The Internet will "Change" your Business &/or Industry

Following up on our discussion about Gary Hamel's innovation video, I made a comment in class that apparently bothered some of my classmates. It was rather terse, so I can understand the reaction to the tone, but it was needed to simplify the concept. The comment was made in response to a number of people not understanding how to get their company to adopt an innovation culture and seeming to be stuck on the idea that they were a data-driven company and innovation often lacks the necessary data to gain approval.

So I recommended to people to have a discussion within their company on, "How the Internet will "Change" (alternative wording used) their business or their industry?" It was blunt and maybe harsh, but it's the reality of today's compressed-cycle economy.

I thought I'd make a list of where some of those discussions could go for the industries that are represented within my class:

Education - I've discussed this several times before (here, here and here), but the Internet will allow the model for education (at many levels) to become collaborative and global. And if the actual education content becomes free via certain outlets, then what new value will schools provide their customers? Is job placement &/or venture funding (or incubation) the new value to provide? Are silo'd discplines (Liberal Arts, Business, Science) easier to blur with Internet technologies, hence creating new opportunities to create "renaissance majors" which may produce more competitive students?

Manufacturing - We're already seeing what digital technology and fabricated labs can do to initiate "creation" opportunities in emerging markets. Combine this with organizations like Kiva.org that provide funding for entrepreneurs, and you have the potential for radical change in how manufactured goods could be created and sold in emerging markets.

Radio & Newspapers - (see New York Times) - enough said. And if you've got a niche in a local market (ie. Hispanic audiences in North Carolina) and you're able to make that model work, why not look to use the Internet to aggressively license/franchise that to other parts of the country? Even companies like AOL and Google haven't figured out "local" yet, so leverage your competitive advantage as quickly as possible.

Mattresses - I highlight this one separately just because one of my classmates is in the "sleep enhancement" business and has an interest in technology. He mention a few weeks ago that their largest distribution channel was a big-box retailer who sold the mattresses vertically in a rack on the floor. Not a fancy showroom where people come in an "try them out", which is how many mattresses are sold. He then said that one of their competitors just decided to move to an all-online model. He said that his company was taking a wait and see approach to moving online because it could disrupt their existing distribution channels (ie. channel conflict). Let's think about that one:

• "Wait and see" on the Internet. How has that worked out for other industries? Maybe those Gen-Y mattress buyers will go against their current buying habits and want to shop in stores (see Zappos).
• Their largest distribution channel already sells the product without the "lay on it" option, but you're still worried that online might not provide the options your customers want?

But even if they aren't sure how to deal with the channel conflict that could happen from an online strategy (hint: channel conflict will always be there), what about setting up an online contest or "fan" page on Facebook or crowdsourcing community that allows people (all ages, all disciplines) to design your next generation mattresses? We've already heard 3-4 good ideas generated in our hallway conversations, why not open that up to 1000x the number of smart minds that might have a suggestion for using a mattress?

Banking - Why should I pay for high-end financial services advice when I can go to Mint or Motley Fool or eTrade or even Charles Schwab? Why should I trust companies that take my tax dollars and make them their dollars without providing any value? The Internet is making financial information more readily available and more transparent, so where could banks do to create need value-creating knowledge for customers? Charging additional fees on ATMs and Account Management is not the answer. Using Internet technologies to expose customers (not hiding information) to knowledge faster, and more globally is where new value will be created.

Healthcare - What are companies doing to get homes for elderly people wired so that low-cost monitoring equipment can be installed to remotely provide services (refill prescriptions, monitor movement for falls, monitor breathing equipment, etc..)? What are you doing to encourage the use of technology (speech recognition, online communities, etc.) that enhance the quality of life when patients are home alone or away from friends (or other with similar illnesses that want to share stories & support)?

