p a r a d i g m   s h i f t s

Service Empires In Cyberspace

by James F. Moore

The real revolution in cyberspace today isn't in products but in service companies. Service businesses are based on the real-time coordination and management of resources and business processes. The cheap computing and communications provided by networked computers--especially Internet technology--can be used to create service platforms of immense power. As we move into the future, these platforms will enable some service businesses to expand almost without limits, and companies that embrace this potential will become the commercial empires of the next century.
We can see the harbingers of this future in some current-generation businesses. Fidelity Investments, for example, which began as a simple manager and seller of mutual funds, today operates a service network where with a single call a customer can buy and sell hundreds of investment vehicles. By aggressively combining computing and communications technologies, Fidelity has created a service system with rich economies of scale and scope. This has allowed the company to build a vast customer base and an almost insurmountable brand identity.
Fidelity is now using the bargaining power derived from its scale to extend its cyberspace-supported hegemony. For example, Fidelity executes securities trades through many of the largest brokerage houses in the nation. In exchange, Fidelity now insists on tighter, faster electronic links to their proprietary market analysis. Fidelity managers thus have better insight into the perspectives of the analysts who help shape market opinion. This translates into better trades and a more comprehensive, real-time understanding of the market.
It's easy to extrapolate an ominous view of the future: Invisible tendrils of emerging empires reach out across cyberspace, establishing connections to seemingly remote satellites. Cognitive lightning flashes across the synapses. Great pirates turn into masters of strategic planning as they discover the value of the integrated knowledge at their fingertips. Grand visions take shape while satellites dance to shared rhythms across the cosmos.
I'm often asked whether cyberspace has room for smaller players, or if it ultimately will be colonized only by the largest companies. My tentative answer is that there is room for a variety of new service companies, but only if they conceive of themselves as the centers of networks dedicated to continuing learning and evolution. Cyberspace is multidimensional, with new conceptions of value being perfected every day. Knowledge-based empires can be established around many of these service concepts.
Most of us are familiar with the PointCast Network (PCN), whose screen-saver interface brings news, weather and sports to our desktops. From the beginning, the PointCast offering was designed as the foundation for a larger, more comprehensive service system. For example, the client software collects information on customer behavior, which in turn has helped PCN improve its service, as well as work with advertisers and other content providers to best target their messages. The PointCast servers can handle a variety of types of content, with a range of time-sensitivity and customization options, and deliver it to a myriad of end points.
By allowing click-through to Web sites, PCN learned more about its customers' preferences. Moreover, it allowed PCN executives to enter into a dialogue with its advertisers about their Web sites, which opened up new avenues for consulting and joint ventures. Offering customized intranet servers for large companies, PCN entered into the world of group work and intracorporate communications. In its latest move, selling preconfigured Internet software and services through retail computer stores, PCN is positioning itself to engage mass-market consumers. If PCN is successful, it will become one of the new centers of commerce in cyberspace.
What does this mean for today's technology executive? First, closely examine the service side of your business for opportunities to extend into cyberspace. Look for service concepts so compelling that they can open up new submarkets. Second, use all of the technologies at your disposal to quickly create dialogue and deepen relationships with customers, suppliers and allies. Third, look for ways to establish economies of scale and scope that will enable you to spread your influence far and wide. Become the central provider of electronic support in your chosen markets. Fourth, become the most effective leader of the evolution of your business and industry, using the insights derived from your experience in cyberspace.
James F. Moore is chairman of GeoPartners Research Inc., a strategy consulting firm in Cambridge, Mass. He welcomes e-mail at jim@geopartners.com. His book, The Death of Competition, was recently published by HarperBusiness.

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