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FEATURE ARTICLE Subject: Mar2001 ECMgt.com:
The New Economic Environment |
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a winning strategy for the New Economy By Frank Moss Co-Founder & Co-Chairman - Bowstreet Our transformation to a service economy, which began in the latter half of the 20th century, is nearly complete: most companies now believe they must differentiate themselves based on services, not products. The Internet and Internet-based technologies have dramatically accelerated this transformation over the last decade, reshaping industries from automotive manufacturing to book retailing, from personal computers to travel. Companies in the service economy succeed by collaborating with all kinds of partners in all kinds of ways, in real-time over the Internet -; not by owning a captive supply chain or dominating a single e-marketplace. Technologies that enable flexible, large-scale, real-time Internet partnering and collaboration have begun to flourish. Virtually any company can digitize and share its core competencies -; the things it does best -; over the Internet. These core competencies can take the form of "web services" based in Extensible Markup Language (XML), a common language of eBusiness. Companies can combine their web services to create new, customized products and services and reach new markets -; all in a fraction of the time it took in the past. Industry visionaries and business leaders are calling this dynamic new form of commerce "business webs." Don Tapscott, co-;author of Digital Capital: Harnessing the Power of Business Webs, writes: "Industry by industry, new net-enabled models are destroying the old models of wealth creation... call this new model of wealth the Business Web.... Whether b-webs seem attractive or not, ignoring them is perilous. Unlike other big ideas, b-webs are inevitable... the b-web is emerging as the generic, universal platform for creating value and wealth." 1 Millions of business webs will eventually arise as companies master the art of business web automation: the mass customization and production of Internet business relationships built on spontaneous alliances of partners, vendors and customers. Business web automation will redefine business and the post-millennium economy just as mass-production techniques kick-started and defined the modern industrial age. 1 Digital Capital: Harnessing the Power of Business Webs, Harvard Business School Press, 2000. The business web movement is already well under way, and it's not just for Internet companies. Companies like GE Small Business Solutions, Pitney Bowes Capital Services, and CNA (one of the nation's largest commercial insurers) are structuring or restructuring their businesses around web services. These companies and countless others have identified the new imperatives of business: All commerce and business is becoming native to the web, not just web-extended. Companies must look to the web for completely new ways to collaborate, extend their brands, create new markets, and manage their businesses for competitive advantage. Simply continuing to automate existing business processes and move them to the web will result in cost savings and operational efficiencies, but not in true competitive advantage and exponential business growth. Corporate value is shifting from hard assets to digital capital and intellectual property. Companies are realizing the untapped value not just in their products and services, but also in their proprietary business processes, customer knowledge, service approaches, and other "soft" assets. Smart companies are turning to the web to share these digitized core competencies, as well as to outsource for those competencies that they don't possess in house. Competition as we have known it is dead. To satisfy service-obsessed consumers who buy in Internet time, companies are finding that they must aggressively, dynamically and creatively collaborate with each other. Forget the old ways of vertical integration, competition and protracted product development cycles. The Service Economy affects every company. Businesses are finding that the way they sell their products and the "buying experiences" they provide are at least as important as what they are selling. For example, customization may count for more in a car sale than the actual car model. Speed (or lack of it) can kill. The Internet has dramatically sped up business across all industries, creating an intensely dynamic environment where time to market is quickly becoming the dominant success metric. Web services and business webs provide the technical foundation that companies need to adopt the new operating style required by this dynamic business world: plug-and-play e-commerce. This new model means that companies can integrate themselves seamlessly into each other's businesses to meet customer demands with little or no software programming and without the protracted business cycles of the past. As companies point and click to add partners to their business webs, the winners in plug-and-play e-commerce will be those companies that most quickly reinvent their businesses using web services, business webs and the new rules of business.
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