Overview
When Transmeta unveiled its remarkable new microprocessors earlier this year, the company's founder, David Ditzel, told the media: "The Internet changes everything. In the future you will no more want to leave your home without your Internet connection than you do without your cell phone today."The Transmeta chips are designed from scratch to facilitate wireless Internet access from Web appliances and ultra-light laptops. Scores of other corporations are scrambling to come up with similar devices.
In Japan, the revolutionary "i-mode" mobile phone is soaring in popularity. These svelte phones are constantly connected to the Internet. You don't have to 'logon' to the Web as you do in North America. The display screen is the size of a business card. More than 350 companies have built a vast array of Web sites for the gadget. Users can receive email, chat, buy and sell securities, download video and music, swap photos, read train schedules, look up their horoscopes, check movie listings, and on and on. The Japanese are hooked.
This constant connectivity to the Net will profoundly effect how we go about our lives. At the early stages we will download straightforward content like music, newspaper clipping and ebooks.
Soon wireless devices that pinpoint your location will be able to answer any questions on services and amenities in the neighbourhood. As you drive through a neighbourhood that you would like to move to, you will be alerted to any houses for sale with the right number of bedrooms and bathrooms. Naturally the device will tell you how to get to each house.
These gadgets will be our constant companions and co-pilots as we go about our work and play. Their ability to extract useful information from the blizzard of digital data will be key. We will insist these devices intimately understand our needs and wants.
As we explore in Digital Capital: Harnessing the Power of Business Webs, corporations are reinventing their business models around the ubiquitous, deep, rich and increasingly functional Internet. Large and diverse sets of people scattered around the world can now, easily and cheaply, gain near real-time access to the information they need to make safe decisions and coordinate complex activities.
Different companies can add knowledge value to a product or service - through innovation, enhancement, cost reduction, or customization - at each step in its lifecycle. Often, specialists do a better value-adding job than vertically integrated firms. In the digital economy, the notion of a separate, electronically negotiated deal at each step of the value cycle becomes a reasonable, often compelling, proposition.
Successful corporations are now distinguished by their ability to identify and accumulate digital capital. They use the Net to blend their intellectual acumen with other companies and leverage the combined insight. They use the Web to develop much deeper relationships with their customers. And they jettison the business models of the industrial age to reinvent their corporations for success in the digital economy.
To repeat: The Internet changes everything. Digital Capital shows how.
Synopsis
The industrial-age corporation is crumbling. The new form of wealth creation is the business web,and the new basis of wealth is digital capital.
Schwab, eBay, Cisco, MP3, Linux, and dozens of other companies have transformed the rules of competition in their industries, seemingly overnight. They hijacked long-entrenched industry leaders with revolutionary offerings that surprised and delighted customers. These transformers could not and did not act alone: partners enabled them to move with stealth, speed, agility, and force. Such teams of innovators pioneered the business web, or "b-web"--the new platform for competition in the twenty-first century. B-webs--partner networks of producers, service providers, suppliers, infrastructure companies, and customers linked via digital channels--are destroying the firm as we have known it and generating wealth in entirely new ways.
In Digital Capital, information-age visionaries Don Tapscott, David Ticoll, and Alex Lowy describe and explain the b-web phenomenon and the forces behind its emergence. Drawing on three years of multimillion-dollar research into hundreds of b-webs as diverse as the Microsoft alliance and the automotive industry, the authors illuminate the five distinct types of b-web now in play: Agoras, Aggregations, Value Chains, Alliances, and Distributive Networks. Punctuating their analysis with a rich set of case studies, they provide the definitive guide to business model innovation in the digital economy.
The book includes:
- The untold real story behind the story on successes like eBay, Cisco, Linux, Schwab, and Priceline
- Positioning and analysis of emergent e-businesses like Webvan, OptiMark, AT&T Solutions, and Enron
- A step-by-step process for b-web strategy design
- A new approach to maximizing organizational effectiveness in a multi-enterprise environment
- The "ABCDE's" of marketing--heir to the "four P's" of the industrial age
- Guidelines for deciding whether to hire, buy, or partner a needed capability
- A new set of lenses for viewing the stock market
The authors warn that participation in b-webs is not optional. To encounter and satisfy the digital customer, firms must lead or partner in one or more of these new business networks. While no single path leads to b-web success, businesses will adopt effective b-web strategies-or they will simply fade away. Sustaining advantage in the digital economy demands more than superficial actions like attracting "eyeballs," launching a hot IPO, following "new rules," building a cool Web site, or even just focusing on customers. In Digital Capital we finally have a book that gets beyond whiz-bang clichés to today's central issues of competitive strategy.
