In the following pages, we go through six related trends with you, without pretending to be complete.
Trend 1: back to the middle ages
Since, with the Internet, place and time, and to a large extent also costs, more or less cease to be major factors in the process of information transfer, all kinds of parallels come into being with medieval structures, organizations and methods of working. More than that, drawing these parallels offers opportunities for trade and industry, education but for instance also for policy makers, to understand, faster and more thoroughly, new developments and to qualify these as important or unimportant in their own policy choices.
The small community of the Middle Ages, where everyone knew everything about everyone (perfect recall) and rumours spread like wildfire, is replaced by large databases through which we maybe know even more about each other. Webcams and Google as modern manifestations of the “omnipresence” and “omniscience” that used to be attributed to church and religion. Via e-mail, time and distance have been ruled out, even an anonymous hacker somewhere in Germany or the Philippines is detected in no time, the world as global village. Ebay as a staple place and goods-goods exchange! The pestilence is back.
In the present era, viruses spread with the same devastating speed, while also virus scanners can only follow and not prevent. Possessions can no longer be protected, even by copyright and the law, from border crossing pirates and gangs of robbers. City walls come back as firewalls. The pillory, too, appears on the Internet: the police and civilians publish photographs of “suspected persons” and blacklists of for example less safe aviation companies and defaulter have been spotted in the meantime. By the way, do you also live in a fortified castle with your own lancers on your forecourt, the gated community with its own safety guards? We predict you an increasing number of crusades, a great future for the liege, the franchisee and, I’m afraid, a strong guild of rummaging robbers. The Dutch criminal justice in the year 2005 seems to get medieval features again with the extension in the implementation of the conspiration ban and the period of custody. The Internet will re-establish the respect for the craft. Since the customer has a choice, you, as a supplier, just have to become good at your trade again. Old guild structures will revive again because of that. It just has a different name (incrowd, virtual community, closed user group, certified RC, RI, RA, MBA, Rotary, etc.).
Just like in the guilds, master-professionals educate trainee-professionals and settle, in spite of everything, simply physically close to each other. Increasingly, trade and industry take over the direction in education and the “baker street” comes back in the form of region-bound economical activity (Silicon Valley). We experience a revival of the maecenate as a result of a withdrawing government.
Another one, then. As, at the end of the Middle Ages, the rising citizenry pushed out the reigning class of nobility that had reigned until then (for instance think of the Di Medici family), in that way we are waiting for the citizenry to once again overtake the political class, or even outstrip through political initiatives, through the rise of the direct referendum, or through the elected burgomaster. Actually, behind this trend there is another one, namely that with the acceleration in communication, story-telling experiences a revival.
Trend 2: inside is outside
Via the Internet, customers have less and less trouble to establish whether or not you have the best offer for them. And that is exactly what customers do, increasingly, for more and more types of products and services. Market transparency and internationalisation of competition necessitates the much sharper formulation of the offer than until recently was required. And that may well be about cents[ii]. Consequently, the Internet brings back the cent.
The Internet dramatically reduces social transaction costs and the costs related to the arranging of cooperation. Therefore, it compels the company to reduce its internal transaction expenses and, much more than five years ago, to compare itself with outside. Cooperating within the company should be realised more cheaply than that the market outside is able to. If not, then the company does not have a competitive offer.
The Internet enables more and more parts of the market to quickly and firmly draw this conclusion about a company. If a company does not take up these questions, the customer will, if only because customers more and more determine their shortlists through the Internet with a growing number of purchase types.
Companies hardly hold secrets anymore for the market and putting on a different appearance than you really are is punished with lightning speed. That means that you, as a company, as an entrepreneur, but also as an educational institute, should more and more strongly ask yourself what your report marks with the customer look like and what your “A’s” are. In short, where inside is at least as good as outside. With that, a core competence for companies becomes the organization of the insight into one’s own A’s and the ability to drop activities in which the company does not form the top. In order to build up this ability, it is important that the leadership in the company keeps a sharp eye on their own performances to keep abreast of interventions from the market in that way.
Here, the ability is also essential to build giants with other excelling companies on the market, from one’s own power, from one’s own A’s, to enter a cooperation with companies that are an A in their field. And by that I really mean cooperation and not parallel self-interest or a emporary non-aggression pact of two competitors.