Airplanes and Air Travel - The airline industry is already been radically changed by the Internet (see Travelocity, Expedia, Priceline), but now it faces a threat from technology companies like HP and Cisco with their Telepresence systems. But are the airplane companies working with their technology companies (or creating their own) to enhance the connectedness when people do fly? Are they allowing kids to play video-games against each other (in different rows) to help parents relax? Are they helping business travels stay better connected while flying?

That's just a few industries represented in my class, but each of them will be radically changed by the Internet in the next 5 years (if not already). Getting people to think through the possibilities of what could happen is (imho) an important strategic activity for them to consider

Understanding (and misunderstanding) how to use Digital Media

One of the more interesting aspects of the latter stages of an MBA program is that you spend less time focused on the classroom details and more time discussing and applying them to elements of your life. You find yourself looking at even the smallest interaction as an opportunity to analyze and seek improvement. Here's an example from a recent interaction with my roommate from the China trip, Gregg Lewis.

Gregg and his wife work regionally out of Roanoke, VA. He has won national awards for his architectural work, and been recognized internationally for his efforts to push the Cradle to Cradle concept of environmentally sustainable design. Gregg's passion for combining great architecture with eco-friendly sustainability are the foundation for his long term goals to raise awareness of the challenges ahead, and drive the overall building industry to be more responsible.

Over the weekend, I received an email from Gregg saying, "hey - wrote this opinion piece for the Roanoke Times - it'll be published this week." The piece ran on Monday. Overall it was well written and provides some good connectedness between the ideas being fostered by several well known individuals. My comments back to him had little to do with the content and almost everything to do with how he planned to amplify this message.

1. Is the Roanoke Times offering you a regular column to discuss aspects of environmental issues?
2. How else do you plan to get this message out to more people?

We had some follow-up discussions about basic things like Blogging, Twitter and other ways to use low-cost digital media outlets to amplify his message and generate some new conversations with people from around the world with similar interests. For now, those are on hold and we'll see if he's willing to put in some time to cultivate those communities.

This afternoon, I finally got around to looking at the piece on the Roanoke Times website. My first search for "Gregg Lewis" turned up this counter-point piece. Opinions aside, it highlights all the reasons the newspaper industry is going out-of-business and clearly doesn't understand the new world we live in. I'll just highlight a few points:

• This is a digital piece of information. It is a counter-point piece. But yet it has no URL linkage to the original piece. It forces the reader to search for it, with marginal chance for finding it.
• It provides no URL linkage to the associated articles. One again, the reader has no easy way to add breadth to the piece they are consuming.
• It provides no mechanism for the reader to comment on the articles. How does the Roanoke Times plan to gather feedback from their customers on whether or not this content is interesting to them? Wouldn't this be helpful to them to better target advertisers? Might their readers enjoy the ability to be part of the discussion?
• It doesn't allow the readers to communicate back to the author (email address, Twitter account??), essentially making this a one-way conversation in a world where two-way or asynchronous conversations rule the day.
• It hides easy linkage (see "Share it" button at top, instead of icons) to share the piece with other users or services (Twitter, Digg, Facebook, Reddit, etc..). Are they only interested in readers that manually navigate to this page? Do they have no interest in free distribution and possibly national or international readers?

So here we have a global message, one that needs discussions and ideas from many sides to make progress, and the institution publishing the message doesn't seem to understand the fundamentals of facilitating the conversation. They are stuck in a world of local readers, local writers, and paperboys with papers slung over their shoulders in a canvas bag for early morning delivery. They have never been in the conversation business, so it's not surprising that they don't understand even cocktail-party basics.

I hope that my friend's message and future work is able to better take advantage of the digital economy that could allow it to grow and expand. I'm more than willing to help share my experiences.

Reinforcing my "2 Guys and the Internet" model

A little while back I wrote that the likely outcome of this latest econalypse is that corporate jobs will not return in mass, and that a freelance model ("2 Guys and the Internet") or Hollywood-style coordination model would emerge. A study released today from The Kaufmann Foundation shows data that supports that theory.

