Digital Capital: Harnessing the Power of Business Webs

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God forbid that doing business and making money on the Internet should bear any resemblance whatsoever to the past millennium of bricks-and-mortar capitalism--that would be too easy. Nope, it's a whole different ball game now, and the new rule is: adapt or die. At least that's the message behind Digital Capital. From the three principal cyberconsultants at the Alliance for Converging Technologies (one of whom, Don Tapscott, authored the bestsellers The Digital Economy and Growing Up Digital), comes a paradigm for global takeover: the business web, or "b-web" for short. In their words, b-webs are "strategically aligned, multi-enterprise partner networks of producers, suppliers, service providers, infrastructure companies, and customers that conduct business communication and transactions via digital channels." Some examples are eBay, Cisco, Dell, MP3.com... in short, any enterprise that a) knows how to form lateral partnerships with other goods-or-service providers, and b) eliminates the role of planes, trains, and automobiles--not to mention lots of time, money, and human energy--by doing almost everything over the Internet. Not only do the authors provide a wealth of b-web case studies (including Charles Schwab, Priceline.com, Webvan, AT&T Solutions, and OptiMark in addition to those mentioned above), they outline a step by-step process for weaving a b-web of one's own.

Too often, Digital Capital's sound ideas come marinated in think-tank jargon so alienated from plain English as to be nearly impenetrable. Consider: "Disaggregation leads to 'disintermediation' and 'reintermediation'," which, believe it or not, isn't a line that French film theorists use in pick-up bars, but the simple statement that business webs manage to cut out a lot of the traditional steps between producers and customers. Now why couldn't they just have said that? No matter. After you nibble through the self-important MBA-speak, you'll find a smart look at how online shops are rewiring early 21st-century capitalism. --Timothy Murphy

Book Description

The industrial-age corporation is crumbling. The new form of wealth creation is the business web,and the new basis of wealth is digital capital.

Schwab, eBay, Cisco, MP3, Linux, and dozens of other companies have transformed the rules of competition in their industries, seemingly overnight. They hijacked long-entrenched industry leaders with revolutionary offerings that surprised and delighted customers. These transformers could not and did not act alone: partners enabled them to move with stealth, speed, agility, and force. Such teams of innovators pioneered the business web, or "b-web"--the new platform for competition in the twenty-first century. B-webs--partner networks of producers, service providers, suppliers, infrastructure companies, and customers linked via digital channels--are destroying the firm as we have known it and generating wealth in entirely new ways.

In Digital Capital, information-age visionaries Don Tapscott, David Ticoll, and Alex Lowy describe and explain the b-web phenomenon and the forces behind its emergence. Drawing on three years of multimillion-dollar research into hundreds of b-webs as diverse as the Microsoft alliance and the automotive industry, the authors illuminate the five distinct types of b-web now in play: Agoras, Aggregations, Value Chains, Alliances, and Distributive Networks. Punctuating their analysis with a rich set of case studies, they provide the definitive guide to business model innovation in the digital economy.

The book includes:
* The untold real story behind the story on successes like eBay, Cisco, Linux, Schwab, and Priceline
* Positioning and analysis of emergent e-businesses like Webvan, OptiMark, AT&T Solutions, and Enron
* A step-by-step process for b-web strategy design
* A new approach to maximizing organizational effectiveness in a multi-enterprise environment
* The "ABCDE's" of marketing--heir to the "four P's" of the industrial age
* Guidelines for deciding whether to hire, buy, or partner a needed capability
* A new set of lenses for viewing the stock market

The authors warn that participation in b-webs is not optional. To encounter and satisfy the digital customer, firms must lead or partner in one or more of these new business networks. While no single path leads to b-web success, businesses will adopt effective b-web strategies-or they will simply fade away.

Sustaining advantage in the digital economy demands more than superficial actions like attracting "eyeballs," launching a hot IPO, following "new rules," building a cool Web site, or even just focusing on customers. In Digital Capital we finally have a book that gets beyond whiz-bang clichés to today's central issues of competitive strategy.

