BOOK EXCERPT
MARCH 22, 1999 VOL. 153 NO. 11
PAGE 1 | 2 | 3 | 4
10 TRANSFORM EVERY BUSINESS PROCESS INTO JUST-IN-TIME DELIVERY
M.I.T.'s Nicholas Negroponte describes the difference between physical products and information products in the digital age as the difference between moving atoms around (physical products such as cars and computers) and moving bits around (electronic products such as financial analyses and news broadcasts). Producers of bits can use the Internet to reduce their delivery times to practically zero. Producers of atoms still can't beam the physical objects through space, but they can use bitspeed--digital coordination of all kinds--to bring reaction time down dramatically.
In some industries, the issue is not so much faster time to market as it is maintaining time to market in the face of astronomically rising complexity. Intel, for instance, has consistently had a 90-day production cycle for its chips, which power most PCs. Intel expects to maintain this 90-day production rate despite the increasing complexity of the microprocessor.
Ultimately the most important "speed" issue for companies is cultural. It's changing the perceptions within a company about the rapidity with which everybody has to move. Everybody must realize that if you don't meet customer demand quickly enough, without sacrificing quality, a competitor will.
11 USE DIGITAL DELIVERY TO ELIMINATE THE MIDDLE MAN
In 1995, in The Road Ahead, I used the term friction-free capitalism to describe how the Internet was helping to create Adam Smith's ideal marketplace, in which buyers and sellers can easily find one another without taking much time or spending much money.
If you're a middleman, the Internet's promise of cheaper prices and faster service can "disintermediate" you, eliminate your role of assisting the transaction between the producer and the consumer. If the Internet is about to disintermediate you, one tack is to use the Internet to get back into the action.
That's what Egghead.com (formerly Egghead), a major retail software chain, did after struggling for several years. Egghead closed all of its physical stores nationwide in 1998 and set up shop exclusively on the Internet. Egghead now offers a number of new online programs that take advantage of the Internet, such as electronic auctions for about 50 different categories of hardware and software and for reconditioned computers. It puts special liquidation prices on systems available on its website and sends out a weekly e-mail "Hot List" with exclusive offers available only to e-mail subscribers.
For the majority of products, which are available through many outlets, consumers will be the greatest beneficiaries. For unique products and services, sellers will find more potential customers and may command higher prices. The more consumers adopt the Web life-style, the closer the economy will move toward Adam Smith's perfect market in all areas of commerce.
12 USE DIGITAL TOOLS TO HELP CUSTOMERS SOLVE PROBLEMS FOR THEMSELVES
As electronic commerce booms, it's not just the middlemen who will find creative ways to use the Internet to strengthen their relationships and customers. The merchants who treat e-commerce as more than a digital cash register will do the best.
Dell was one of the first major companies to move to e-commerce. A global computer supplier with more than $18 billion in revenue, Dell began selling its products online in mid-1996. The company's online business quickly rose from $1 million a week to $1 million a day. Soon it jumped to $3 million a day, then $5 million. It's now risen to $14 million.
Michael Dell characterizes the business today as "different combinations of face-to-face, ear-to-ear and keyboard-to-keyboard. Each has its place. The Internet doesn't replace people. It makes them more efficient. By moving routine interactions to the Web and enabling customers to do some things for themselves, we've freed up our salespeople to do more meaningful things with customers."
Smart companies will combine Internet services and personal contact in programs that give their customers the benefits of both kinds of interaction. You want to move pure transactions to the Internet, use online communication for information sharing and routine communication, and reserve face-to-face interaction for the activities that add the most value.
As I said in The Road Ahead, we always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next 10. Don't let yourself be lulled into inaction.
You know you have built an excellent digital nervous system when information flows through your organization as quickly and naturally as thought in a human being and when you can use technology to marshal and coordinate teams of people as quickly as you can focus an individual on an issue. It's business at the speed of thought.END
From Business @ The Speed of Thought: Using a Digital Nervous System, by Bill Gates. (C) 1999 by William H. Gates, III. To be published this month by Warner Books, USA.
PAGE 1 | 2 | 3 | 4
