Product Description

Richness or reach? The trade-off used to be simple but absolute: Your business strategy either could focus on "rich" information - customized products and services tailored to a niche audience - or could reach out to a larger market, but with watered-down information that sacrificed richness in favor of a broad, general appeal.
Much of business strategy as we know it today rests on this fundamental trade-off.

Now, say Evans and Wurster, the new economics of information is eliminating the trade-off between richness and reach, blowing apart the foundations of traditional business strategy. Blown to Bits reveals how the spread of connectivity and common standards is redefining the information channels that link businesses with their customers, suppliers, and employees. Increasingly, your customers will have rich access to a universe of alternatives, your suppliers will exploit direct access to your customers, and your competitors will pick off the most profitable parts of your value chain. Your competitive advantage is up for grabs.

To prepare corporate executives and entrepreneurs alike for a fundamental change in business competition, Evans and Wurster expand and illuminate groundbreaking concepts first explored in the award-winning Harvard Business Review article "Strategy and the New Economics of Information," and present a practical guide for applying them. Examples span the spectrum of industries--from financial services to health care, from consumer to industrial goods, and from media to retailing. Blown to Bits shows how to build new strategies that reflect a world in which richness and reach go hand in hand and how to make the most of the new forces shaping competitive advantage.

Product Details

• Amazon Sales Rank: #186044 in Books
• Published on: 1999-10-01
• Original language: English
• Number of items: 1
• Binding: Hardcover
• 261 pages

Amazon.co.uk Review
Philip Evans and Thomas S. Wurster think that the Internet can blow away practically any business and in Blown to Bits, they examine how the new economy is "deconstructing" industries such as newspapers, auto retailing and banking while creating new opportunities for others. They write that the "glue that holds today's value chains and supply chains together" is melting and that even "the most stable of industries, the most focused of business models and the strongest of brands can be blown to bits by new information technology."

Evans and Wurster, both executives of the Boston Consulting Group, argue that the Internet demands new business strategies because it provides companies tremendous "reach" for customers without sacrificing "richness" or the quality of the information about products and services. The book shows how some businesses--Microsoft and Intuit in personal finance, Dell Computer in retailing and the Automotive Network Exchange in manufacturing supply--are thriving amid a rapid expansion of connectivity and the widespread acceptance of new technical standards on the World Wide Web. Clearly written and tough-minded, Blown to Bits is required reading for business leaders, entrepreneurs, strategists and others concerned about the new economics of the information age. --Dan Ring, Amazon.com

From the Publisher
Blown to Bits commands attention
It is recieved wisdom these days that the digital revolution changes everything. Companies and industries, we are told, are shifting before our eyes. No business model will survive intact. Everything is up for grabs.

Then again, the people pushing this line hardest are those with the most to gain, such as software companies and consulting firms. So a book by two partners from the Boston Consulting Group should be approached with due caution. All the same, Blown to Bits commands attention. First, it is an attempt to fit the whole phenomenon into an intellectual framework. Second, it does not over hype. It has the temerity to suggest that some industries might not be greatly affected after all. The book's basic thesis was set out by the authors in the Harvard Business Review two years ago, and is here ysefully expanded. It begins with the economics of information versus the economics of things. Take that well-worn example, the bookshop. Books are expensive and slow to shift, so the economics of things argue you should stock as few as possible. The economics of information suggest the opposite. The more you display, the more you sell. The old-style bookshop is therefore a compromise. In the digital revolution, that compromise is resolved. Information on books is displayed online, while the books themselves are stored in warehouses.

The handler of information, such as Amazon, obviously stands to profit from this. But so to may the warehouser and the distributor. The point is that both information and things can be better managed apart. And the bigger the original compromise, the greater the value which can be released. In the mail order business, by contrast, the economics of things and of information are separate already. In the grocery trade, too, physical products can be stored well enough in out of town superstores. The compromise is much smaller to begin with. An online grocer such as Peapod has a market value less than a tenth of Amazon's.

So, to the second arguement. This involves what the authors call richness versus reach. Reach is what you get when you advertise to millions on television. Richness is when a salesman sits down for an hour with an individual client. In old style business, the two conflict. The more you have of one, the less of the other. This is a line along which businesses position themselves. Take clothing. At one end is the bespoke tailor, at the other the catalogue retailer. Chains such as Marks and Spencers are somewhere between. In the digital revolution, the authors argue, this trade off is shifted or even abolished. A networked world offers not only reach but, increasingly, richness as well.

In the old world, a car maker such as Toyota would prefer richness to reach in choosing its component suppliers. Rather than shop around, it would take a few chosen suppliers into close partnership. What it lost in cheap deals it would make up in reliability and lower inventories.

Compare the Automotive Network Exchange (ANX), a so called extranet set up by the big three Detroit car makers and involving some 5,000 suppliers worldwide. In essence, this is a global auction. Buyers post their requirements, and suppliers instantly respond.

Obviously, this is a huge extension of reach. But there is richness too. Enough information can be exchanged to ensure quality and delivery. The old trade off is losing its force. As the authors admit, these are special cases. Amazon has done splendidly in bookselling, but the millions of titles it offers were already listed in the book trade's catalogues. It could therefore achieve instant critical mass.

