Port 80: Boardwalk: people and communities

Boardwalk will introduce the people and the online communities where they work and play -- including industries and organizations. Who's out there? What are they doing? How are they changing? What's happening to the old off-line forms of community?

If enough people contribute to Ricci Street, it could become a community. I'm not counting the temporary community formed by the students who are required to participate during the semester. They're like visitors to any other resort -- summer or winter. It's the folks who live there year round who provide the real community.

What are online communities? The Internet is notorious for letting folks with the oddest interests find each other. Boardwalk is where to mingle with the teeming masses and find out more about them.

Personally, I'm most interested in the development of information and how it flows between people and within and between organizations, especially how the Internet is transforming the businesses of higher education and publishing. I have also developed a set of pages about the wood furniture manufacturing industry.

where buyers meet sellers

things that must be delivered and used as atoms. Do the customers rule when they can instantly compare prices worldwide? Industry by industry, this will be a fascinating process to watch.

This article from 1996 has the dewy-eyed sheen of a new romance. However, falling in love with the Internet is a process being repeated all over corporate America today.

Corporate Metamorphosis: The Effects of the New Media
by Sean Murphy
First Monday, May 1996

Enter the distribution capabilities of the Internet. Exponential in terms of power. One to one, real time, synchronous and asynchronous, many to one, many to many - passive & real time. 24 hours a day, seven days a week.

In a short time, this new medium has changed our ways of thinking in many domains. I wish to tackle the following question: What will this concept do to today's corporate structures?

The Transformation of the Enterprise

Other pages in this Boardwalk neighborhood have links to interesting web sites demonstrating things that can be done on the Web that can't be done as well -- or at all -- offline. Some of them are industries. Others are broader fields of study.

The Internet was a different place before business got involved. It may have been a better place, too. Looking back, however, e-commerce and the dot-comming of American business seem inevitable.

Is it an evolution or a revolution? The comprehensive story of this transformation won't be written while we're in the beginning of it, as we are now. The best we can do is note the trends and watch them develop.

The speed with which these trends are developing indicates that many organizations and industries are searching for a panacea to cure their ills, a magic bullet to make them competitive. That won't work, of course, if it neglects the human resources and intellectual capital of the organization, which the Generally Accepted Accounting Principles are at a loss to quantify. The answer is in the people's use of the tools, not in the tools themselves.

Remember that the Internet is only an enabling technology, a tool. "Let's get ourselves one of these Web sites and make a ton of money" is not a sound strategy.

Thus, we may see a backlash. In 1999, Ford's president Jac Nasser announced that the company was giving a PC to all 350,000 employees. How soon before some of them started a Just Say No club? They didn't have to. In late 2001, the PC giveaway was halted, Nasser was fired, and a scion of the Ford family took over.

world's largest

corporation rank 1 - 10	sales $bil	GDP $bil	country rank 29 - 35
Wal-Mart Stores	256	269 251	Saudi Arabia Colombia
BP	233	238 233 231	Bangladesh Switzerland Sweden
ExxonMobil	223	228 218	Austria Ukraine
General Motors	186
Ford Motor	164
DaimlerChrysler	157
Toyota Motor	136
General Electric	134
Royal Dutch/Shell Group	133
Total Fina Elf	132

Comparably sized countries in billions of dollars of Gross Domestic Product, 2002

The Change Process

The transformation of an organization is seen from the outside as a linear process in which innovation is transferred as a complete package. Implementation is the final stage in the process.

This is a misleading and potentially dangerous view. The process is not linear. It is risky. Implementation often disrupts the whole organization.

This is proving especially true of ebusiness transformations, which are integrative. They cut across existing boundaries, often referred to as "silos", within the organization. They cut across the existing boundaries between one organization and another: competitors become partners; information that used to be "secret" or "proprietary" is shared along the supply chain. Ebusiness drives fundamental structural and cultural changes in the organization.

A more accurate view of ebusiness innovation and implementation recognizes that:

It is a highly political, career-threatening, paradigm-shifting decision-making process.

One of the hard changes that everyone experiences involves their relationship to information. Power that was once maintained by hoarding information will now be maintained by sharing it.

Successful innovation-implementation thus depends on a decision-making process which is open to the views of all the different groups involved and is capable of gaining their commitment.

What's changing?

business strategy

What will you do next? Why? How will you decide? How will you visualize your decision so that you can explain it to others?

Although often used by marketing departments, these analyses can apply to any change effort.

