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Before the start of the course (T171. I mean), there were a lot
of worried posts in the Tech Cafe from people who were reading the
course books and had got a bit nervous about the language used in
'Blown to Bits'. Comments seemed to be that it didn't make sense,
it was boring, full of jargon, etc. Speaking for myself, I quite
enjoyed it, but then I read it late last year while I was preparing
for the B200 exams and believe me it's a hell of a lot more fun
than Andre Gunder Frank on the World Economy!
I took some notes on it at the time and thought I'd put up a critique/glossary
here from the point-of-view of an ex-business student in the hope
that it will be of some help to someone. I'll break it down into
points to make it easier to take...
1. Intro:
Worried by security issues of e-commerce? Concerned about your
privacy? Peeved by the creeping commercialisation of cyberspace
by sinister corporations? Then buy a different book!
Let's get this one straight right from the start: 'Blown to Bits'
is a business book for business people, written by business analysts
and published by the Harvard Business Press. Its aim is to tell
Entrepreneurs and CEOs (Chief Executive Officers) how the world
of business has changed and how their way of working has to change
to meet these new challenges. Part of the problem people seem to
have when they approach this book is that they expect it to be a
critique of business practices from a consumer point-of-view, and
to go through the usual litany of hand-wringing about cookies, spyware,
etc.
In some ways, though, 'Blown to Bits's bias towards the interests
of those who sell stuff makes it a more informative book. I know
it seems odd, but think about it: What we're getting here is an
insight into the way these CEOs' minds work, which can only be a
good thing. If we know how they intend to part us from our money
we'll be much better placed to sort the hysteria from the real issues
next time we read a story about e-business.
I can suggest ways of reading it, but it would have to be a very
personal thing. Maybe you might try imagining yourself setting up
an online store to sell secondhand books, computers, sandwiches,
software, whatever...and use the book to try and work out how you
would get the message across to customers, whether they were on
the other side of the world or just in your local area. That might
help you identify better with the readership, but it really is up
to you.
2. Science Fiction.
The other thing to bear in mind while reading 'Blown to Bits'
is this:
Take it with a big, fat pinch of salt, OK?
The Internet is changing at breathtaking speed, and if there's one
thing you can be absobleedinglutely sure about it is that any book
that tries to predict the future of the Internet will be completely
wrong. Remember all those predictions back in the fifties about
how we'd all be served by robots and taking holidays on Mars by
the turn of the century? No, neither do I, but rest assured that
even ten years from now, you'll flick through 'Blown to Bits' and
laugh your bum off.
3. Slippery Words.
Here's another moan. I know, I know, I said what a good book it
was and now I'm whinging on about it, but that's just me! It seemed
to me that the writers didn't really define their words very well.
For example, Richness and Reach are probably the two most overworked
words in the book, and considering the importance of the concepts,
you'd think they'd have a clearly-developed idea of what the two
words mean and how they differ. If you look closely, though, you'll
see that the words are used in slightly different ways in different
contexts, and according to what the authors want them to mean. This
is part of a general trend which you come across sometimes in academic
writing when the author is excited about the subject and wants to
prove a nice, neat theory on the base of very little concrete data.
In this case, I reckon the theory is fairly sound as a whole, but
they use a lot of linguistic dodging to make it sound a lot simpler
and a lot more inevitable than it really is...IMHO!
4. Jargon.
This is the main point of this section: The jargon of business.
Here, in no particular order, is a glossary of some of the terms
used in 'Blown to Bits' and associated literature. By that, I mean
generic terms which are 'assumed' to be understood in 'Blown to
Bits', rather than concepts like Richness and Reach which are defined
fairly extensively in the book itself. I haven't alphabetised it
properly because a lot of the terms are linked and I thought it
simpler to group them together. If I've missed any terms and you'd
like me to add them, e-mail me to let me know:
a. Business Environments:
Usually taken to mean the Social Factors (age, interests, opinions,
language, culture), Technological (telecom/Internet infrastructure,
scientific advances, etc.), Economic (Taxation, local wage rates,
tariffs, etc.) and Political issues (including legal constraints,
war, security) affecting a business, collectively known as STEP
(as in 'a STEP analysis').