It also highlights that the average age of entrepreneurs in the US was 39. This is encouraging news for all the students in the executive program that may not love their current position but are concerned about the safety of leaving the existing paycheck. If you start something now, you won't be alone in taking the risk to start that opportunity which might better align with your passion. And since there are plenty of entrepreneurs out there with distinct skills, there are more opportunities to connect with them to provide a broader range of products or services.

Great Discussion about Disruptive Technologies

This one is coincidental, as we're just now getting around to discussing Disruptive Technologies in our ITmgmt course. I personally think the entire course could (or should) have been focused on that, but I don't make the syllabus. Oh well...

A few weeks back I talked about a B.S.Report podcast between Bill Simmons and Chuck Klosterman where they discussed the downfall of the newspaper industry and some of the reasons this was happening.

As a follow-up to that discussion, Bill interviewed (right side of page) John A. Walsh, one of the Sr.Execs at ESPN behind ESPN.com and SportsCenter. Not only did Walsh provide additional reasons why the newspaper (and traditional news) industries are struggling, but he provided excellent insight into the mindset that is needed to truly create disruption within an existing marketplace. His passion for creating change and thinking differently comes through in ways that make you wish that you were working on one his projects right now!!

If you get a chance, take a listen for the first 30 minutes (or more) and then determine which end of disruption your business is on today. And keep in mind that ESPN began during the middle of the 18% interest rates and recession of the early 1980's. There may be no better time than now to be disruptive.

Getting your Business to the Right Size

I've written about this before, but Seth always seems to be more elegant at describing concepts that will effect our future. So what does this mean for companies and employees?

On one hand, it means that there won't be as many jobs available (from big companies) in the future as there have been for the past few years. On the hand, it means that companies will look for more ways to leverage outside "groups" to provide functions for them. This isn't a new concept, it's called outsourcing. But outsourcing in the past was about large companies taking over chunks of work for other large companies.

I think that's going to change going forward. It's going to be more project-by-project, or what's sometimes called "Hollywood-style", because it's similar to how studios bring together various groups to make the movie and then it disbands. And with all the interconnectedness via the Internet, those groups can be small and geographically dispersed.

So I believe what this will create is a new market for big companies and small independent groups that create expertise in making this Hollywood-style work very efficiently. Not only will they bring world-class skills, but also world-class integration and process-management. There are some opportunities here for people with operational and project management expertise to create quite a niche expertise and consulting business.

How the Internet effects your Business

I've written about the demise of newspapers and broadcast television before. Most discussions about the evolution of media sources is tied to the economics that get changed because of the Internet. But I was listening to The B.S. Report: 3/13 this morning, and Bill Simmons and Chuck Klosterman had an interesting discussion about the cultural aspects of why people tend to gravitate towards the Internet. At ~45 minutes, it's worth a listen. And no, you don't have to like sports or know about sports to connect with the discuss.

Beyond the discussion of the need to have information immediately (or gratification immediately), it touches on several issues that we've discussed in StratMktg. How do you react to competing business models? How do your customers perceive value? Can you still create revenue opportunities or provide "perceived value" if your primary product is free?

Sometimes I wonder if I'm doing bad vs. good things

Within the Exec MBA class of 2009, I'm sort of the outspoken "Internet Guy". There are others in the class that do work related to technology, but I'm primarily of the one that waves the flag for all the things the Internet could do...especially as it relates to changing business.

"The Internet" is a pretty amazing thing. It's been a lot of fun over the past 15 years to work on Internet-related projects. In terms of the scope of man-made things that have had as much impact on the world, I suppose it's right up there with democracy, the wheel, the assembly line, and the atomic bomb.

But sometimes I wonder if the pace at which the Internet moves and changes is a good thing for mankind. It's a pros and cons list that I think about quite often.