Trend 3: if you are not seen, you are off
The company will get less and less time at the customer to submit his message in the real-time economy. This puts high demands on the communication of the market message. For instance, you get 3000 messages per day to deal with. That means that attention from you as a consumer is the scarce factor for a company. Therefore, marketers will diligently look for better ways to reach you as a consumer, and then preferably at the moment you make the decision to buy. The “Bond van Adverteerders” (Dutch Advertisers Association), concluded early 2005 that the existing mass media rapidly loose effectiveness. On the one hand, consumers have not started to spend more time on media consumption and within that, also spend less and less time on commercial messages. A drastic rise in advertising budgets in the years to come fit in this pattern. Branding, focus, repetition aimed at market reputation, think for instance of the rise of city marketing, with many images, a winner’s image with which customers and business partners are willing to associate, are absolute keys in that.
The increasing importance of collaborations among companies has a direct impact on marketing. Winner’s image becomes even more mportant. People do not like losers. You want to proudly show your new “capture” to your family and friends. The Internet makes “unknown” even more unloved, as it were. So, the Internet forces not only to an objective determination of market power of the company. Both consumer-to-business and business-to-business marketing aimed at the creation of a fitting winner’s image is a second requirement to get access to a successful business community. The Internet makes your front yard and branding, with which you determine how you want to be seen, and with that an association with popularity and success, and your network capacity (even) more important. The classic desk research marketing will therefore loose more and more territory in favour of smart, cheap and interactive relation-oriented sales. The way in which the company styles interaction with the customer seems to be more qualifying for market segmentation than the traditional classification into branches or company scale[iii]. In brief: “to be seen is to be seen”.
A second point is that the digital world has a tendency to “the winner takes all”. This means that the Internet, as part of a market strategy and setting the standard will be present more dominantly. The frequently available free download through the Internet as an “amuse” for the real stuff directly results from this. That does not only require consistence and focus of your community, but also mass. At the same time, follower strategies are not successful if “the winner takes all” applies: if you follow you will become second at the most. Therefore you should not (only) strive for better on the market. In other words, the successful incorporation of product renovation or a total shift of the course within the available core competence is probably more successful. In brief, this is where a totally new market lies for real innovators.
At a more subtle level lies the acceptation of organizations, companies and jobs as being finite. They come and they go. They become more or less ‘projects’ comparable with the way movies are being produced. Of course it had always been that way. But the Internet will substantially magnify the creative destruction. Consequently, an interesting research topic is the development in the marketing functions and marketing organization in a company, with an increasing internal and external interest of that company.
Trend 4: ”one-way“ becomes “all-ways”, Control Excellence is being replaced by Communicational Excellence
If we look at the set-up of profit and non-profit organizations, then we see that practically all business functions are affected and some even replaced by the Internet. E-marketing, e-sales, e-procurement, e-HRM, including an annual statement of your income and a digitalized resignation, to mention a few examples. The chief learning officer, too, responsible for managed change and the corporate e-learning governance has already been spotted. To a lesser and lesser extent, organizations need fixed organization structure to get the right man at the right job. Thanks to the Internet, individuals, but also companies with specific competences are able to find each other and demand and supply meet each other at a far lower cost than they used to. In stead of a smart Taylor-inspired hierarchy, human farming and ditto functional organization, comes the talent to spot talent and the ability of individuals and companies to increasingly organize themselves through networks or communities, on a concrete target or customer case. In this enumeration fit, for instance, the implementation of competence management and demand steering or chain reversal. With for a visible result reality pull, chain reduction and a strong decrease of overhead and related cost.
It is fascinating to find out, within this framework, whether an intranet of an organization is actually used to this end. Or whether it is only set as a cheap medium now to exact the use of prescribed process regulations in the company.
