rich access to a universe of alternatives, your suppliers will exploit direct access to your customers, and your competitors will pick off the most profitable parts of your value chain.. "Blown to Bits shows how to build new strategies that reflect a world in which richness and reach go hand in hand and how to make the most of the new forces shaping competitive advantage."
FROM THE CRITICS
USA Today
This book is your e-ticket for the ride of your business life.
Reuters
An incisive look at how business are managing in an information age.
The Economist
As an analysis of the impact of the communications revolution on the corporate world, this book is hard to better.
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