InReview – Issue 9

Blown to Bits: How the New Economics of Information Transforms Strategy by Phillip Evans and Thomas S. Wurster; Boston, Harvard Business School Press, 2000; xv, 261 pp.

Both authors are with the Boston Consulting Group. Phillip Evans is senior vice president in Boston, while Thomas Wurster is vice president in Los Angeles. This book elaborates their Harvard Business Review paper from September-October 1997 entitled “Strategy and the New Economics of Information.”

The central idea of the book is that throughout history we have had to trade-off reach (the size of the audience to whom we could deliver a message) and richness (the complexity of the message which can be delivered, including words, pictures, video, interactivity, reliability, security, and timeliness). With growing bandwidth from telecommunications networks, and improvement in computing capability, this trade-off may no longer be necessary. We can deliver both reach and richness.

The implications of this thesis are what makes the book interesting. Since information is at the very heart of business, this changing picture modifies the very definition of business. Partnerships with customers and suppliers can become tighter, but single company integrated product suites can also become vulnerable. The latter happens because the availability of rich information makes it possible for a new company to compete with an existing integrated company in a niche, or “sliver” of the business. The integrated company may have made most of their money on the sliver, and used the other “loss leaders” to bring in the customer. Now, they are in trouble.

The authors provide lots of examples from the banking industry to the automobile industry. They do an excellent job in developing this concept, and its implications for company structure, product sets, and relationships with buyers and suppliers.

The weaknesses of the book are clear as well. This is obviously an update of the HBR paper, and the authors did not appear to take the time to either fully update the paper or integrate their new concepts. Here are a few examples.

On p. 90 they talk about grocery shopping over the net. Netgrocer and Peapod are mentioned, Homegrocer is not. The authors were pessimistic about the growth of this business but did not appear to account for what has happened here in the past two years, since their book has a 2000 date.

In chapter six, the authors introduce a third dimension to their reach vs. richness trade-off, “affiliation.” This is some measure of grabbing on to the customer and holding them with features causing them to stay. It is a good concept, but not very well developed. It is dropped again in favor of the two dimensional trade-off later in the book. It gave the impression of a late idea which was patched in and not well developed.

They introduce Metcalf’s Law (the growing effectiveness of networks as more people are connected) in chapter six as well, but this would be a useful tool earlier in the richness/reach discussion.

Perhaps of more fundamental concern is the lack of attention to the “relationship” side of business. There is a rather basic question as to how far one can go in developing trust over the net, regardless of how “rich” the information is. The authors are not clear as to whether this issue is included in their definition of richness. They come back to trust and relationships several times (eg. p. 28, p. 100), sometimes suggesting it is a part of the richness of information, sometimes treating it as separate. Regardless of how trust fits with richness and reach, it is a fundamental concept worthy of more treatment by the authors.

There are some excellent ideas in this book, well explained and illustrated. Most of the foundation is in the HBR paper, however, and the author’s could have taken more time in bringing the book to completion.

Reviewed by Al Erisman

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A Better Way to Think About Business: How Personal Integrity Leads to Corporate Success by Robert C. Solomon; New York, Oxford University Press, 1999; xxiv, 145 pp.

Robert Solomon is Professor of Business and Philosophy at the University of Texas at Austin, and author of several widely respected books on business ethics. He also has years of experience working with companies such as Chase Manhattan, IBM, and Motorola on their ethics issues. A Better Way presents Solomon’s ideas in an abbreviated, accessible, practical format.

In Part One, Solomon discusses “how not to think about business,” rejecting several popular metaphors and models (business as warfare, game, jungle, etc.). In Part Two he argues in favor of seeing the corporation as a “community” and as a “citizen,” images rich in implications for how we view our work, our relationships with others and with the society around us.

The starting point is, thus, to get the mission, the big picture, clear. Solomon then (Part Three) provides a catalog of 45 or so “business virtues” ranging from the predictable (fairness, creativity, honesty, loyalty, responsibility, trust, etc.) to the unexpected (humor, style, saintliness, toughness, etc.). The sum of these virtues is integrity, defined as wholeness, coherence, integration, and consistency.

Solomon argues that business cannot succeed long term unless it pursues ethics and virtue. Bad ethics undermines the trust (among employees, customers, suppliers) without which business cannot succeed. It is character ethics that matters most here, according to Solomon (following his primary philosophical guide, Aristotle), especially in our fast-moving, global high-tech business environment.

