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  • 1. Mapping the Digital Destiny Mapping the Digital Destiny KALPANA MATHUR Associate Professor, Department of Management Studies, JNV University, Jodhpur 13, Krishna Nagar, Panch Batti, Jodhpur 342001 Rajasthan, India. Email: drkmathur@satyam.net.in MOHIT BATRA Chief Operating Officer e-Eighteen.com pvt. Limited, 328, 3rd Floor, tv industrial estate, s.k. ahire marg, Worli, Mumbai 400018, India Email: mohit.batra@moneycontrol.com “The whole world steps aside for the one conventional way of doing business. Given who knows where he is going” the crucial role of communication and information, the long-term impact of technology on economic growth could be ABSTRACT extensive. Thus, the real management challenge is to innovate on its business The euphoria around the Internet is voyage without derailing existing business. behind us. But the Net is very much a part of the business landscape. Now – more than Play by the rules of doing the business as ever before – we need to pay attention to usual, with the speed of technology. how the Internet shapes business strategies and value creation opportunities. The paper Key Words: Economy + Technology = attempts to look at the basic question we all Better Economy need to understand and answer - Where are we right now and where can the New Business Generation Gap: Economy take us? Economists, analysts, writers, The paper focuses on The Pre academicians…nationally, internationally Technology Triggers for using technology everyone is debating and trying to make a for any line of business. Any industry point as to what is Old and New about the migrating towards the net has to answer economy. What are those points of these questions in order to move from the differences and where are the focal points? 1
  • 2. Mapping the Digital Destiny Nervousness is rampant, be it stock markets generation which is making it difficult for or industries. People are ready to believe themselves by challenging and distorting the every second book on the shelf without even old tried and tested business values. Use of gauging the implications. Debates don’t and technology can always be fruitful provided won’t ever take us anywhere. The need of one knows where to go. Newer generation is the hour is to see ourselves in perspective of losing out on the concept of life cycles of the changing business scenario. Technology success and is moving towards the concept and New Economy can be effectively used of easy money. This results in business rather than it using us. They are business system failures and thus creating a cluster of enablers and we need to better ourselves in unsuccessful stories. whatever field we are rather than trying to change industries. There are products and A clear example on how newer unaware services and it is for us to understand that value systems (UVS) are losing… their own true and value based businesses stands industry as well as spoiling the game for strongly on both these pillars. Technology others. Like a car race where the track is the can be used as an excellent service tool, same.... cars change...but wherever the track which can change the way we do business. is slippery...chances of a slow car slipping The basic question we all need to understand are less than the fast one. So lets define the and answer is- Where are we right now and track to growth.... there are the basic values where can the New Economy take us? and fundamentals of doing business that are applicable for both types of cars (old The euphoria around the Internet is economy and new economy). Also to define behind us. But the Net is very much a part of what is the difference in old and new the business landscape. Now – more than economy.... will prove that it is mere fancy ever before – we need to pay attention to term devised by some credit hungry authors. how the Internet shapes business strategies The far-reaching business trend, which no and value creation opportunities. It is not the one can mistake as being the most time to be complacent because the stock significant, is the global economy and its market has punished the Internet startups. Its demand. time to recognise and respond to the critical eBusiness challenges facing corporations throughout the world.[1] Understanding the Pulse of Technology: Bridging the business gap is all about crossing from the old value systems, Before we even start feeling that life is strategies to newer ones. Revolution is never transformed from old to new, we need to created in air; it has to be based on need understand the rider- Technology. It is also and values already existing. Thus there is required to come out with certain answers so nothing like the new or old economy…it is as to locate the pulse of technology and then all about improvement be it in products, it’s effective use. For every product that is services offered, systems, relationships, produced there is a set of principles that cutting lead time etc. True transformation governs the life expectancy of the product. only happens with due respect to existing This product life cycle is marked by various effective systems with a vision to better events and periods that constitute how the them with time to meet the end objective. consuming public will view the product over This is where we are missing out. It is not time. With the rapid change in technology it about the new economy but the new is particularly important to fully understand 2
