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January 2001 Archives

January 6, 2001

Cyberspace customers re-define world class organizations

Everywhere I turn organizations have the ‘business model’ on their agendas. ‘What’s a world class business model going to be in ten years time?’ they ask. Naturally, this is associated with high growth, technology, retention of key individuals, and stimulating new wealth creation. But getting from here to there brings more than a little uncertainty.

A new competitive landscape is beginning to emerge with the internet changing relationships between organizations and consumers. World class companies will compete for attention as employees and customers alike form new peer relationships as they reach out and connect in this new medium. In this new world, ruled by the internet, it is clear that learning faster leads to tomorrow’s competitive advantage. But, who is learning faster — organizations or consumers?

The speed with which customers are learning could significantly affect the future landscape in which organizational decisions play out. Some recent examples demonstrate how new models make consumers smarter faster. The most visible is Napster (www.napster.com the music exchange site), which by October 2000 had over 35 million users and was still growing (despite ongoing court proceedings) at 1 million users per week. This is the prime example of customers learning new behavior patterns and experiencing new forms of internet-enabled functionality. Similar parallels can be made with auctions sites where new payment systems were established to enable real time consumer transactions (see www.x.com, PayPal, and www.ebay.com and www.auctionwatch.com).

So, we have an emerging paradox. What strategies will enable you to retain a world class position close to your customers in a world where consumer groups may be empowered to learn faster than their traditional suppliers? Consider for a moment where you will be positioned when your customer information is completely interconnected.

For over a year now I’ve been writing about COMsumers — communities of consumers empowered by the internet. The COMsumer Manifesto (www.firstmonday.org/issues/issue5_5/henshall/index.html) proposed that consumers would combine the internet’s power to collect information with personalized tools in real time affinity groups — groups that will with time control their information assets and pool them collectively for their advantage.
Many organizations compete to provide information and declare ownership of their information assets. If the information assets were to be returned to the people, on what basis would you compete? Imagine a world in which the customer owns his or her transaction and data records!

The internet is empowering consumers in different ways. Systems like www.paypal.com (e-mail money) can effectively work around traditional money systems and banks. But it is not just organizations that are challenged. The role of government, the evolution of taxation systems, and the growing issues around intellectual property are just a few areas that require new solutions. More importantly, privacy is a real concern. Not because we are worried about sharing information, but rather because unlike our physical assets over which we as individuals hold title, there is no title to our virtual property. If you are hacked, cyber-burgled, or simply raided it’s a hassle. Tomorrow it could mean your life is uninsurable!

Consuming information

We as consumers need to start managing our information. It’s clearly valuable, and will either result in lower prices or improved access. The challenge is to create a data-mine, for everyone on earth owned by everyone on earth. Are you willing to bet that a consumer, who is your customer, will never find this a likely idea? What if the early adopters go this way? How many before we reach the tipping point? Twenty per cent? And, which industry will be the first to tip? Yours?

Farfetched? Well just consider. What if your competitor gave their customer data records back to their customers and offered to manage this information for them for a minuscule percentage? Are you ready to adopt your customer’s data standard when this new community starts pooling this asset? What will this make of your world class customer information asset? Is it likely that the new open source solution will quickly improve on your own in-house approach? Then, will you be able to adapt and respond in time to this emerging standard as it evolves?

At this point the customer’s data has moved outside the organization’s business model. Now this consuming community potentially knows more about their needs and their development desires than your organization. At this point real decisions will need to be made. Will you retain an exploratory R&D approach? How will your advertising and marketing systems now work? Finally that old rule of thumb — the 80/20 rule. How will that respond to a COMsumers approach? Indeed, your business may already be locked into the wrong signals.

By embracing this new world you may begin by partnering with this emerging community to improve your asset alignment, adaptability and responsiveness. Ultimately, this is a world that may not be better or worse. However, it will be different. But to consider it in isolation or reject it outright may be premature. A world class community is more than just your organization. The internet transition is inviting you and your organization to become a member.

About January 2001

This page contains all entries posted to Unbound Spiral in January 2001. They are listed from oldest to newest.

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