Firms Must Cast the Net Wide to Catch the New Economy's Customers ; Old-Style Strategic Planning, Using One or Two Scenarios, Is No Longer Feasible
Coyle, Diane, The Independent (London, England)
ONCE UPON a time - which, as everybody knows, means a very long time ago indeed - General Motors redesigned its top-of-the-range Cadillacs so they could compete better in its home market with fancy, imported European cars. One of the improvements was OnStar, an onboard car-phone system allowing the driver to communicate with a call centre. It meant the call centre staff could send a breakdown truck, respond to an accident, and offer navigational help and other services to Cadillac drivers.
That was way back in September 1996. History has moved on, and this year two-thirds of all new GM cars will have their own internet addresses. Their radios can act as MP3 players. Drivers will be able to send voice e-mails. The service centre will be able to diagnose faults in the car down the line. GM is in alliance with America Online to provide all these Net services using the car as a portal.
In other words, travel is incidental. The automobile is now essentially a computer on wheels, connected to the same network as the desktop computer or the mobile phone - or, for that matter, the new smart fridges being developed by Electrolux, or the smart kitchen bin NCR is producing. Before long every car and every kitchen will be a local area network.
These cases are among those used by N Venkatraman, a visiting professor at the London Business School, in a new e-business programme the LBS has set up in partnership with PricewaterhouseCoopers. The question he raises is this: where is the value, the potential profit, in the emerging business model for the New Economy?
Is it GM's OnStar technology? Or the network service provided by AOL? Or the online content, which is after all why AOL wants to merge with Time Warner? Who is going to control the value of the new in-car internet services? Who will control it in the network in the intelligent kitchen where your fridge or kitchen bin can re-order from the supermarket, and a food company such as Kraft can download recipes and order ingredients for you? Which partner in the mushrooming mobile telecoms alliances will dominate; the manufacturer, the service provider or the content provider?
That we ask these questions, Professor Venkatraman suggests, indicates how firm a grip the Old Economy business model has over our imaginations. For the answer is none of the above. The value lies entirely in the possibility of these alliances; it is in the network, not in any one of its components. Indeed, he goes on to condemn the fashionable argument that "B2B" (business- to-business) transactions are the secret of future internet success rather than "B2C" (business to consumer) or even "C2C".
Instead, the key is "D2D", or device to device. It is not that the supermarkets can sell to you online, nor that they can shift their supply chain to the internet, that spell big profits in the future, but rather the possibility that your kitchen gadgets will be able to make their own phone calls and speak to the supermarket's computer. …