  • 3. Mapping the Digital Destiny the product life cycle so that the consumer Technology has been instrumental in can make the best use of it. Lets first try to providing products and services to define this industry in order to come out with practically all the other industries right from trigger points for gauging the growth use of databases in the internet industry to parameters. satellite linkages for mobile communication to weather forecasts to car engines to Why are balloons so easy to play with? healthcare to simple company accounting usage. Technology can never be a product! Reaction time permits us to adjust our It is always a sub product/service that is reflex action according to the flight of the mainly usage dependent. Certain examples balloon and thus always make a contact. The of the same are as follows- feature of the product in the case of a balloon fits so naturally with our inherent strength & 1. www.amazon.com is a sub product slow adaptability. Relatively large Life or a channel in more dignified way Cycles enable companies to fix strategies on that links customers to an online a longer term. Bookstore. Internet is a facilitator and never a product. Ever tried Juggling? 2. The biggest example would be -Reaction time/x! This is what real life www.internet.com which itself is a technology means. The company has one or knowledge based service product. two products to start with which then Again Knowledge is a product and increases depending on the market Internet the medium through which requirement. Hence may be entirely new it is imparted. products or newer versions of the old ones. (Windows 98 and within a year now 3. www.ebay.com, world biggest Windows 2000, Oracle took less than 8 auction site where number of months to shift from Oracle 8 to Oracle 8i, auctions happen every second is Netscape 4 the latest). Technology as an again just a medium which enables industry changes faster than every new union of products for sale and benchmark laid. Thus technology as a interested customers. business rides on such uncertain waves where direction and growth are of utmost importance. Technology is always back to back integrating businesses front to front. Newer Life Cycle of technology based services economies is thus integrating old is dependent on a lot of factors apart from businesses to still newer ones back to front. the conventional widely used bell shaped curve plotted between two axes of time and A successful product must be balanced: growth. A particular software so widely marketing, technology, and user experience spoken by the company and spread across all play critical role, but one cannot dominate vendors may have a newer version much the others. Also moving in the same line, before the actual marketing campaign is economies do not work on imbalances. There over. Also the nature of technology is a lot has to be a balance in terms of business dependent on how other industries behave. understanding, values, needs and strategies. Imagine one industry meeting with the At any point in time if technology plays a demands of all other possible industries. comparatively more important role, then the 3
  • 4. Mapping the Digital Destiny other factor should not be forgotten, because 9. How to convert products and sub it plays this role for their betterment only. products into Profit centers? 10. How to meet up with the growth? Now comes the most crucial issue. These are a set of questions to which These questions become the focal point answers have to be known before stepping in for using technology for any line of business this revolution. The objective is to know- and thus can be called as The Pre Technology Triggers. Answers to these 1. What is need? This may be for any would help solving concerns of any industry industry, product or customers. in question. Any industry migrating towards 2. What resources we have? This may be the net has to answer these questions in order in terms of intellectual or physical. to move from the conventional way of doing This may also be the values systems, business. business strategies taken from the so called old economy. Learning comes Thus from each of the above-mentioned over ages and it can be the most triggers, further newer businesses can be effective guide to success. created provided the need is identified and 3. Where do we want to reach? This the potential exploited. Companies that are would mean bench marking ourselves able to do this finally emerge as winners in to be the best in terms of offerings and the long run. Companies mostly make the finding out ways to reach there. mistake of sticking on to some of its favorite Creating new value systems and using revenue models and not look for the the best possible solutions. An potentially new ones. Technology is understanding of technology at this inherently a double-edged weapon. Due to point is essential in order to fit it into lack of awareness in the market, clients don’t the path to success. The whole industry know how to use it to the fullest and vendors scenario is becoming dynamic every sometimes cannot come out with solutions. day. It was easier to keep employees in Thus it cuts both sides with lack of older ages as compared to now. This is knowledge of actually using it as a solution. one of the areas where value systems Thus an understanding of Technology is are changing. Employees are offered essential to make the shift of transformation stocks in order to give them the onus of into a new world. Not to forget in various ownership rather than just job. Training businesses this revolution may take place at is becoming an integral part of any various stages. business development exercise taken up by companies. 