Solomon’s book is a more convincing version of what Tom Morris attempted in his If Aristotle Ran General Motors. His catalog of virtues is provocative, good reading but it begs for a better organizing principle than alphabetization! Finally, any “Solomon” providing annotated “proverbs” about moral virtue should have had something more substantial to say about wisdom and discernment! Still, this is a good, worthwhile read for business leaders.

Reviewed by David W. Gill

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The Age of Spiritual Machines: When Computers Exceed Human Intelligence by Ray Kurzweil; New York, Viking Press, 1999; x, 388 pp.

Ray Kurzweil is an accomplished technology inventor (speech recognition, reading machines, music synthesis) from MIT. This book is written with a great deal of imagination on what will happen when computers exceed the capabilities of the human brain (about 20 years from now, according to his calculations).

I was attracted to this book for a couple of reasons. One reviewer described the book as being about the day computers will tolerate us humans and keep us around as pets, while doing all of the important things themselves. I had recently been reading some papers from the 1960s, promising the same vision for the 1980s, and wanted to see what was different this time around.

The author’s premise appears to be that humans are nothing more than scientific instruments, admittedly not yet fully explained. The crucial issue is when the capacity of the computer exceeds the capacity of the human brain, because at that time we will be able to download the information from the brain and take it from there.

Anticipating his critics, he has a great cartoon with the wall covered with sayings on what only the human, not computers, can do. “Only a human can play baseball, Only a human can translate speech,” are two such examples. Then, on the floor crossed out are similar statements that used to be on the wall such as “Only humans can understand continuous speech, Only humans can play master chess.”

The author should get credit for a high level of imagination. As a science fiction book, this would appeal to some. The author makes a good point that we have often wrongly limited what we believe computers will be able to do.

But, I believe the leap from computational power to humanness misses the point, and perhaps the point of departure is at the fundamental premise. This kind of writing gave Artificial Intelligence a bad name twenty-thirty years ago; if this one is widely believed, it could do the same again. While the book is intriguing, I would not recommend it to those seriously looking for the future role of technology.

Reviewed by Al Erisman

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The Character of a Corporation: How Your Company’s Culture Can Make or Break Your Business by Rob Goffee and Gareth Jones; New York, Harper Business, 1998; xvii, 237 pp.

Rob Goffee and Gareth Jones are business school professors in England and also (is there a trend here?) founding partners of a London-based consulting firm. Their book grew out of a much-praised, jointly authored article in the Harvard Business Review and is based on years of analyses of businesses.

“Culture” refers to an organization’s shared symbols, values, habits, and assumptions. It has to do with “how things get done,” with the way physical space is arranged, with communication patterns and time usage, with issues of “identity.” They argue that today’s globalization, increased competition, information technology, and rapid change often lead toward organizational disintegration. In such a context, what will hold companies together in a sustainable, cohesive way? What sort of corporate cultures are required for business success today?

Drawing on the sociological insights of Emile Durkheim and Max Weber, Goffee and Jones look at two fundamental aspects of culture: sociability (how people relate to others) and solidarity (how people relate to the tasks of the organization). They argue that there are four basic cultural types: communal (high in both sociability and solidarity), fragmented (low in both), networked (high sociability, low solidarity), and mercenary (low sociability, high solidarity).

Goffee and Jones argue that any one of these four cultural types might be appropriate, depending on the type of business, the environment, etc… Each of the four can also slide into a very negative, dysfunctional expression. Their book provides tools for a sort of cultural self-audit, detailed discussions of the four cultural types, and some concluding advice on how to move company cultures either way on the sociability and solidarity scales.

While Goffee and Jones try to nuance their arguments and allow for exceptions, their argument inevitably both benefits and suffers from their ideal typology. The fourfold typology is a deep, thoughtful, and potentially illuminating, analytical lens. At the same time, any such typology can lead to dangerous oversimplification, stereotyping, and a narrowing of one’s vision. It feels limiting to try to cram all company cultures into their four pigeonholes.

Their choice of the terms “mercenary” and (even more) “fragmented” for two of the cultures are also unfortunate because of their negative baggage. Their point that these could be good and appropriate corporate cultural choices in some circumstances would be better served by terming them (say) the “segmented” and “effectiveness” (or “impact”) cultures. A flawed, but helpful book.

Reviewed by David W. Gill