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Strategies for success in the E-conomy: Product and market transformation

Are you ready to make e-commerce work for you? The authors of a new book on "E-conomy" say certain e-business strategies are based on changing a product or even a whole marketplace. Here's what you need to know.


By Amir Hartman and John Sifonis with John Kador
This article is an excerpt from Net Ready: Strategies for Success in the E-conomy and appears on TechRepublic through an exclusive arrangement with the authors. Today’s installment in this series examines the first four of the 12 strategies for e-business initiatives that are outlined in the book. Each of these strategies focuses on transforming a specific product or market segment within the e-commerce world. Subsequent excerpts will review the eight remaining strategies.
E-business initiatives, for all their diversity and variety, take a limited number of forms or strategies. Based on our examination of hundreds of organizations launching E-business programs, we believe that the vast majority takes one or more of a dozen strategies represented in Figure 1. Some strategies are product-specific. Others attempt to transform an entire industry. We further categorize the twelve strategies into three broad areas: Product and Market Transformation, Business Process Transformation, and Industry Transformation.



Reconceive the product or service
Familiarity may breed contempt, as the saying has it, but it also breeds complacency. The hardest thing in the world is to rethink a product or service so commonplace, so ordinary, that it requires a major effort just to consider that they may deserve a second thought. But it is in the reconception of the ordinary that the possibility of creating real value exists.

Is there anything more ordinary, more commonplace, and more frustrating than a business card? Everybody feels they need them, but business cards are a major pain for all concerned. There are two parties to any business card transaction. Let’s call them donors and recipients. For business card donors, the problem is to keep them current. In these days of area code roulette and e-mail address changes, keeping business cards current is an expensive proposition. For recipients, managing hundreds of business cards so they can be accessed is a daunting task. The biggest issue is keeping the information on these cards current and up-to-date.

One solution is to put every business card you receive through a scanner and manage them as a database in a Personal Information Manager. A small industry supports just such a solution. But while recipients can now search through their business card database by name or company, there is still no reliable way to ensure that the data is current.

To its credit, Tippecanoe Systems has considered this set of challenges and reconceived the situation by creating the virtual business card. It just might be the solution to the age-old problem of keeping business cards from getting out-of-date. Its VBCard Web site links paper business cards to virtual cards accessible over the Internet. The linking is made possible by printing a username and PIN number on the business card, which will identify a single virtual card in the VBCard Web site.

VBCard follows a paradigm common to most successful e-business initiatives. Begin with a common product and add a carefully focused service component to create a value-added e-business initiative. Here this paradigm works like a charm. For donors, they can have a business card that never goes out of date. Whenever they have a change to a card, even when they change companies or careers, a donor can go the Web site and update their information. Best of all, when people registered on the site update their cards, the site automatically notifies subscribers by e-mail. Thus the site gives you business cards that are always correct and creates the infrastructure for building communities and relationships that have the potential of creating lasting value.
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Redefine the value proposition
In the traditional economy, value propositions are typically inward-looking, focused on either product features or corporate operational processes. That’s not good enough anymore. In the E-conomy, value propositions must have an outward perspective, taking the point of view of customers. Presenting customers with a value proposition means understanding what they are trying to achieve—even when they themselves may not be fully aware of it—and how the product or service will get them closer to that intensely articulated goal.

But even presenting customers with a clear value proposition is not good enough anymore. To really succeed in the E-conomy, you have to redefine the value proposition in the context of the new rules. You have to assume that, somewhere out there, there is a competitor that will render your value proposition irrelevant. Competition today is not between products or even benefits; it’s about competition between opposing value propositions. Here’s how a few organizations have reconceived the value proposition of the market in which they operate.

Free e-mail services such as Hotmail and Juno are prime examples of redefining the value proposition. As a concept, free-mail is deliciously win-win. There’s no cost to the customer and, because it's Web-based, all you need is an Internet connection and a browser to access and send e-mail anytime, from anywhere. The services are surprisingly robust. If your e-mail needs are modest—sending, replying and maybe attaching an occasional file—just about any of the dozens of free-mail services that have sprung up will give you what you need. Of course, you have to put up with ads scattered about the screens as you read and compose messages. But the ads are generally unobtrusive. They're also targeted to your business and personal interests, based on data you're required to provide when you sign up. Most services also offer to e-mail you product information, but you can check the "no thanks" box and the e-mail services respect your wishes.

Move the product Up the Food Chain
A third strategy for creating value in the E-conomy is by moving a product up the product hierarchy food chain. Existing products take on entirely new attributes when complemented with elements of service and encapsulated by information. Net Ready companies always strive to move their products or services up the food chain. Advantage comes in both the differentiation that results from moving up the food chain, as well as in the migration itself. In the E-conomy, enterprises that are in motion tend to be more successful that those in stasis.

Onsale, the online auction service, represented a revolutionary presence in the E-conomy when it was launched. As a startup, its business model was not fettered by industrial age baggage. Onsale’s challenge was how to create a new retaining experience that exploits the unique characteristics of the Internet. To do that, the company broke a number of retail myths. One myth was that products have fixed prices. In response, Onsale leveraged the concept of differential pricing. In its auctions, Online also took advantage of the concept of scarcity, which replaced the myth of unlimited availability, to create a more fevered competitive shopping environment. To squeeze out maximum efficiencies of scale, Onsale automated the entire operation, eliminating the person-to-person contact that traditional economies required. Finally, by generally not taking control of inventory, Onsale avoids the expense and risk of holding inventory. The genius of Onsale and its imitators is that it has taken commodity-oriented products and moved them up the food chain. Customers don’t just buy; they win (see Figure).



Separate the function from the form
The traditional economy entangles function and form so thoroughly that it is difficult to calculate where the real value is. In most cases, the value is really rooted in the function. Entrepreneurs who can figure out how to deliver the function using the unique attributes of the E-conomy will often crate enormous value by shedding the baggage of the physical container in which the function was formerly moored. Let’s briefly consider an example of enterprises creating advantage by strategically applying the principles of separating form from function.

Why should people gather together in a meeting center to watch the same Power Point presentation they could more easily watch from any browser? That’s the logic of WebSentric, a new Web conferencing service that lets professionals deliver slide presentations in real time within any browser. The service, called Presentation.Net, is aimed at companies involved in distance learning, corporate conferencing, and telesales efforts.

WebSentric is betting that it can extract some value by separating the traditional form of a presentation (slide shows in a hotel meeting room) from the function (imparting information). For so many years, the form and function have been inextricably linked. But the Web offers a model for distinguishing between the two. Now, whether the technology is robust enough to give presentation attendees a workable presentation remains to be seen. The company is on the right track by using JavaScript/Dynamic HTML to show slides rather than a large GIF. This decision lowers bandwidth requirements, allowing dial-up attendees to have a reasonable experience over 28-Kbps modems. WebSentric says it will make the service available during mid-1999 via its Web site. The company has not yet determined pricing, but says a Web presentation conference will cost less than a teleconference. Beta customers include Sun Microsystems and Federal Express.
Is your company net-ready? What strategies have you used? To share your experiences, click here .

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