Michael Porter's Five-Forces analysis is an extension of a SWOT analysis and a PEST analysis. Here's an adaptation:

Breaking the rules may be the most difficult action CEOs can take. But Porter suggests that if they don't, it's over. He's not a big fan of the Internet, but his analysis can still guide those making e-business decisions. Its big advantage is that a five-forces analysis is familiar to many old-school decision makers from reading Porter's articles and books such as 1980's Competitive Strategy: Techniques for Analyzing Industries and Competitors.

Now nearing its 60th printing in English and translated into nineteen languages, Michael E. Porter's Competitive Strategy has transformed the theory, practice, and teaching of business strategy throughout the world.

business models

Business model innovation. ... We cover ideas, business (concept) design, development, and other aspects that focus more on the creative side of structuring and developing businesses.

To make an analogy, while most business disciplines focus on engineering and construction, we'll be focusing more on architecture-- the structure and design of businesses. We're the "art" side of business. But we base that art not for art's sake, but with foundations firmly placed in the "science" of business as well.

When people speak about "business models," they could be speaking about three distinct things: components of business models, real operating business models, and what we call change models. A business model, strictly speaking, is the organization's core logic for creating value. A change model is the core logic for how a firm will change over time in order to remain a profitable environment. The capacity to distinguish and communicate them will improve your organization's focus, establish a framework for competing agilely, and position your company to thrive despite industry discontinuities.

How do companies succeed? They choose an effective business model and execute it superbly. They relentlessly renew their distinctiveness as competitors threaten. And they master the ability to change their business model-again effectively- at a pace that matches the dynamism in their markets.

I recommend this white paper for an overview of current thinking in 2001. When discussing the components of business models, Linder and Cantrell specify half a dozen:

Pricing model

Revenue model

The solution for many established companies and startups [to their difficulty finding good business models], has been to apply traditional business models such as advertising, subscription services and retail sales to the Web�.
-- Webmaster, October 1996.

Channel model

Disintermediation is already taking a hit on the business-to-consumer front, where new business models, such as cobranding and digital channel management � as opposed to channel cannibalization � are beginning to take hold.
-- Computerworld, December 1999

Commerce process model

Ancient history may perhaps be a good place to find a new business model. Traditional auctions have been held since the time of Babylon.
-- PriceWaterhouseCoopers, August 1999.

Internet-enabled commerce relationship

The real key to competing in the New Economy is in business model innovation. Based on the Internet, fundamentally new models of the firm and its interaction with external entities have emerged�.
-- Business 2.0, November 1999.

Organizational form

The eCommerce Steering Committee considered the following electronic commerce business models: skunkworks, standing steering committee, eCommerce executive VP, new business unit, spin off, and outsourcing.
-- Big 5 Consultant, December 1999.

Value proposition

Less value and very low cost
More value at the same cost
Much more value at greater cost

There are two basic business models. Companies either compete on price, or they compete on quality.
-- Oil and Gas Industry Analyst, January, 2000.

Learn more

Is the Internet revolution really over? According to analysts and the economy soothsayers, No! The Internet has entrenched itself into the economy today. This medium that provides enormous opportunities to any business by removing the twin obstacles of time and distance is here to stay, and thrive.

What lessons can be learnt from those who survived the carnage on the Infobahn? How can you rate a successful e-business?

Up until last summer, Nicholas Mercader published an email newsletter (at Topica, home of the Ricci Street Gazette) called The Business Model Insider and ran an accompanying web site of the same name. The Web site seems to have gone the way of the newsletter, but you can see the final September 2001 version of the site at Archive.org's WayBack Machine.

Cases

A little more than a year after committing to sell insurance online as part of an ambitious multichannel strategy, Allstate Insurance Co. has had to swallow some tough medicine to stay on course. ...

Despite stiff agent backlash, the company is still not shrinking from challenging its formerly captive salespeople to prove their value by serving customers in their medium of choice. "It's not up to us whether an agent gets disintermediated or not. That's the customer's call," said Steve Groot, senior vice president of direct distribution and e-commerce. ...

Unlike some other insurers that have publicly expressed caution -- or given mixed messages -- about e-commerce, Allstate made an unequivocal acknowledgment of its role from day one. It said the Internet will eventually change the way the industry operates and a fundamental change in its business model, rather than just pilot programs, was in order.

The company concluded that customers want the Internet for policy information and quotes, and that their interest in buying directly online will gradually grow, but the large majority of customers want human contact when buying insurance. ...

"The industry is requiring these carriers to look at the way they do business and make some very hard decisions," Johnston said. "Otherwise, the companies that are coming into this space, the brokerages and banks, are going to eat their lunch."





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