: Market Leadership in the Information Age by Jeff Papows, London,
Nicholas Brealey Publishing Limited. xvi+240pp £12.99 (1999) (pb),
Shopping e-shopping-has arrived with a bang. Many websites have
been launched in India which offer online shopping. Many of these websites
are not only general and city-specific but also commodity-specific and
even locality-specific. Many websites also provide services. What are the
implication of this new development on the existing as well as new businesses?
How to cope up with the new challenges posed by the
Birch et al.*provide a dozen themes which are grouped into three parts. In the first part, the authors review the current market and competitive dynamics and then develop stratagies for the e-shopping age. The second part is devoted to setting up a successful Internet business which contains four steps to e-shopping success. The third part provides a guide on the way towards a digital economy. Each part contains four chapters. Each chapter also contains the URLs of relevant websites.
The dozen themes are : (i) The future of shopping is online, (ii) Traditional physical assets are dead weight. (iii) New players siezing power, (iv) Survival of the fastest, (v) Internet shops need new brands, (vi) Context makes the difference, (vii) Customer loyalty is most important but increasingly difficult to create, (viii) Built-to-order offerings will upset traditional value claims, (ix) The Internet will pervade every communications device we use and more, (x) Digitisable products will be free, (xi) Innovation will be driven from the quality of product and service, and (xii) Survival requires equity financing.
This, then, is a brief profile of emerging brave new world of the e-economy. At the heart of the e-economy is the Internet, which every one knows, is a network of computer networks. The power of the Internet, and for that matter, e-economy, lies in the fact that it is a network. The network in its turn, derives its power from the fact that `the functional utility of a communications medium grows with the number of connections, i.e.with the square of the number of subscribers. With 200 million Internet users by the end of 1999, the Internet has emerged as a formidable medium for business.
What then is the formula for e-shopping success? The authors suggest four steps : 1. Build strong brands, 2. Set up Internet store appropriately, 3. Build individual customer relationships, and 4. Build customer-focused business processes. The authors are quite clear that e-tailers need new brands. Further, they advocate promotion at four levels_on one's own website, on other commercial websites, within Internet communities, and beyond the Net.
The design of the website deserves close attention. Birch et al. provide four rules: Rule 1 : Short loading-time, Rule 2 : Make text layouts legible, Rule 3 : Attractive layout, and Rule 4 : Remember your commercial goals. The essence of good web design is that not only should it be attractive to attract the visitors but retain them. Research indicates, state the authors, that within three clicks visitors must either be captivated by the site or have reached their specific goal, otherwise they will leave the store. The key words on the home page should be such which can be easily picked up by the general search engines.
Building individual customer relations is next on the agenda of the authors. Birch et al. suggest building customer loyalty in four stages: (i) Know and understand customers, (ii) Address customers, (iii) Let customers define the shopping experience, and (iv) Promote customer community. The authors then move on to creating customer-centric business processes. Their prescriptions include built-to-order products will revolutionise industry activity chains, create new business processes, and outsource and use partnership.
This brings us to the third part of the book-Towards the Digital Economy. As the Internet continues to grow exponentially, anytime, anywhere access to it can be clearly seen on the horizon. Emergence of Internet 2 and XML (extensible mark-up language instead of present hyper-text mark-up language-HTML), etc. will change the face of Internet. Already, a product is being defined as a service, and a service as a product. A brave new world of service is emerging. How does one then start an Internet venture?
Debt financing is ruled out because the company would be soon over-debted on the traditional measures. Venture capital comes to the rescue of the entrepreneurs. Typically, the venture capitalists, according to the authors, have the following criteria : (i) A potential `mega market' opportunity must exist, (ii) The venture should have clear unique selling point (USP), (iii) The company should be a market leader in its sector, (iv) The company should be a springboard for other business ideas, (v) The company must have a strong management team, and (vi) The company has to show flexibility and pragmatism.
The book is written in a simple, direct and prescriptive language. The three authos-one is based in London (Alex Birch), the other in Palo Alto, the heart of the Silicon Valley (Philipp Gerbert), and the third in Dussedorf (Dirk Schneider)-have successfully pooled their talents to open for us the new vistas of e-shopping. The fact that the book is primarily written for Euro pean audience does not in any way affect its global appeal. The book is highly recommended for an understanding of the fast emerging brave new world of e-shopping.