The Internet, as one aspect of globalisation, has had a big effect
on all these factors. It allows companies to 'outsource' a lot of
work (i.e., get it done by people who need to work at home due to
family ties, or by a factory overseas employing labour at a cheaper
rate than in the home country) and to avoid some of the economic
and legal strictures in host countries.
b. Markets.
It's difficult to generalise because there are lots of very different
theories about how markets work, but you don't want to read all
that, so I'm just going to go ahead and generalise anyway:
A perfect market is one in which everyone who wants to buy something
has completely free choice and perfect information. All the people
selling things have to vie against each other to compete for that
person's hard-earned dosh. They do this by selling cheaply ('competing
on price') and by making their product better and better and shinier
and groovier ('competing on differentiation') so everyone gets a
better deal. A similar process governs the price of raw materials,
and even of wages in a perfect labour market.
This never, ever happens in the real world. If I want to buy a bottle
of plonk now I can't go into every shop on earth looking for the
best deal. I have to go to the nearest row of shops where I will
be overcharged because it's the only place open within walking distance
and the shopkeeper has a small shop with high overheads. If I go
to the supermarket tomorrow, I will just end up buying whatever's
on a convenient shelf with a pretty label and nice presentation
because I don't know enough about wine to make a proper choice.
These are called market distortions. (In the first case, the shopkeeper
has a virtual monopoly in the area, and in the second, I have imperfect
information)
Obviously, I'm keeping it simple. Generally speaking, though, if
something is scarce and in great demand (say, gold, or the labour
of skilled computer programmers, or wine on a bank holiday within
walking distance of my flat) it'll be really expensive, but if it's
easy to get but not that interesting (e.g., chips, dog turds, the
labour of unqualified teenagers, or a Gary Glitter album within
walking distance of my flat) then it's cheap. This is known as the
law of supply and demand.
One of the things the Internet does is to make markets more efficient
because as time goes on it'll be easier to make a few mouse clicks
and get whatever I want whenever I want from the cheapest supplier
in the area (if I need it now) or the cheapest in the world (if
I can wait). At the same time, the Internet, and globalisation in
general, have expanded markets from the local to the international
level. Not only does this mean cheaper books, it also means lower
wages. Ironically, web designers are finding this more than most.
It is quite a high-skill area, but by definition anyone who can
do it can access the net, so people who once charged huge fees find
themselves competing against some Russian teenager willing to do
freelance work for a few quid!
c. Organisations
Endless theories here too, of course. Traditionally, Organisations
were structured as Bureaucracies, which just meant they were run
according to rational principles, with everyone having a clearly
defined role. More recently, bureaucracy has come to mean something
grim and inhuman.
New theories of the organisation have come about and they have one
main thing in common: They all agree that bureaucracy is A Bad Thing.
There are many different structures: Independent Business Units
, Teams, Virtual Companies, all related to theories such as Total
Quality Management, Lean Production, Downsizing, and on and on.
I'm not going to bore you with the details. The thing to bear in
mind is that they are mainly passing fads, taking old bureaucratic
principles and applying them according to some 'revolutionary' notion
from a best-selling business book (e.g., 'In Search of Excellence'
whose author, Tom Peters, recently admitted (in Fast
Company Magazine) he made a lot of his figures up.) The general
trend is towards smaller companies, specialising on a 'core competence'
(which just means something the company is really good at) and buying
in services from outside (Outsourcing). This is a strong theme coming
across, especially in the latter half of 'Blown to Bits', when the
authors talk about deconstructing the organisation. As information
flows more freely, there is less need for big companies that do
everything. IBM, for example, used to do everything. Now, computers
are made by dozens of companies (chip makers, software companies,
hardware manufacturers, printers who make the manuals) and distributed
by dozens of others (Time, Dell, Jungle.com...) And within those
companies, there will be freelancers and franchisers and contractors
and god-knows what else. In some cases it's difficult to tell the
inside from the outside of a company.
d. Processes.
Some people would say 'forget the structure: what matters is what
a company does'.