Similarly with ANX, Detroit's big three form a quashi-monopoly of US car manufacture. If they agree on a standard, it Becomes universal. The final part of the arguement relates to corporate structure. In the old world, we are told, activities that depended on richness - on communication, control, trust and so forth - belonged within the company. Those depending on reach, by contrast, were assigned to the market. Thus, the boundary of the corporation was itself a point on the trade-off between richness and reach. In a networked world, that trade off vanishes as well. Internally, the company heirarchy gives way to a kind of structural soup, in which ad hoc teams form and dissolve. Externally, companies form shifting alliances.

The model for the future corporation is thus Silicon Valley: a community in which no-one can tell the difference between competitors and allies, and where workers mean everything and corporate boundaries nothing. Applied to most industries, this may be baloney. It is thought provoking baloney all the same.

Customer Reviews

Reach vs. Richness // Things vs. Information
I have read a number of books on the electronic revolution taking place and how is it going to affect the business world. At the end, they all tell the same story without saying anything. We all know that the business models will have to be re-evaluated, that technology will change things but... why? What are the underlying forces acting in the background that make these changes necessary? How can we prepare for them? This book is an excellent place to find answers to those questions. It provides a credible explanation of what exactly is happening and how to identify whether our business is endangered or not. It also provides very valuable examples of different industries (automotive, banking, health care...) which facilitate understanding some of the concepts. Reading the praise for this book, one can find a coment by Jack Nasser (Ford CEO)... I would be quite concerned if I had a Ford dealer... ! Very interesting read.

Irresistible Forces Colliding Creates Opportunity for You!
Unlike most e-commerce books that focus on the best practices of the last 2-5 years, Blown to Bits is a book about corporate strategy as it relates to the implications of e-commerce. Although I have read many e-commerce books, this is the first one that I have found that addresses strategy questions in their broadest implications. Other books on the subject tend to focus more narrowly. I had heard the term 'deconstruction' before reading this book, but was not quite sure what it meant. Now I know that this is the process of taking vertical value chains apart. To me, the most important insight in the book related to navigation as a value-added activity for e-commerce customers. The Web is obviously going to keep growing very rapidly, and we will all need more and more help to get to the right places on it. The navigators will be very powerful, as that problem increases. For those who want how-to information for starting up an e-commerce business, this is not the book for you. Instead, you should read Customers.com and keep up with Patricia Seybold's Web site. If you want to know what is working well now, surfing the Web is a good alternative. Those who are most likely to get benefit from this book are larger companies who are doing little with e-commerce now, and start-ups who are thinking through their strategies of which markets to pursue. In either case, the book is well-written and easy-to-read.

A valuable e-business classic - but lacks an epilogue
This book is an important e-business classic. But despite the authors' clever recommendations, an epilogue is missing, as the Internet revolution they announced did not materialise. The Internet EVOLUTION, however, lives on.

Blown to Bits is about the consequences of the Internet for businesses.

The most important conclusion in the book is that the combination of increased bandwidth, global interconnected electronic network, faster computers and open standards are abolishing the requirements up to now of balancing information reach with information richness.

One example is the alternative media that a company can select when potential customers are targeted. Newspaper ads can reach a broad audience with a limited and static message. At the other end of the scale, a personal meeting with the customer gives the opportunity for deep, detailed and interactive information.

Businesses' supply chains include the same balancing act. When firms do business, the number of partners is inversely correlated to the richness in the information of the interchange.

The Internet removes this balancing act because you suddenly can reach many partners without compromising on the level of detail and complexity of the information (vast reach AND vast richness).

According to the authors, the consequence is that the value chain is blown to bits. They call it deconstruction, which happens when the things economy increasingly is separated from the information economy. "Information is the kit that binds the value chains and supply chains". But the kit is eroding. Information is no longer embedded in the physical units. The economy for physical things and the economy for information are fundamentally different. Unlike physical assets, information (an idea, illustration, checklist, article, etc.) can be reproduced costless infinitely. And where things are worn out, information remains their original form.

Blown to bits contains a wealth of well-described cases like newspapers, banks, car dealers, stock brokers, computer hardware and last not least Encyclopaedia Britannica. In addition, the book includes many interesting text boxes with questions the reader can use for further consideration.

In the bright light of hindsight!
Blown to bits was published in the roaring heydays of the dot-com wave ... and it shows. In 2001, two years after Blown to bits was published, the authors admitted their mistakes in an article for their employer, Boston Consulting Group. They summarised the evolution:
1) It is increasingly clear that the new economy is not displacing the old one. Instead the old is in the process of transforming itself from within.
2) The Internet is NOT proving to be a disruptive technology (i.e. characterised by eliminating the advantages for existing market players). Instead, incumbents are using it to challenge their own business models.
3) Information does not, in general, "want to be free"; instead, intellectual property rights are being extended.

This does not imply that the Internet won't change a lot. Nor can we all can return safely to the good old ways of doing business. Rather, it means that all incumbents have got a second chance to get e-business right.

This conclusion concurs with the view of strategy professor Michael Porter (quoted August 2001 in Business Week)
"We need to see the Internet as complementary to other things the company does rather than contradictory or cannibalistic. That was a really fundamental mistake that many people made. They assumed that this was a disruptive technology that existing companies could not embrace as efficiently as a new company coming in with a clean sheet of paper.

And Porter concludes: "The Internet as a family of technologies will have a very powerful effect on operational effectiveness. We'll see deeper integration among service, sales, logistics, manufacturing, and suppliers."

Peter Leerskov,
MSc in International Business (Marketing & Management) and Graduate Diploma in E-business