It is also interesting to analyse, in trade and industry, within which internal business activities the communities and demand driven become the dominant organization form and where the fixed organization structure remains implemented. Where organization acupuncture is aimed at process-wise flowing and where departments are aimed at controllable clotting. Among other things, that has to do with whether we have to do with information-controlled or goods-controlled business processes. As far as that is concerned, a shift is going on from “hardware”-based towards “software”-based solutions. Queue detection used to be done with gantries and cameras, a hard infrastructure. In future, queues will be measured and traffic flows managed through orientation (GPS, possibly RFID) via cellular phones in cars. Then, it is true you still need things. But far less, mind you. The formal framework of that activity also plays a role. Sarbanes Oxley and the necessity at e.g. airline companies maintenance department to separately account for each and every little screw, for instance, still forces to a hierarchic organization structure. As always, it is about the balance, about the optimal mixture. Furthermore, it is often a matter of view and portrayal of man, the old theory X and theory Y. You can send off your outdoor employees with GPS in their cars with tight top down organized routes. Then you choose “one-way” communication aimed at demand in control. You can also choose the concept of reality pull instead of scheduled push, implement chain reversal and have the employee compose his own job and his own routes. That is “all-ways” communication aimed at creating networks, the organising principle implemented by Homecare Utrecht. Time will tell which one is more productive, choosing for “counter” or “encounter”, for demand and control or for finding your “PAL”, your ability to pool, ally and link and find your own partners. For companies, both cost focus and customer focus are a topic. This challenge is unprecedented, from an organizational point of view.
Consequently, one of the core assignments of every organization is to learn to really understand. Understand the market and the customer, understand the colleague. Without understanding no connection and without connection no cooperation and no giant. However, to really understand you’ve got to have the nerve to re-frame, to take a different stand. Listen differently. As a pupil, for instance, in stead of as a teacher. Re-frame should also be possible in the structure of the organization.
Trend 5: inergy: the whole is more than the sum of the parts
One of the fascinating aspects of the Internet is that we do no longer need coordinating action to find one another and to form a one-interest-community. More and more, the Internet takes over the position of hierarchies and related top-down control in this. Unbundling, outsourcing, but also new forms of short cyclic capacity planning are the direct consequences. The evaporating, for part of the business activity, of hierarchy in favour of virtual communities is about all kinds of things and is an accelerating process. That may be about distribution strategy: the 100 people who want to fly from Amsterdam to New York and who arrange a plane together without intervention of a travel organization. The charter as a temporary community and more customer-friendly successor of the scheduled flight. That may be about scheduling of capacity-controlled organizations: customers who directly contact the service mechanic without intervention of a back office or garage planning board, like KPN realised this with their servicemen’s organization: a community of service mechanics. That may be about demand-controlled education within Inholland University. But that can also be about driven innovation: software developers who find each other as peers via the Internet and who tog ether develop software as it originally went with Linux[iv]. Virtual communities have existed since the rise of mass media. A somewhat longer existing, very practical community, for instance, is that of “Dutch celebrities”, who each continue the value of their own community through clever PR. In that way, TV announcers and newsreaders generate a value. The Internet, however, creates far
more quickly and far more diverse communities. Travellers communities, mechanics communities, communities of software developers, students, and one more current example, of investors in a certain share. Other examples of Inergy can be found in many new verticals. I shall name some examples. A typical “inergy vertical” for instance is the combination of branch fellow craftsmen, related communication media and enterprise prizes that they award each other. Inergy aimed at being seen and continuation. It is, I think, no coincidence that the coming of the Spinoza prize as a vertical of the Dutch Organization for Scientific Research, NWO, universities, communication media and scientists more or less coincides with the coming of the Internet. “Idols” is something different from the Spinoza prize. The underlying mechanism is the same. It is to be hoped that the political government of the Netherlands and adjoining institutes and institutions manage to resist the tendency to become a vertical and thus to be “seen”. Whether the Internet stimulates social networking or restricts verticals (“guilds”) through Inergy being created is a thrilling issue of research.
In fact, your organization does already exist as a community. It is the informal organization existing within the company, within the Netherlands or within an even wider context. If you “want something with e-business and Inholland University” and would reach one of the members of that community, you will have access to the complete operational power and creativity of that community. That requires little organization, only our website.
If companies use such a community as a regulating system, they could save very many organization costs (“overhead”) in doing so and tacit knowledge could maximally be put at the business’ disposal. If a company chooses
community-controlled production of software or an educational institution to develop in that way the minor “digital organization”, then that has some more benefits. The most important benefit results from the fact that for professionals, nothing works as motivating as a little compliment from his peers and the access to the community (a big IT-player did not like his first contribution to Linux being rejected. That did not happen a second time).
