BLOWN TO BITS
How the new Economics of Information transforms Strategy
Authored by Philip Evans & Thomas S. Wurster
By Mike Jones
Management Information Systems
05/27/03
This book is about how the new age of technology dealing with the way information has changed the business environment forever. It starts out with the example of Encyclopedia Britanica and how they were leaders in their field in the late eighties and early nineties. Though they were very pricey the sales force targeted families with young children and the parents had to have this source of valuable information for their children. Sales were very high and there was no competition for the Encyclopedia icon. Everything was great until the computer age took hold and all of a sudden you could get that same information on a little round disk known as a CD-ROM for a fraction of the cost. That disk was even being given away with the purchase of a microcomputer that people could use for other things as well. This goes to show us that even the strongest business can be blind sided when they least expect it. Moral to be learned here is that "even the most venerable can be the most vulnerable".
All businesses are information businesses and the information is the main glue that holds any business together. The business of information is different than the business of things. When something is sold, the seller no longer owns it but when a piece of information is sold, the seller still has access to that information and can sell it again. Although the two are different they are still very much linked together as all things consist of some kind of information.
One of the most fundamental issues of the information business in the beginning was the dilemma of Richness and Reach. It was nearly impossible to have both Richness and Reach in information but the rise of the computer industry and the Internet has changed that forever. There are six aspects that come into play when talking about Richness of information and they are Bandwidth, interactivity, reliability, security, currency and the degree to which the information can be customized. This has all changed with the computer. This change is melting the informational glue, as we know it. It "deconstructs" value chains, supply chains, franchises and organizations. The definition of deconstruction is the reformulation of traditional business structures. The newspaper industry and retail banking is just a couple of businesses that have been deconstructed. You used to have to go to the bank to do your banking and newspapers were either delivered or you had to go get them. Now both can be done via the personal computer at nearly no cost and in a fraction of the time. Deconstruction does a lot of damage at first and hits where a company can least afford it and if a company is willing to accept the change it can make it through tough times.
Intermediaries exist because of the trade off between richness and reach. The deconstruction of the old intermediaries is known as disinter mediation and the creation of the new intermediaries is known as navigation. Disinter mediation used to be about substituting reach for richness but now it is about transforming them both. This will happen where a company can least afford it. The new navigators compete against each other on richness, reach and affiliation. The key is reach but reach is clutter without navigation. We need navigation to find what we want. Navigators are not consumer oriented even though consumers use them. They are supplier oriented because the supplier needs to get their product to the consumer. Reach has developed faster than navigation but we are slowly catching up.
Navigators affiliate mostly with suppliers but are starting to lean toward affiliating themselves with the consumer. This is surprising that this is only happening now and hasn't happened in the past. Navigation is worth more than the supplier business due to the need for navigation because without navigation the products and services would not get to the consumer.
Adding richness is the most powerful way to put off deconstruction due to the fact that if your giving people what they want you will stay in business. You need to be giving them something they don't already have which makes the consumer your biggest competitor. Richness goes up as reach increases. As richness and reach escalate so does the competitive advantage and intensity at all levels of the supply chain.
In closing I would like to say one thing and that is business has changed forever with the desktop workstations and microcomputers and the Internet. People are touching out to one another unlike they have ever done before. Networks are connected to networks all over the world. A message can get across the globe with the touch of a keyboard. Business is ever changing and will continue to change for a long time to come. We will either keep up and make the changes necessary or we will be left behind and fail. As it said in the book "The winner is not the player who understands the endgame. There is no endgame. The winner is the player who sees just one or two moves further ahead than the competitors".
Loading your book clubs
There was a problem loading your book clubs. Please try again.
Not in a club? Learn more
Join or create book clubs
Choose books together
Track your books
Bring your club to Amazon Book Clubs, start a new book club and invite your friends to join, or find a club that’s right for you for free.
Download the free Kindle app and start reading Kindle books instantly on your smartphone, tablet, or computer - no Kindle device required.
Read instantly on your browser with Kindle for Web.
Using your mobile phone camera - scan the code below and download the Kindle app.
About the author
Follow authors to get new release updates, plus improved recommendations.