4. How do we reach there? How do we transform, and how do we use the new A Walk Through the Tech World: economy wonders-technology? 5. How the integration of technology Take any possible industry, growth is a happens to these ideas? parameter as well as the way to maturity. In 6. What functions of businesses are conventional industries needs come first then important and at what time? a potential solution. Framing of that solution 7. What is the impact of external is in terms of product concept generation- environment on technology businesses? right from raw material processing to 8. What are the linkages between the finished goods roll out. This is basic. This products and sub products? cycle takes years and decades to mature 4
  • 5. Mapping the Digital Destiny when effectiveness and productivity is at NASDAQ with fortunes of market be combined and thus an ace strategy capitalization but with zilch profits. can be culled out. Marketing, Business The company is yet to reach its Development, ….are all a fall out of this. break-even point very strongly. What next? - the question that every Technology is no different. Last decade investor is looking answers for. of activities in this industry has offered lots of growth parameters along the far-fetched 2. There has been a very sustainable value chain. There are various phases and agreement that ease of use and various regions falling into various understandability in technology are categories depending on how fast they win important. Similarly, good industrial over such parameters. The growth is akin design, simple, short documentation, any conventional industry only that it may be and convenient, pleasing products leadingly fast. There can be jumps but there are superior. On the other hand, cannot be any skip. The technology much of the computer technology business transforms at all these stages and today violates all these things, yet matures both on growth as well as value the companies prosper. Apple generation terms. It would be worthwhile to Computer, the one company that mention that in any country with even a tried hardest to make products that slightest bit of Techno-activity, growth were easy to use, understandable cycles and value parameters can be with sophisticated aesthetics driving projected. This could then be the base of both graphical design on the screen positioning the national brand and and industrial design of the products proceeding on the high tech landscape with failed. From a majority market share full flow. it has now come down to less that 4 % From concept to ideation to business plans to product development to usage of All industries have stories of success technology to market to gauging competition and failure to tell. If the failure rate is as high to developing revenue models to spin offs to as 90%, concerns are much higher. Along creation of further products, the above- with the complexities, the focus seems to be mentioned questions would find answers in. missing somewhere. The dynamics of the businesses are so high that sometimes the most successful of the companies also fail. It would be worth On The Other Side: mentioning that in the year 1999-2000, around 92 percent of the technology-launch Technology has created some new companies failed and many of the remaining industries such as the on-line auctions and are going through rough waters. Having said digital marketplaces. However it’s greatest about the fate of the newer technology impact still remains on the old industries. companies, the older ones are also following There were various concerns in the old way the suit. of doing business namely-communication, infrastructure, gathering information and 1. Every person even remotely accomplishing transaction. The one word linked with technology has heard answer to all these concerns is Technology. about www.amazon.com, a company Be it the net or hardware or software, operational for the last 5 years, listed technology has handled the situation well. 5
  • 6. Mapping the Digital Destiny Three biggest achievement of technology in was supposed to change everything - the bringing about changes to the old industries reality is, there was no way that a single have been saving of cost and time and that of technology could fulfill such an extravagant convenience. promise. Every breakthrough technology, over the last 200 years, affected some areas Whether an industry is old or new, there of the economy more than the others. The are some factors that affect the bottom line electricity altered manufacturing processes anyways. These are information about and power intensive industries. The products and competitors in terms of automobile transformed personal knowledge of new entrants, substitute transportation and housing. The Internet products, industry competition, the seems likely to transfigure mainly bargaining power of buyers and suppliers. communications - intensive industries and Analyzing these factors illuminates the activities. fundamentals of the industry and in turn affects the average profitability. Information Given the crucial role of communication crosses the barriers of geographical and information, the long-term impact of boundaries. Customer is illuminated with the technology on economic growth could be product options available and price extensive. The Net can become