The document discusses how information technology is deconstructing traditional businesses by blowing up the tradeoff between richness of information and reach of distribution. It explores how businesses can now compete on richness, reach, and affiliation. Specifically, reach is increasing as connectivity expands from proprietary to open standards, allowing new competitors from anywhere. Traditionally integrated supply chains and organizations are also deconstructing into more fluid, flat, and trust-based models as information becomes reconfigured. Intermediaries that made their living balancing richness and reach are now vulnerable to being disintermediated when this tradeoff is destroyed.

1. BLOWN TO
BITS

2. Blown to bits
Philip Evans & Thomas S. Wurster
1999
2

3. Contents
▸ Information and things
▸ Richness and reach
▸ Deconstruction
▸ Disintermediation
▸ Competing on reach
▸ Competing on affiliation
▸ Competing on richness
▸ Deconstructing supply chains
▸ Deconstructing the organization

4. Information and
things
▸ Competitive advantage
▹ Wallmart: cross docking
▹ Nike: branding, celebrity endorsement
▸ Melting the glue
▸ The economic of information and the
economics of things
▸ Releasing value (shelf space case)
4

5. Richness and reach
(Wallmart vs Citibank)
5

6. Richness and reach
▸ The explosion of connectivity and advent of universal standard (proprietary
to open)
▸ Technical to content
▹ Analog to digital (there is no qualitative barrier)-transmission and
content don’t have relation with each other
▸ Critical mass
▹ Standard: the greater people using them, the more valuable (Qwerty
keyboard)
▸ Blowing up the trade off between richness and reach
▹ Advising, alerting, collaborating
▹ New competitor will come from nowhere 6

7. ▸ Reformulation of
traditional business
culture
▸ Newspaper (electronic,
erosion not
substitution); retail
banking; automotive
retailing (compare
price, financing)
7
Deconstruction

8. ▸ De-averaged
▸ Competition escalates
▸ Information business inherit new business
▸ Information business follow different, and more intense rules of
competitive advantage
▸ New opportunities arise for physical business (Amazon)
▸ Many wholesaler, retailer and distributor will be disintermediated
The challenge to the incumbent (Britannica)
8
Implications for
competitive advantage

9. Disintermediation
▸ Intermediaries
make their living
from trade off
between
richness and
reach, when
they blow it up,
it will get blown
up as well.
9

10. 10

11. Competing on reach
▸ Destroy/shift the annuity.
11

12. ▸ Competing on reach
▹ Navigating hierarchy (Ad, brands, store layout)
▹ Seller advantage (marketing vs searching)
▹ Reach without navigation (Amazon RO; Bookmark, favourites)
▹ A new world of navigator (business, software agent, e-
retailer)
▹ Competing on reach (separate their catalogue with physical
product)
▹ Critical mass (Careerpath.com:7 newspapers)
▹ The competitive struggle
▹ The domain of search that defines critical mass bears
no necessary relation to the domains of the physical
supplier or distribution industries.
12

13. 13
CA for Navigator

14. Competing on affiliation
New navigators derive their advantage (versus established players and one
another) by affiliating as closely as possible with the interests of the consumer.
The greater the reach of navigators across suppliers, and the more intense the
competition among navigators for the loyalty and attention of the consumers,
the weaker the navigator’s bond to any one seller.
▸ The affiliation spectrum (interest of the consumers)
▸ The logic of affiliation (shift away from seller)
▸ Paying for navigation (financial advisor, banner ad)
14

15. The competitive advantage of
navigators
▹ Implications for sellers (replace hierarchical search)
▹ Continuation of the richness/reach trade off (streaming audio>virtual
mannequin)
▹ Lack of compromised value (bubble gum case)
▹ Denial of critical mass (refuse to make information available)
▹ Greater affiliation with customers (Amazon)
▹ Co-option of the Navigator (ad on Navigator website)
▹ Deconstruction of the seller’s business (function to the navigation
business)
15

16. Competing on richness
▸ The most powerful way
for incumbents and
insurgents to compete,
given deconstruction, is
to use richness to
deepen customer
relationships and to
build brand equity.
16

17. Competing on
richness
▸ Richness strategies
▹ Consumer-specific information (CDNOW: information for their
favourite artist), Dell (richer information to the consumer)
▹ Product-specific information: telephone service, financial product
▸ The impact of exploding reach
▹ One brand gainer
▹ No navigator needed
▸ Brands: Sony, Apple
17

18. Deconstructing supply chains
▸ The spectrum of scale
▸ Deconstructing automotive supply chain
▸ Changing the competitive landscape
▸ The migration of standard

19. Deconstructing
healthcare
▹ Website
▹ Consumer reports
▹ Decision innovation
▹ Access health
▹ Health partners
▹ Patient record

20. Deconstructing the
organization
New organizational model become possible-models that afford much more
richness and reach (Ownership, employment)
▸ The traditional hierarchical organization
▹ Slow
▹ Cumbersome
▹ Bureaucratic
▹ Politicized

21. Comprehensive deconstruction:
Silicon valley

22. Deconstructing the
organization
▸ Fluidity: soft-wiring; work on many projects
▸ Flatness: wider span of control, hierarchy
reduced
▸ Trust: transparent, review, control

23. Summary
23
proprietary
to open
Richness and Reach
Richness(bandwidth,
customization,
interactivity) and
Reach (connectivity
Iintegrated to
reconfigured
Deconstruction
Reformulation of
traditional business
culture
Traditional
to new
Disintermediation
their living from trade
off between richness
and reach, blown up
Richness,
reach dan
cost
Supply chains and
organization.
Fluidity, Flatness, Trust

24. 24
THANKS!
Any questions?