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Web-Based Infrastructures: Drivers of the E-World

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Sanmay Mukhopadhyay and Cooper Smith discuss the impact the Internet has had on the world so far, and present their point of view as to what to do about this business perspective problem.
This chapter is from the book

Introduction

If you are reading this book, chances are that you are well aware of the influence the Internet has had on the world so far. That impact, however, is very different if we look at the Internet from either a personal point of view or from a business perspective. The Internet has proven infinitely bountiful as a tool for personal gratification but has been much more elusive in meeting the black and white goals of a business initiative. There are many other books and documents that go into why this is so. The purpose of this book, more or less, is to present at least, our point of view as to what to do about this business perspective problem.

The "cyberworld" is much more complex than the old-fashioned "brick-and-mortar." The simple mantra of "Location! Location! Location!" has a whole new meaning when it comes cyberspace. But if the Internet is to be used for business purposes, how do apply the old rule to the new media? We can follow Michael E. Porter's advice:

If average profitability is under pressure in many industries influenced by the Internet, it becomes important for individual companies to set themselves apart from the pack—to be more profitable than the average performer.1

This is good advice, but it is easier said than done. We do not need to go into how much has already been said about the business potential of the Internet—too much has probably been said already. Our job is to define methodologies to tap into and exploit that potential to its fullest. A major mistake that has been made by the business community is seeing the Internet as a "cost-cutting" strategy to provide the same goods and services an organization already supplies. In other words, the business mantra of the past has been, "Yes, we sell widgets, but now we can sell widgets online at a fraction of the cost of maintaining a brick-and-mortar operation." This approach has led many organizations to concentrate solely on "operational effectiveness" as a means of adding value to their business.

Simply put, if we make widgets at the same cost, sell them at the same price, but reduce the cost of selling them, we increase our profit! In isolation, this seems like a good idea, but we must remember economies work under market conditions, usually with some level of competition. Real economic value relies on maintaining a competitive advantage. If everybody else who sells widgets decides to sell widgets online for the same exact reason, where is the competitive advantage?

This is why the Four-Dimensional (4D) Framework goes further than just creating a Web site and calling it an "e-business." The Internet is only an enabler for a more well-planned approach to gaining a more powerful and strategic position within a competitive market, regardless of what that market might be. To do so, we need to focus on just what that strategic position should be. There is no one-stop solution here since every organization and every business is different, with its own sets of goals, motives, and strategies. But with a fundamental understanding of how one's own business works, using our framework should illuminate the most likely paths to identifying and implementing sound Internet strategies for any form of business.

We begin by stepping away from technology for the moment and concentrating on some basic principles. This way, we can clarify and understand our strategic goals. Let's isolate these business principles and use them to define an entirely different set of business rules that provide for a more practical and successful framework for using "e-technology" to establish "e-businesses." We base these principles on what we call fundamental drivers:

  • Business drivers
  • People drivers
  • Process drivers
  • Technology drivers

A "driver" can be thought of as the natural cause and effect of any natural transaction. Business, after all, is the exchange of goods between two or more parties, hopefully for the benefit of both. A transaction is an isolated exchange of a good, a service performed, or a payment made. A driver is the motivation and result combined for any given transaction.

Let's look at a very simple example. Say a group of prehistoric cavepeople are hungry. If they could kill a woolly mammoth, they could all eat the meat, wear the fur, use the bones for tools, and the entire group would be better off. Since no single caveperson can kill a woolly mammoth on his or her own, they have to rely on each other, to benefit both as a group and as individuals. It serves their best interests to work together. This is a simple business driver.

Now that it has been decided that our cavepeople will work together, we need some structure to make sure they can work together effectively. We need a leader, of course, someone to make decisions for the group under stress or at other times of need. And there is likely to be some level of specialization. Some cavepeople may be good at running, so they should be the ones to distract the mammoth while those who are good with spears sneak up on it. Others may be good at skinning and cleaning the carcass or lighting the fires to cook it. Mind you, each member of the group may be able to do all of these things, but invariably, some will be better at some things than at others. How people work separately and how they work together, their skills and knowledge, define the people drivers.

Jobs, whether performed separately or in a group, are generally performed in a specific way. Sometimes, jobs can be done simultaneously, while others cannot be done until others are complete. For example, fires can be lit to cook a mammoth before it is actually killed, but of course, it can't be cooked until the mammoth is killed. Therefore, the cooks must rely on the hunters to do their job before they can do the cooking. However, the fire starters need only know how to start their fires. When they start them is important, but not essential for them to do their jobs. The process of rubbing sticks or striking flint is independent and included in the overall process of killing and cooking a woolly mammoth. This defines the process drivers.

Finally, using spears to kill the mammoth may be less effective than using poison arrows. However, making spears is considerably easier than collecting and processing effective poisons to put on the tips of arrows. There is an economic tradeoff between using one technology and using another. After all, a hunter is only going to be as good as the tools he or she uses to do the job. The tradeoff between stone spears and poison arrows is an example of a technology driver.

The way these drivers are listed above exemplifies their order of importance. Without the need for food and warmth, there is no need to kill a mammoth in the first place. If our cavepeople were on a South Sea island where fish and fruit were plentiful and it was always warm, there would be no business driver to kill a woolly mammoth (plus the fact that on such an island, there would be no woolly mammoths to kill). Secondly, without people willing and able to do the job, there would be no threats to any woolly mammoth. Thirdly, even if there are people who decide to take on the job of hunting the mammoth, unless they know and coordinate what they are doing, their chances of success are pretty slim. The "enterprise" should then and only then begin to look at the tools available to get the job accomplished.

One of the major flaws of the Internet boom of the late 1990s was the all-out effort to fit the business models to the technology instead of the technology to the business models. Again, using our previous example, let's say one of our cavepeople (a man) stumbles across a loaded elephant gun while hunting (we'll ignore the obvious anachronism for now). He pulls the trigger, creates a frightening explosion, and almost blows his foot off. Well, this leaves quite an impression and he decides this thing is quite an attention-getter. He brings it back to e-design and fires it off in celebration of another successful woolly mammoth hunt! This makes him very popular among his fellow cavepeople. Now we can say to ourselves, "Use the gun to go shoot a woolly mammoth, stupid," but we already know what the gun should be used for. Our caveperson is simply shaping the business model to the tool and not the other way around.

Eventually, the novelty wears off or he runs out of bullets, and soon the gun becomes a signpost. Our caveperson loses his popularity and the "elephant gun" market plummets. Was it up to the caveperson to be a good businessperson and use the elephant gun to shoot his own mammoth all alone and become "wealthy" in the eyes of his fellow tribespeople? Who is to say? The point of the story is, without keeping a clear eye on all four of the principles drivers of business, steering any business to success will be an iffy proposition, whether it is hunting woolly mammoths or running an "e-business."

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