This video is a good reminder that sometimes we need to put the impact of the Internet on our lives in perspective. Yes, the Internet has allowed people to do some amazing things (collect the world's information, visit friends and family without leaving the house, learn things that otherwise we couldn't afford, connect with old friends, help the world's poor), but it's also changed our perspective on time and scope.

It's good to step back from time and time and put some things in perspective....

Broadcast TV will be dead soon!!

There seems to two consistent themes this semester (in the classroom or reality):

1. Manufacturing in the US is dead or dying.
2. The Internet is completely changing all forms of media, and the old ones will be dead soon.

I've written about the impending death of the paper newspaper, and I think it's time to start collecting facts and stories to write the obituary for broadcast TV.  I'm calling it right now...it'll be dead within 10yrs.  How do I know this?  

• It took about 10yrs for the Internet to kill the newspaper industry
• It took 5-10yrs for the Internet (VoIP) to kill the voice revenues of the telephone industry
• And with announcements like this starting to pop up, it's time to start the 10yr timer for broadcast TV.  

The first sign that the old industry is dying is when they realize that the competitive service is taking off and the only thing they can do is starting taking short-term actions to block it's growth.  They can't compete with the new service on price or ability to attract new customers, so they resort to actions that are completely defensive and create no value in the market.  

For anyone that is in the content creation business, this is an inflection point.  The online opportunities are now going to happen fast & furious.  You can stop thinking about distribution via broadcast networks and cable, and start only focusing on Internet and mobile devices. Potentially some great new business opportunities for WFU MBA students with start-up ideas.

2 Guys and the Internet?? Maybe your next business...

This past week, I watched a video from the new Dean of the WFU Business schools, Steve Reinemund. It covered a number of topics:

• The current economy and its effects on WFU and the business schools (undergrad and graduate)
• The merging of the undergrad and graduate programs and the vision to improve the school's offerings and ranking.
• Steps the school is taking to ensure that near-term graduating students will receive additional assistance in finding employment.

One area that interested me quite a bit were his comments about creating new business school models that leveraged the breadth of education that WFU offered, both from the liberal arts of the undergrad departments and the joint activities of the business schools. The main idea being that we need to do a better job of bringing together excellent ideas and people, regardless of their field of discipline. It makes alot of sense to me, considering that very few companies compete in markets which are only taught in B-Schools (maybe banking or consulting?).

Over the weekend, I went to a number of social events and the topic of the economy came up with several friends. We made the obligatory guesses at how long the downturn will last and how severe it will ultimately be. In most cases, we determined that many of the jobs being lost will probably not come back, at least not for large corporations. They will find that productivity has outpaced the cost of the employees, or that buying habits will be changed for many years to come because of this recession.

These two things got me thinking. Why doesn't the school create a "2 Guys (or Gals) and the Internet" program to drive entrepreneurship? It could start as an extension to Dr.Mandel's Center for Entrepreneurship, or it could be much smaller and focused, like Mark Cuban's Open Source Stimulus program. And don't limit it to just the Business school. Begin to leverage the goal to tie in the entire set of skills and thoughts of Wake Forest. Or be really bold, and start expanding the program to include other schools from the ACC, maybe leveraging those that have skills that aren't world-class at Wake Forest. Lots of smart engineers at Georgia Tech, Virginia Tech and NC State. Amazing things happen when you allow yourself to branch out with small ideas.

So where does the "and the Internet" part come into this thinking? Am I requiring that these new ventures be only focused on Internet technology? No way!! I'm suggesting that since there are so many opportunities these days to leverage the interconnectedness of the Internet to source aspects of a business, that this should be a mandate of the program. These "2 person" operations will need to use all the leverage they can to compete, and that's completely possible with today's Internet. Need business cards - link up with Moo. Need to host your business operations - link with Amazon. Need early market research or advertising buzz - link up with Twitter. These are just basic items, but the ability to pay-as-you-need and grow without all the fixed costs (or people) is there for the right idea and motivation.