book.chapter Unraveling the internet

The advent of the Internet is fundamentally and drastically reshaping the conventional business landscape. By gaining a deeper comprehension of the Internet's potential, business leaders can start to predict where the most significant influences will be on their existing business models. While it's accurate to say that the Internet won't necessarily affect every facet of your current business model, its influence will permeate many of its aspects. The Internet is a puzzle – it's challenging to grasp and comprehend because there are no historical references to consult, no seasoned experts, or even any established business models yet. We are all in a collective learning process. The Internet possesses four primary characteristics that make it hard to understand: it is intangible, a perpetually shifting target with changes occurring in real-time, it is evolving over time with a continually changing profile, and it is constantly in beta mode where experiments are ongoing. Despite the absence of business history, experienced individuals, or even any proven business models yet, one thing is certain. No business can afford to completely disregard the Internet. At some point in the future, the Internet will become an opportunity, a vulnerability, or a critical issue for every business worldwide. The Internet will influence every product and every customer, in every market, in every industry, in every country. It will be to this century what electricity was to the last century and what steam power was to the one before that. Over the next 50 to 75 years, the Internet will permeate every aspect of society and business. Like steam in the nineteenth century and electricity in the twentieth, it will overpower the traditional ways in which we live and conduct business. The Internet is another tool for implementing a company's business strategy. In practical terms, the Internet has only 12 basic capabilities that can be applied to any business: aggregation, build-to-order, customer self-service, producer direct, channel integration, syndication, market knowledge, product rebundling, market exchanges, dynamic pricing, portals, and one-to-one marketing. These capabilities can be exploited across the business to support the business strategy of the enterprise. The Internet is a fertile breeding ground for "Killer.coms" – companies that come from nowhere and upset the entire dynamics of well-established industries. For example, the day Amazon.com was launched, the business models of Barnes & Nobles and Borders were changed irrevocably. The Internet separates information and products, excels at transporting information cost-effectively and instantaneously, and the way value is added is evolving. The general rules of business are changing, with traditional value chains being disrupted, physical assets potentially becoming liabilities, and brand loyalty having less practical impact. The biggest profits will go to those who manage information, not physical assets. No change represents as large a challenge to every CEO now and in the years to come as the Internet. Because of the intangibility of the Internet, it is difficult for most executives to ‘get their arms around it’. They can’t see it, they can’t touch it and they have no experience with it or anything like that. As a result, most executives have great difficulty assessing the impact the Internet will have on their business. Formulating strategy is the top priority for every CEO. The best way to predict the future is to understand the present.