Download Description

Business webs, or "b-webs"--partner networks of producers, service providers, suppliers, infrastructure companies, and customers, all linked via digital channels--are generating wealth in entirely new ways. In Digital Capital, information-age visionaries Don Tapscott, David Ticoll, and Alex Lowy describe and explain the b-web phenomenon and the forces behind its emergence. Drawing on three years of research into hundreds of b-webs, the authors illuminate the five distinct types of b-webs now in play. The book includes the story behind the story on successes like eBay, Cisco, Linux, Schwab, and Priceline; provides an analysis of emergent e-businesses such as Webvan, OptiMark, AT&T Solutions, and Enron; and gives the reader a step-by-step process for b-web strategy design. Punctuating their analysis with a rich set of case studies, the authors provide the definitive guide to business model innovation in the digital economy. Sustaining advantage in the digital economy demands more than superficial actions like attracting eyeballs, launching a hot IPO, following "new rules," building a cool Web site, or even just focusing on customers. Digital Capital moves beyond whiz-bang clichés to today's central issues of competitive strategy.

Customer Reviews:

Take a Fresh Look at Your Online Design!.......2006-06-20

Interesting book... all of the authors are officers of the Alliance for Converging Technologies. This book was released in 2000, so it might be considered outdated among the current progression of business books. What I found interesting was how the authors divided the most successful business web designs into five separate categories, explained their pros and cons, and delineated from them strategies for any business web that would be useful today. I find their paradigm still a useful way of interpreting the market.

The five types of business web designs delineated and explained in detail are the: 1. Agoras like Ebay where many buyers and many sellers carry out an almost perfect supply/demand negotiation. 2. Aggregations such as large wholesalers and retailers like Walmart who act as intermediaries between buyers and sellers. 3. Value Chains that add services that add value. 4. Alliances among interdependent businesses and 5. Distributive Networks that would supply all of the extra services needed to carry out an online business such as banks and delivery services.

Human capital and relationship capital in these endeavors is explored. The book finishes with strategies for business webs: 1. Describe your value proposition. (Why exist?) 2. Dis-aggregate, identify the parts of your value system - suppliers, shippers, etc. and also look for weaknesses. 3. Decide what you would want if you were the customer. Ask yourself 'What could I acheive if there were no technological or organizational obstacles. How will this business change when the customer gets control (as the web business progress into the future, the hierarchical structures will flatten and customers will have the balance of power). Then, using this information, edit #1. 4. Reaggregation - put it all back together with a reward structure for all participants including customers. 5. Prepare a Value Map - who do you give value to and receive value from? 6. Mix - incorporate and look into other business web designs that may help.

Four Stars

Great e-commerce book but out of date.......2005-06-24

This book has some good and some bad news on its e-commerce and management relevance to our present day business environment.

THE GOOD NEWS
The authors cover on major strategic management principles in a way that one can easily relate to e-commerce rather than just to traditional bricks-and-mortar method of commerce. This is their well-articulated area and one that is still in context today.

With extensive research on numerous companies among e-commerce companies (referred in the book to as business webs (b-webs)) the authors end up categorizing all b-webs into five categories. These are Agoras, Aggregations, Value Chains, Alliances, and Distributive Networks. What they introduce that is of key value is that these b-webs bring in the business world a unique way of relating with key industry and market constituents for each business. These include all the players in the strategic management environment customers, general public, government, free-lancers, suppliers, competitors, and infrastructure companies.

Bricks-and-mortar firms are unable to compete with b-webs (e-commerce) in doing business because b-webs are more efficient and effective at creating value. The entire value chain activities are different from inbound logistics to storage, production, outbound logistics, to after sales support. Of major difference are the communication channels. For example, traditional companies may rely on telephone and fax in their tracking and communications while b-webs use satellite tracking and web-support services. One may use cash, the other may use electronic transactions. More paperwork and processing verses less paperwork and processing.

The authors endeavor to help businesses to shift from the old order to the new one using strategic management principles. They cover on what they call disaggregation: identifying the five categories of value creation in a business then determining how these can be best served through b-webs. The five categories are customers, context, content, commerce and infrastructure. Each type of b-web has a unique emphasis on each of these categories. For example Distributive Networks which have the least level of control focus more on the role of context providers, channeling most other roles and responsibilities to other players in the b-web.