With this in mind, you can see what's going on by following a process
(say an order being dealt with, or a manufacturing system) to see
how value is added. Value is not the same as price. It reflects
the benefits (real and psychological) which a customer gets from
the product/service supplied by the company. For example, suppose
I buy a computer. The activities which add value include:
Supply/Delivery (helpfulness and professionalism of sales and delivery
staff, speed at which order is processed, punctuality of delivery)
Support (What is included, what does it cost, do the staff know
their stuff?)
Design (does the machine look good?)
Components of hardware and software (how well made, how well do
they work together)
Branding (Is the company I bought it from a reputable firm? What
about the hardware/software manufacturers? How well does the brand
image fit my belief system? Excuse me while I gag on that last one,
but you'd be surprised how important brands are! The whole issue
of brands and their presence on the net is absolutely vital to the
argument of the book)
Collectively, a list like this may be called a Value chain (or a
Supply chain, although that is a slightly different thing). Value
chains can span several companies and this is often the case. Obviously,
each of these can be looked at more closely and new chains made
for different parts of the process. Each value chain treats the
end user of the process as a customer even if it isn't in the usual
sense of an actual shopper . Adding value for the customer is always,
always the goal of a process, and jobs that don't do that are to
be ruthlessly eliminated.
Again, the Internet works towards streamlining or automating these
processes.
e. Other terms:
That potted description of how businesses operate represents a year's
worth of knowledge right there, so I hope you enjoyed it! There
are some other terms which I couldn't fit into the narrative, so
I'll tack them on the end here for want of a better place to put
them:
Information: Not really a business term, this one, but
what do the authors mean when they talk about information? It's
the glue that binds companies together; it has its own economics...Again,
I find this a poorly defined term in the book. It means a vague
collection of things from descriptions about products to employee
records, share prices, html code and anything else they need it
to mean at a given time. It conveys a general sense of 'Gee Whizz,
Ain't the Internet Cool' without being specific enough to be pinned
down by anyone who wants to question the theory. The term 'asymmetry
of information' crops up a lot. That just means 'someone knows more
than someone else'.
MBWA: Management by Walking Around. A management style
made famous by Hewlett Packard. Its British counterpart, with which
I'm sure we're all familiar, is MBSOYBFA (Management By Sitting
on your Big Fat Arse)
Horizontal/Vertical Integration: Horizontal Integration
means expanding into different kinds of products services. For example,
Amazon moving from selling books to selling books, CDs, electronics,
etc. was becoming more horizontally integrated. Vertical integration
is the process of taking on more sections of a single supply chain.
For example, if a company which builds computers were to suddenly
decide to buy a chain of computer superstores, a fleet of delivery
lorries, and a microchip company it would be integrating vertically.
Cross-Subsidy: The practice of providing a bargain product
or service (known as a loss leader) to the customer in order to
entice them into buying a package including a more expensive one.
E.g., a bank with a very good interest rate on its current account
might hope to lure customers who would then take out a (high priced)
loan. Cheap ISPs often cross-subsidise their free access by having
a premium rate support line and a 45 minute queue to get through.
This is a doomed practice if the book is anything to go by!
JIT (or Just-In-Time) the practice of having components/products
delivered just in time to be used, thus saving on storage costs.
Especially important in the context of Moore's law because new components
become obsolete or lose value so quickly that there's really no
point making a big stockpile of anything.
Disintermediation: Cutting out the middle man. More specifically,
not allowing retailers and marketers to present the goods on their
terms, but going direct to the needed product - for example via
a search engine...Which leads me nicely on to...
Commoditisation: When companies fail in their attempts
to push forward the product as a distinct item with a high profile
(e.g., by use of branding) the product becomes a mere commodity.
Jeans are commodities, but Levis are Levis. A big fear of retailers
is that if people start shopping via a search engine, the brand
image will be swamped by the search engine's brand and all items
will be commoditised and forced to compete on price alone. One of
Bill Gates' nightmares, which led to the writing of 'The Internet
Tidal Wave' was that if computer users shifted their attention towards
the internet and away from their desktop, the Windows would cease
to be important and would be commoditised.
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