About the Authors:
Don Tapscott is author of the international bestsellers The Digital Economy and Growing up Digital. With David Ticoll and Alex Lowy, he also coedited Blueprint to the Digital Economy. Tapscott is Chairman, David Ticoll is CEO, and Alex Lowy is Managing Director of the Alliance for Converging Technologies, an international research and consulting group that advises corporations and governments worldwide on strategy in the digital economy.
Publishers Weekly
Building on concepts that have been around for more than a decade, the authors argue convincingly that the age of the trillion-dollar enterprise, where two or more companies come together to complete one project, and then go their separate ways, competing against one another for the next, may finally be at hand. Managers who are grappling with ways to expand rapidly with limited resources--a description that fits just about every manager--are bound to be intrigued by the argument that Tapscott (The Digital Economy), Ticoll and Lowy--partners at the Alliance for Converging Technologies consulting firm--put forth. As they see it, the Internet eliminates almost all of the transaction problems that have plagued alliances up until now. Alliance partners no longer have to be in the same location, since the Web makes communication instantaneous, which in turn makes managing enterprises easier. Continuous market feedback is possible, since customers can be plugged into the network, along with suppliers and subcontractors. That's intriguing enough, but the authors go further and outline how five possible types of alliances, or "business webs," can be tailored to suit virtually any company. While the authors give relatively short shrift to the "how to" component of constructing these webs and they don't spend as much time as they might on exactly where employees fit into them, those shortcomings don't distract too much from their otherwise trenchant and absorbing presentation. While the future may evolve differently than the authors envision it, they have provided a workable interim blueprint for getting from here to there. (July) Copyright 2000 Cahners Business Information.|
Editorials
From Barnes & Noble
This book begins by trumpeting the MP3 online music site as the quintessential example of an information age "business web." "MP3's success is the product of an Internet-based alliance -- a business web -- of consumers, businesses ... and content providers. It exemplifies how business webs have risen to challenge the industrial-age corporation as the basis for competitive strategy." Consequently, the authors conclude that the traditional music-distribution channel once dominated by such firms as RCA and CBS "is in tatters." While that characterization soft-pedals the furious legal counterattack that traditional music distributors launched against MP3, the authors nonetheless make a compelling case for their basic premise: "B-webs are the mechanism for the accumulation of digital capital, the knowledge- and relationship-based currency of the new economy. To succeed in the digital economy, every employee, entrepreneur and manager must embrace a new b-web strategy." This instructive book provides portraits of companies that have already taken that step, and offers readers a detailed blueprint for following their examples.
Related Titles:
Coauthors Don Tapscott, David Ticoll and Alex Lowy previously collaborated on Blueprint to the Digital Economy: Creating Wealth in the Era of E-Business and Tapscott wrote The Digital Economy: Promise and Peril in the Age of Networked Intelligence. Business-to-business exchanges are one type of business web often used in commodity-based industries. For adetailed look at how to set up a successful business-to-business exchange, see B2B Exchanges: The Killer Application in the Business-to-Business Internet Revolution. Business-web pioneers profiled by Ticoll, Lowy and Tapscott include Cisco Systems and Dell Computer. Cisco's history is recounted in Making the Cisco Connection: The Story Behind the Real Internet Superpower while Michael Dell details his business vision in Direct from Dell: Strategies that Revolutionized an Industry.