the knowledge in turn increasing the bargaining communications backbone for everything power. Cutthroat competition takes place as from linking supply chains to business a result in between products and their turnarounds. If applied right, ultimately, suppliers. The focus shifts entirely on price technology could boost the rate of innovation rather than quality and product feature. It is by increasing the speed at which ideas spread general phenomenon of reduced profits due between companies and across countries. But to this effect. Not only this, another the very strengths of the Internet are also its phenomenon that is becoming general is limitations. Just because communication is companies and smaller business getting omnipresent doesn't mean its everything. washed away in the bargain. Consolidation is Linking supply chains over the Net cuts cost on it’s full with reduced profits. Volumes are and improves response times, but ultimately gaining importance to units. It is cutthroat. manufacturers succeed or fail if they develop good products and figure out how to produce The great paradox of the internet is them at low cost and high quality. Like that it’s very benefits-making information airline reservation systems can improve widely available, reducing the difficulty of customer convenience and boost revenue per purchasing, marketing and distribution passenger but can do nothing about long allowing buyers and sellers to transact delays caused by runway congestion and business with one another more easily- also mechanical difficulties on airplanes. [3] make it more difficult for companies to capture those benefits as profits. [2] Evidently in much of the economy the net offers incremental payoffs without substantially altering core businesses. There The Shadow Across Technology: are plenty of situations and industries where the net has the potential to be radical and The once infinite promise of the Internet such numbers would increase with better appears to be deserting us. The dotcoms, facilities such as broadband etc. But even in which were supposed to tumble industry industries where the net can effect profound giants, have mostly vanished. The Internet changes, institutional barriers and business 6
  • 7. Mapping the Digital Destiny inertia mean the big gains may of advice for small investors. Like many not come for a couple of years. The speed of others, Amazon is experiencing traumatic Internet time has more to do with the capital changes and has lost around 90 percent markets than with the pace of technology of its value since the beginning of last adoption. In fact, the eventual payback of the year. As it has grown with distribution web should be measured over a decade. centers and warehouses all over the world, it is akin more to a mail-order According to the conventional wisdom, company rather than a cyber innovation. things changed slowly and companies built Reports earlier this month of a tie-up enough capacity to handle current demand with Wal- Mart, America’s big discount with enough room for growth. But chain, sent Amazon’s shares soaring. The technology investment on the tide up was clinch did not materialize but the predicated on expectations of extremely combination looks attractive: Wal- rapid growth in demand for years to come Mart’s distribution network and buying for telecommunications bandwidth, clout together with Amazon’s web savvy semiconductors, network servers etc. The marketing. enormous amount of venture capital and initial public offerings available to startups • The dot com darling Yahoo! which until drove companies to grow far faster in a few recently seemed a stunning success is short years than the underlying infrastructure also in a dangerous zone. It has been a or consumer demand could support. They leading Internet portal and rare to be outdistanced the corporate research and making a profit. It was one of the development departments that traditionally Internet’s biggest financial success accounted for most business innovation. stories with revenue doubling last year to With companies lowering their demand $1.1b and profits of $291m.However this forecasts, hi-tech companies have been left year it may not do so. It is supposed to with massive excess capacity, far more than badly miss its sales projections and what they would have built in the slower, advertising revenue for the first quarter is more stable old economy. expected to fall from m $ 220-240m to just about $170-180m. Taking the Highway: Yahoo! is making efforts to develop other sources of revenue for instance by “I am a slow walker but I never walk encouraging people to take out backwards”, said Abraham Lincoln. Thus, subscriptions to certain services. The the real management challenge is to innovate rationale is that Yahoo! also needs a on its business voyage without derailing partner from the conventional media. In existing business. Globalization and the new the past, Disney, Vivendi and Viacom blood are exciting entrepreneurs to defy and have been suggested as possible partners. advance But the traffic is titanic and so is the Laughable at that time but Viacom had speed, thus increasing the chances of shown interest in acquiring Yahoo! at collisions and collapses. $15 a share. However, this month Yahoo! share price has actually fallen • The star e-tailer, Amazon.com has grown close to the suggested one from a peak of at an amazing rate, nearly $2.8billion of $237. The company needs to search for sales but without extracting any profit. Its means to boost its revenue to survive. founder and CEO Jeff Bezos has a word 7