The second book-**Enterprise. com - by Jeff Papows, President and CEO of Lotus (which gave us Lotus 1-2-3 and which nowstands merged with the IMB) is in the nature of an insider's guide to the information economy. Papows conceives of three waves : Wave One : The Back Office (Automated Accountants) (upto mid-1970s), Wave Two : The Front Office (Knowledge Workers) (advent of PCs in 1980s), and Wave Three : The Virtual Ofice (The Global Marketplace) (Rise and Spread of Internet and the World Wide Web beginning 1994).
The competitive position of companies today and tomorrow, according to Papows, is being defined by four elements-An Intranet, An Extranet, The Internet, and the World Wide Web, which combine to form the cyberworld. These four `knowledge nodes' constitute an intergral part of the information technology (IT) revolution. They collaborate with each other to create today's and tomorrow's global cybermarket. The companies are being `forced to compete and adopt, or wither away'.
The web emerges as the forger of new information technology (IT) economics. It is being driven by two basic laws-the Moore's law - semi-conductor density will double every eighteen to twenty four months - and the lesser known Metcalfe's law - the cost of a network expands linearly with increases in network size, but the value of a network increases exponentially. The implications of Metcalfe's Law are quite profund. This means that, as the network expands, its utility grows manifold to the users.
There are three major critical business areas in the new IT economics : critical mass, mass customization, and mass communication. The advent of web promises quantum-level leaps in these three areas, claims Papows. But what are these areas? To understand them, following Papows, consider the facts that the software average cost curve is falling and the network marginal value curve is going up. The point where these two curves intersect is the critical mass. Similarly, for mass customization, the cost of customization, post-web curve is falling down and the cost of customization, pre-web is going up. Ditto for mass communication for pre-web and post-web. We now enter the enterprise framework. This consists of four layers_empowered individual, automated workgroup, integrated enterprise, and extended enterprise. To understand these four concepts, consider data, information, knowledge and work. Data are simple unqualified facts. Information enriches data by giving it some context. Knowledge iswhat information becomes when it is connected to relevant know-how or know-way. Work is the product of putting some combination of data, information, and knowledge into action.
Work is also a structured process in organisation. Data too is structured but information is unstructured. The challenge, says Papows, for most organisations to-day is to effectively combine structured data with unstructured information and to produce an efficient and effective `mostly structured' work process. The essence of workflow, Papows continues, is the provision of electronic support for business processes previously accomplished by means of laborious manual procedures.
Ultimately, it all boils down to knowledge-management. As Peter Drucker has noted, in today's economy, the most important resource is no longer labour, capital or land; it is knowledge. For Jeff Papows, true knowledge management is the ability to take information stored passively inside people's heads and render it public, actionable, useful, and explicit.
But why is knowledge management so important now? Papows gives seven reasons : 1. Globalization, 2. Speed, 3. Service orientation, 4. Worker dispersion, 5. Closer business relationships, 6. Technology, and 7. Competition. To survive in the changing environment, organisations require a new culture of information discovery, distribution, and application. The emerging business environment is characterised by speed, efficiency, and innovation.
Knowledge management thus emerges as an organisational competency which is based on groupware, messaging, and database technology. Knowledge management systems, says Papows, intergrate structured and unstructured information with collaborative work processes. The ultimate goal is not merely to find or discover information, but to enhance an organization's agility, responsiveness, and creativity. Laudable objectives by themselves no doubt, but how can they be achieved?
Papows suggests a three-pronged attack of knowledge creation, distribution, and application, and acknowledges six difficulties of implementing knowledge management : 1. Company size, 2. Information volume, 3. Lack of incentive, 4. Lack of metrics and short - term horizons, 5. Lack of know - how and experience, and 6. Rapid absolescence. Knowledge management systems, and the collaborative computing technologies that support them will prove to be key elements in the success of all organizations in the emerging era of the virtual office, proclaims Papows.
Books have started having their own websites. The first book * - The Age of E-Tail - has its website on http://www. theageofetail.com. The website provides useful introduction to the book. The second book * - Enterprise.com - does not have an independent website. I therefore, searched for its publisher at http://nbrealey-book.com but my computer could not find it. I then went to amazon.com and found the book. It contained, apart from other details, reviews by the readers. Incidentally, most website on books invite the readers to contribute reviews which provide interesting perspective.
Both the books under review here make compelling reading. The first book takes us to e-marketing of our services to the clients in the Internet era. The second book lays emphasis on knowledge management as a critical management tool in the fast emerging digital economy. The speed at which change is taking place worldwide is astonishing. These two books help us in understanding the emerging business scenario in the Information Age.
See this column in next issue for the review of two classics in information technology : Being Digital by Nicholas Negroponte and What will be? by Michael Dertouzos.