Over all there are 9 features of b-webs that somehow distinguish them from traditional business:

1. Internet infrastructure, 2. Value proposition innovation, 3. Multienterprise capability machine, 4. Five classes of participants, 5. Coopetition, 6. Customer-centricity, 7. Context reigns, 8. Rules and standards, 9. Bathed in knowledge

THE BAD NEWS
This book is masterpiece for 2000 when it was published. Being a book on e-commerce makes it either an antique or a hard sell in 2005. Their website domain name given in the book [...] is currently (June 2005) under a notorious domain parking, selling and redirecting group [...]). They're notorious for having popups, browser homepage potential manipulation and ultimately annoying online visitors (or is it victims?)

A major hurdle is that the authors extensively use technical and confusing jargon. A business student or professional who wants key points, not language abstracts can easily be put off. Much could have easily been put in everyday English. Terms like disintermediation, reintermediation, reaggregation, disaggregation only bring more confusion to key points in the book.

Terms used for their five business models also seem to be less connected to what they describe. Their five business models are value chains, aggregations, agoras, alliances, and distributive networks. Value chains actually have no connection with the value chain model popularized by Michael Porter in strategic management. Needless to say that the authors are keenly tied to strategic management principles, including the generic value chain itself. Strategic management is their well articulated domain.

In addition, much of what is in the book is by now among obvious principles on e-commerce. For example they argue that e-commerce, which they call business web, or "b-web" is the new platform for competition in the twenty-first century. The authors argue that the new way of doing business is very different to the old bricks-and-mortar method of commerce. It has brought new rules of doing business and those who fail to conform to the new rules will perish. They heavily stress that participation in b-webs is not optional for business success. It is a swim or drown situation.

While this may be extreme it is true that e-commerce is playing an increasing role in being a key success factor (KSF) for many businesses and institutions. For many it is their only KSF. What businesses and institutions now need is how to successfully tap into the potential opportunities available in e-commerce.

Their five business models (b-webs) at best outline the degree of organizational control involved in each e-commerce model. Value Chains have the highest level control while distributive networks have the least. The five models seem less significant today in providing a clear map on setting up an e-commerce "plant." They however do provide major strategic management considerations, an area the authors deserve a lot of credit.

Overall this is a great e-commerce (b-web) book, one of the best for its time (2000 to 2001). If the authors made updates on their work its contents would catch up with IT and e-commerce advances.

Don Tapscott's Way... 'Clear Vision' & 'Great Thinking'.......2001-12-31

Like his other books, this 'Digital Capital' will bring us to a new level of thinking about how Net-Economy will work and shape the world we've already known.

Tapscott's clear vision about 'digital money' will surely give us a higher perspective about what works and what doesn't work in this internet 'boom and bust' era.

One of the best Tapscott's book since 'Digital Economy'.....

Digital Capital: Harnessing the Power of Business Webs.......2001-11-16

Digital Capital articulates the characteristics of web based business models and illustrates how the application of these business models can rapidly change the status quo. Ample examples and quotations from business web innovators show the practicality of the models while the authors' framework offers guidelines to explore and examine business web opportunities. I can now better run and build my company's digital future.

Putting your money where your business should be.......2001-07-31

If the University Texas is correct, the Internet economy is "increasingly being driven by traditional companies adapting Internet technologies." This book discusses how other companies are doing it.

Don Tapscott is a must for any executive looking for tangible case studies. Find more than just a justification for your Internet initiative--find out how other companies are doing it. Fight Coase's Law through more efficient outsourcing; Streamline your partnerships; And more...

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This digital document is an article from Information Management Journal, published by Association of Records Managers & Administrators (ARMA) on July 1, 2001. The length of the article is 715 words. The page length shown above is based on a typical 300-word page. The article is delivered in HTML format and is available in your Amazon.com Digital Locker immediately after purchase. You can view it with any web browser.

Citation Details
Title: Digital Capital, Harnessing the Power of Business Webs.(Review)
Author: Robert Shultz
Publication: Information Management Journal (Refereed)
Date: July 1, 2001
Publisher: Association of Records Managers & Administrators (ARMA)
Volume: 35 Issue: 3 Page: 50

Article Type: Book Review

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Title: Landlord gives his part of Main Street a facelift.(Lou Vlahopoulos, owner of Galaxy Diner in Getty Square)
Author: Hope Salley
Publication: Westchester County Business Journal (Magazine/Journal)
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