Peer-to-peer review as a core value for community driven producing is the best quality guard and guarantees good results. Besides, professionals like that. How it works? Get to work in the community automatically means that you are asked to do jobs at which you are a real master. This way of working puts you in your power as a professional. And that gives inergy, in our terms. Of course that does mean very tritely that you really have to be good at something. Otherwise you will not be asked and you will certainly not become a peer. You just have to be known as a real professional and first deserve your place as a trainee. In that, it does not matter whether you have a broad or a narrow competence profile. Value will find its way. No value, no member of the guild and no being asked for contributions. Initiatives in this field are www.linkin.com, for instance, or the open business club. Therefore, the Internet leads through the intermediate step of communities towards the absolute necessity of being just good in your craft again: “back to basics”.
For the organization that dares to take the step towards back to basics, some interesting business perspectives will come up. In the first place, that company may expect a substantial cost reduction in double figures. After all, a large part of the overhead has become superfluous. In the second place, the company organizes itself in this way much closer to the customer or to the student, according to your organization. Direct contact with the peers’ community brings the customer at the controls already in the company. Therefore, the company will have more value to the
customer and the customer more value for the company. Customer inwards, overhead outwards. Do you recognize it?
Trend 6: The Internet makes you entrepreneur
This may well be the most far-reaching trend for many. As organizations have to search for “A’s” in their offer, the same goes for you and me, to an increasing extent. The Internet turns you into the project manager of your own career. It is your move. Internet makes you an entrepreneur. As companies should develop profiles to be seen and to be a winner, the same way will go for you and me, to an increasing extent. It will become the trick to find a connection with your peers from your own power and to set off together to make your point. Here, you may think less and less in years or months. You will have to think in weeks, days, and in some cases in seconds, have the
guts to choose a position and to make decisions. The good news, therefore, is that the Internet offers you the perspective of a made-to-measure life. No beaten tracks but your own creation in connection with who you are. You, not your boss, create your own perspective, as a steward of your own talents. You become a self-employed person and you have to carry out your on personal marketing. The bad news is that then you must have something on offer. You should have an insight into your own offer and talent and to act with a focus on that. The “Let the cobbler stick to his last” never was so relevant before. For an educational programme about the consequences of the Internet and the digital world or for the impact of the Internet on the business areas, these are important elements for setting up the curriculum. Not only technology, marketing, e-learning tools and web design belong here. But also communication, communication and communication. The Internet compels companies and individuals, but also students, to take up their powers and to increasingly shape their own lives24. Through the
building of giants, each from his own power set up a top performance. In that world there is no room for unnecessary ego-controlled complexity and costly lack of cooperation that would immediately price a company out of the market. This is the world of focus, implementation power, leadership and cooperation. In that sense, the common reproach that society is individualizing further may still be out of place and the Internet might also mean a stimulus
for a new humanization of organizations. Driven by economic reasons, that is about real-time connection of vision and entrepreneurship.
The trends described here indicate the enormous business transformation lying ahead of us. The trick will be to keep the worlds connected of one way and all-ways communication with their difference in business rhythm and human
characters, within companies and between companies. Leadership should create the conditions on which these treat each other respectfully and with business focus on their way towards a winning team to the market, “from power struggle to armed force”. That goes for Europe, for organizations, for you and for me. Only on that condition e-business produces more.
This is chapter 2 of the book About
an Analogous Life in a Digital World, Rotterdam 2005
This chapter is an 2005 translated version of the speech Frans van der Reep as his contribution made, when accepting the position of professor e-business, INHOLLAND University of Applied Sciences on October 27th, 2004.
See for instance: www.unitedconsumers.com or the initiative of
Athlon Car Lease on 10 August 2005 with
a summary of the cheapest and
most expensive petrol pumps per region.
[iii] See for instance
Siebelink, J. (2005), “Opzij Kotler”, In: Tijdschrift voor Marketing, September
See, for instance, Nonaka, Ikujiro and
Hirotaka Takeuch (1997). “The knowledge-creating company”, Scriptum.