Are you positioned to survive in the Digital Jungle? The outcomes of the transition from the industrial economy of the 20th Century to the digital economy of the 21st Century are binary. That is, you will make the transition or you will not. Halfway measures will guarantee failure. Within a few years, surviving businesses will all be ebusinesses. Those who fail to make the transition will be bought up or simply disappear.
If you plan to survive in the emerging digital economy, you need to understand what is happening in our society and in our economy, and you must recognize the implications for your business.
We have entered a new age of civilization � the Information Age. The Information Age is already proving to be as profoundly different from the Industrial Age in which most of us were born and raised as the age of airplanes and automobiles was different from the primitive agricultural eras that preceded it. Business Week magazine says, �Information technology affects every other industry. It boosts productivity, reduces costs, cuts inventories, facilitates electronic commerce. It is, in short, a transcendent technology � like railroads in the 19th Century and automobiles in the 20th.�
Information capabilities grow exponentially
In 1965, Gordon Moore, co-founder of Intel Corporation, predicted that the processing power of the computer chip would double every 18 months. For over 30 years, that prediction, known as Moore�s Law, has held true with no end in sight. Computing power is growing exponentially.
By early 1998, the first gigahertz chip had been tested in laboratories. In late 1998, IBM demonstrated the fastest computer in the world � a machine capable of processing 3.9 trillion instructions per second. That�s 15,000 times faster than a state of the art 1999 personal computer. It also sports over 80,000 times the memory of that same PC. However, at recent rates of advance, most people can expect to own that kind of computing power by the year 2010.
Computing power is not only growing rapidly, the cost is falling equally rapidly. The standard unit of measure for computer speed is the ability to process one million instructions per second (or MIPS). As recently as the late 1970s, purchasing the computing power needed to process one MIPS cost hundreds of thousands of dollars. By 1991, the cost of one MIPS computing power had dropped to $230. In 1994, it was down to $50. In 1995 it declined to $16 and by 1997, it was down to $3.42. This trend means we must plan our business models and design our business processes for a future where supercomputing power is virtually as free as the air we breathe and the water we drink.
Data communications capacity, or bandwidth, is also growing exponentially. The speed of dialup modems has increased from 14.4K (thousand bits per second) to 56K over the past few years. However, that is dwarfed by the arrival of cable modems and ADSL telephone lines. These new communication channels will provide data communications capacities of six to 10 megabits per second. That is 100 to 500 times faster than the dialup modems of 1999.
But megabits are just a drop in the bucket compared to what is coming. At Lucent Technologies and MIT, the ability to transmit data at speeds in excess of a terabit per second has already been tested and proven. That�s 1,000 gigabits or a million megabits per second. That is enough data communications capacity to download an entire three-hour long movie, uncompressed, in a fraction of a second.
Communication moves to new heights
Perhaps even more than hard-wired communications, wireless digital communications will impact the way we work and live. On November 1, 1998, Motorola officially launched its Iridium satellite communications network. This network of 66 satellites in low Earth orbit provides wireless voice and data communications around the globe. Also in 1998, Teledesic Corporation launched the first of its 268 satellites into low Earth orbit. When this constellation is completed around 2002, it will provide wireless, broadband, multimedia communications and computing capabilities anywhere on the planet. It will be a virtual Internet in the sky.
Try to finish the following sentence correctly: �There are more telephones in Tokyo than...� As of this writing the answer is � the entire continent of Africa.� Africa may never have as many hard-wired telephones as Tokyo, but, in a few decades, it will probably have every bit as good an information technology infrastructure. Wireless digital communications will bring the Information Age to parts of the world where lack of a communications infrastructure and economic resources have held back progress over the past century. By the middle of the 21st Century, wireless digital communication will have helped to make obsolete the phrase �Third World.�
The combination of data processing and data communications explo-sions is bringing unprecedented capabilities to humankind. For example, we shall soon see telephone switches and other devices that provide real-time translation between people conversing in different languages. Digital high-ways into the home already offer instant access to the world�s store of knowledge and information.