Reviewed by MH - May 15, 2000
Publishers Weekly -
Building on concepts that have been around for more than a decade, the authors argue convincingly that the age of the trillion-dollar enterprise, where two or more companies come together to complete one project, and then go their separate ways, competing against one another for the next, may finally be at hand. Managers who are grappling with ways to expand rapidly with limited resources--a description that fits just about every manager--are bound to be intrigued by the argument that Tapscott (The Digital Economy), Ticoll and Lowy--partners at the Alliance for Converging Technologies consulting firm--put forth. As they see it, the Internet eliminates almost all of the transaction problems that have plagued alliances up until now. Alliance partners no longer have to be in the same location, since the Web makes communication instantaneous, which in turn makes managing enterprises easier. Continuous market feedback is possible, since customers can be plugged into the network, along with suppliers and subcontractors. That's intriguing enough, but the authors go further and outline how five possible types of alliances, or "business webs," can be tailored to suit virtually any company. While the authors give relatively short shrift to the "how to" component of constructing these webs and they don't spend as much time as they might on exactly where employees fit into them, those shortcomings don't distract too much from their otherwise trenchant and absorbing presentation. While the future may evolve differently than the authors envision it, they have provided a workable interim blueprint for getting from here to there. (July) Copyright 2000 Cahners Business Information.|From The Critics
Digital Capital, the new book coauthored by Web guru Don Tapscott, functions much like a classic economics primer: It takes a fascinating topic and drains the excitement from it.Business webs, or b-webs, the authors argue, have emerged as a powerful and profound new form of economic organization. "If the corporation embodied capital in the industrial age, then the b-web does the same for the digital economy," they write.
Tapscott and crew essentially posit b-webs as ubercorporations - amalgams of businesses that join up to reduce transaction costs and inefficiencies. "The b-web is emerging as the generic, universal platform for creating value and wealth," they assure.
There's nothing egregiously wrong with this thoughtful and authoritative book. In fact, the authors provide solid analysis of the new shape of competition. But they do so with such earnestness and heavy-handedness that the book sags.
For example, the authors provide a "b-web taxonomy" with dense descriptions of what they classify as agoras, aggregations, value chains, alliances and distributive networks. They then address how such organizations affect human capital and what they call relationship capital (otherwise known as marketing). The book closes with prescriptions for how to build and profit from b-webs.
Such talk comes across as a complicated and static lecture from gurus with ideas to sell. The turgid vocabulary and tech-heavy content make for intellectual speed bumps to anyone seeking a quick read. And the nature of the book is a mismatch with the environment it describes: The dynamic, fast-moving world of rapidly emerging business models and innovative online companies can't be captured by such an academic and ponderous take.
Moreover, the book's basic premise - the rise of b-webs - assumes that these nascent environments will actually take shape. The largest and most ambitious b-webs, such as AutoExchange, or those in the aerospace or health care industries, have yet to have a meaningful impact on the economy. Like the early venture investments in IT or biotechnology, much of these businesses' value lies in an increasingly uncertain future.
The book's argument rests heavily on the example of MP3.com as a thriving b-web that has "shaken the foundations of an entire industry." While arguably true, MP3.com isn't the success story it used to be after the recording industry's successful court ruling against it, which hammered the company's stock and revealed flaws in this new business' structure. Likewise, the authors use the rise of another threatened company - Webvan - as an example of a successful aggregation form of b-web.
Ultimately, this book delivers insight into a profound new economic form, but it's not the final word. Livelier and more relevant reading on Net economics is the 1998 book Information Rules. Hal Varian and Carl Shapiro's primer lends historical context to the economic rules that govern the new economy, as well as gives crisp managerial guidelines for this changed world. Tapscott's book is too self-important and rooted in yesterday's examples to deliver more lasting benefits.
Tom Ehrenfeld writes the Just Managing column for TheStandard.com.
From The Critics
Ebay, Schwab and others have created revolutionary offerings which have stolen customers from more traditional venues, working with transaction partners which enabled them to move quickly in the changing Internet environment. Digital Capital describes and explains the emerging business web phenomenon and its influences, using key players and detailed information to expose the untold stories behind big successes and offering a strategy for competitive action. Essential for any who would conduct or build a web business.Kirsanov
...the book's research is extensive, and it's surprisingly saavy about technology...if you are trying to understand why some companies are flourishing and others are struggling under old-fashioned business models, Digital Capital is pure enlightenment.—Business Week