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By Philip Evans and Thomas S. WursterHarvard Business School PressPublished September, 1999261 pp, hardcoverISBN: 0-87584-877-XPrice: $19.25 at fatbrain.com .
Richness and reach
In their book Blown to Bits, Philip Evans and Thomas S. Wurster use the term “richness” to refer to the depth and quality of information. They use the term “reach” to refer to the number of people exchanging information.
In the past, companies had to accept a trade-off between richness and reach. They could sell products with rich information to a niche market or they could sell products with poor information to a mass market.
Then came the Internet, and now corporations can have both richness and reach. “Digital networks,” the authors say, “are now making it possible for a very large number of people to exchange very rich information. The richness/reach trade-off is being displaced and, in some cases, obliterated.
“Once information can travel by itself and there are standards that allow everyone to share that information, it becomes possible to have richness and reach. This blowup of the trade-off between richness and reach is creating a new economics of information. And with the blowup go the behavioral patterns, institutions, and asymmetries that have defined marketing, supply chains, organization, and the boundaries of the corporation.”
So achieving both richness and reach is not just a way to gain competitive advantage. To survive in the new information economy, many companies will be forced to reach for customers with rich information about their products and services even if it means abandoning time-honored ways of doing business and cannibalizing sales from established distribution channels.
Evans and Wurster are Boston Consulting Group vice presidents who won a 1997 McKinsey Award for an article in Harvard Business Review. That article serves as the basis for Blown to Bits.
In the book, the authors point out that the most successful traditional companies may be the most vulnerable as the "tidal wave of universal connectivity” melts “the glue bonding economic activities together" and the most profitable parts of an organization’s value chain come under attack by competitors.
Executives of established companies might breathe a sigh of relief when they read that only information companies will be affected by “deconstruction,” which the authors define as “the dismantling and reformulation of traditional business structures.”
But the relief will be short-lived because the authors quickly remind us that “every business is an information business. In many businesses, information plays a surprisingly critical role. For example, about one-third of the cost of health care in the United States—some $350 billion—consists of the cost of capturing, storing, processing, and retrieving information. By that measure, health care is a larger information industry than the ‘information’ industry.”
The authors show how deconstruction will affect not only health care but also banking, news reporting, and automotive retailing. They also show how disintermediation (the destruction of the middleman function, which will be replaced with navigation, the new intermediary function) is affecting stock brokerages, computer retailers, and supermarkets.
Whatever industry you’re in, the book provides tips and strategies you can use to survive the upheaval, whether you work for an old-economy company or an information-age start-up.
Blown to Bits occasionally bogs down in a surplus of business jargon and a dearth of concrete examples, but overall it’s an insightful, lucid, and logical textbook on the new economics of information. (Like a textbook, it includes end-of-chapter summaries and extensive endnotes.)
The authors say the primary audience for the book “is the executive in an incumbent business, who is aware of what is happening but not an expert, who is concerned that the old business assumptions may no longer apply....”
But the book is worthwhile reading for a much wider audience that includes anyone who wants to understand how new technologies affect old institutions, those interested in e-commerce, and anyone who wants to know if his or her own company—and ultimately his or her own job—will be Blown to Bits.
Thomas Pack is a freelance technology writer.Is there a book you would like TechRepublic to review? Send us your suggestions in an e-mail, or post a comment below.