Virtual meeting rooms save people the wear and tear of air travel. Satellite-based personal communicators allow individuals to phone home from anywhere on the planet. And machines capable of emotion, inference and learning are interacting with human beings in new ways. It appears that Star War�s C3PO and Star Trek�s Mr. Data may not be so far off after all!
Forecasting for the future
How do you plan for the extraordinary changes taking place in our society and our economy? How do you more effectively manage your organization to ensure it will survive such dramatic change as well as take full advantage of it?
To begin with, you must answer the question, �How will the future of our industry be different?� Specifically, you must look ahead five years out and ask:
� In what end product or service markets will we participate?
� Who will our customers be?
� How will we reach them?
� Who will our competitors be?
� What will our competitive advantage be?
� Where will our margins come from?
� What capabilities will make us unique?
To answer such questions requires more than just industry forecasting, it requires industry foresight. The distinction is a key one. Forecasting starts with what is today and attempts to project what might happen tomorrow. Foresight starts by identifying what could be tomorrow and then determines what must happen in the interim to accomplish the desired result.
Industry foresight requires deep insight into key trends in technology, demographics, life style and regulation in order to rewrite industry rules. Only then can you create the new competitive space that will ensure your organization can survive and thrive in the digital economy of the 21st Century.
A study published in the Harvard Business Review discussed what it takes for companies to survive and succeed in the emerging digital economy. It pointed out those companies most successful exceed their competitors in three critical dimensions of management: quality, speed and cost.
Quality is no longer a competitive advantage, it is a competitive necessity. At leading-edge companies, the quality of their products and services is unsurpassed. In addition, they do things faster than the competition, whether that is filling a customer�s order or bringing a new product to market. And finally, the delivered cost of their products is the lowest in the market.
Companies that excel in all three critical dimensions of management dominate their markets. Those that fall short in any one of these three critical dimensions, no matter how well they do in the other two, fall into the great majority of businesses simply struggling to survive in the market.
How can you simultaneously maximize the quality of your products and services, minimize your business process cycle times and cut costs? The answer, at most businesses today, is that you can�t do it. That is the challenge management faces.
Business transitions to ebusiness
It is impossible to simultaneously maintain quality, reduce business process cycle times and cut costs given today�s paper-bound, people-intensive business processes. The only way to make the changes needed to ensure that our organizations survive the transition from the industrial economy of the 20th Century to the digital economy of the 21st is to digitally transform our business models and business processes � to become ebusinesses.
eBusinesses use digital technologies as enablers to transform their business models and business processes in ways not possible with traditional paper-bound communications.
A business process is a group of related activities that produces a result of value to the customer. Process redesign is best defined in the book Reengineering the Corporation by Mike Hammer and James Champy, as �the fundamental rethinking and radical redesign of businesses to achieve dramatic improvements in critical contemporary measures of performance such as costs, quality, service and speed.�
A business model represents the combination of business processes that comprise your enterprise. Typically, an enterprise business model will consist of five to 10 business processes. An ebusiness results from the total digital transformation of your business.
Transformation of business models and processes is necessary for several reasons. First, customers are demanding individualized treatment. Second, competition is getting tougher. We�re in a global marketspace now, and it only takes one global competitor to raise the bar for everyone else. Third, technological change has accelerated. It�s not only changing the nature of the products and services we offer, but information technology is also increasingly being used as a strategic competitive weapon. Fourth, most organizations have fragmented processes. Our processes are built into industrial era organizational structures where stovepiped organizations allow information to flow vertically, but make it difficult for information to flow horizontally through processes that cross our traditional departmental boundaries. All this must change as we enter the 21st Century�s Digital Economy.
Jack Shaw has 20 years experience in management, consulting and Information Technology. He has been the president of Electronic Commerce Strategies since 1985. He can be reached at 770-565-4010 or For more information about this book contact: Electronic Commerce Strategies, Inc., 770-565-4010 or This an excerpt from Jack Shaw�s Surviving Digital Jungle: What every executive needs to know about ecommerce and ebusiness.