  • 8. Mapping the Digital Destiny • Another technology megastar, eBay is based businesses are not inherently flawed, expected to have an average operating they are merely the victims of poor planning, margins around 35 percent on revenues poor execution, and dumb money; all of which can grow up to 54 percent a year. which doesn't mean that technology is eBay also needs partner to expand further doomed, but rather, that the contrary is true. from its online auctions. It has signed an In the rush to Internet riches, basic business alliance with Microsoft, not exactly a principles were discarded in the belief that conventional company, which will help somehow the rules had changed. It was both the companies to develop their use thought that national brands could be built of the Internet. More importantly, it will overnight if fueled by enough capital; that help eBay pursue its goal of expansion technology, almost by itself, could change since Microsoft’s sites are among the market dynamics; and that youth could largest in drawing worldwide Internet conquer experience. traffic. Microsoft sites would start carrying eBay’s listings and would also The world has changed. Today, the ones offer additional services such as billing anxious about the future have been stuck by information to eBay’s buyers and sellers. the sense of realisation. Suddenly awakened, we're reminded of the virtues of business Through mergers and alliances, lot of fundamentals: don't spend more than you companies are moving in the direction of make. Learn from mistakes, make brick and mortar companies to be able to adjustments, and move on. Growing a stand in these times of high volatility. In the business takes time; be patient and enduring. process, they will also come to be valued Controlling costs is no fun, but it's an more like traditional companies when they important ingredient to success. join hands with sound, conformist partner or establish themselves so. According to IDC analysts, it is just a matter of differences between “eBusiness At a time when the business 1.0” (from 1995 to 1999) and “ebusiness environment is turning increasingly 2.0” (from 2000 to 2004).[5] The former era capricious and aggressive, and corporate life was marked by the rise of dotcoms like span is contracting rapidly, companies need Amazon.com – consumer oriented, high to stick to business basics. There was always growth companies with low or non-existent something absurd about Yahoo! being worth profit that gained much of their advantage by more than the combined value of General being first to the web. The latter will see the Motors, Heinz and Boeing. [4] Such entrance of brick and mortar giants like Ford, fantasies are over but the dream is still a General Motors and Merrill Lynch into the good one – only thing is that the day of easy eBusiness arena. Over the next five years, success is over. increasing online competition and the sheer growth in the volume of online business, will lead investors to have higher expectations for Striking the Right Chord: revenues and profits, and customers to have much higher expectations for functionality “A journey of thousand miles must and service. begin with a single step” according to Lao- Tsu. What we are really witnessing is not the But to succeed at eBusiness 2.0, every collapse of New Economy, but the collapse company should have an e-strategy in place of a business management strategy. Internet- which should clearly define the following 8
  • 9. Mapping the Digital Destiny issues [6] • Develop the business model i.e. how to make money • Determine the customer experience to learn how to interact with customers online. It is a new concept since retailers understand only the traditional ‘in- person’ customer model • Assess technology options to understand which technologies will best bring micro Internet strategy to life. Magic can only happen at Circus, not in real life. Every business has to go through the make and break of real life and there is nothing like easy/fast money. Yes! at various stages various industries may pose irresistible return and stand extremely attractive but that may be purely a factor of market demand, which may change. Life cycles also may govern the false attractiveness of some industries at some point of time. Excitement is good provided it is in control. Excessive excitement leads to intoxication, which leads to over confidence...to comfort ...to uncalculated risks...to disaster. Peak of excitement is the most false judgment position. The need of the hour is to identify these foundation values and judgments in the economy...discount it by the newness and excitement of it...and then service the business. The New Mantra- Economy + Technology = Better Economy Play by the rules of doing the business as usual, with the speed of technology. _____ 9
  • 10. Mapping the Digital Destiny References: 1. Venkatraman, N., “Strategic eBusiness – Challenges for Competitive Success”, General Management Review, July– September 2001, Volume III, Issue 2. 2. Porter, Michael E., “Strategy and the Internet”, Harvard Business Review, March 2001 3. The Economic Times, 25 March 2001 4. The Economic Times, 19 March 2001 5. Report of Directions Conference, International Data Corporation, Boston, March 2000. 6. Gagnon, Joe., Senior Vice President of e-strategy at Cambridge, Mass.-based Mainspring, in his interview with WebBusiness _____ 10