BUSINESSWEEK ONLINE : JULY 17, 2000 ISSUE
BOOKS These Webs Set Companies Free DIGITAL CAPITAL Harnessing the Power of Business Webs By Don Tapscott, David Ticoll, and Alex Lowy Harvard Business School Press --- 272pp -- $27.50 Before reading Digital Capital, the latest in a series of New Economy books by such Silicon Valley favorites as Geoffrey A. Moore and Patricia B. Seybold, I wondered: Why is it that high-tech companies tend to make their predecessors seem so lead-footed? How did Cisco Systems Inc. (CSCO) seemingly come out of nowhere to challenge slower-moving Microsoft Corp. (MSFT) for the title of world's most valuable company--while startups nip at their technological heels? Authors Don Tapscott, David Ticoll, and Alex Lowy have nailed the esoteric something that makes these companies different. In their insightful if occasionally cumbersome book, the authors call it a ''business web''--an almost organic arrangement that allows a company to grow fast while staying lean. Digital capital, the authors assert, consists of the all-important data and whip-smart employees that make these business webs work. Where companies once worried about physical assets, the authors write, the best now worry about intellectual assets. If corporations don't do something particularly well, they outsource it to partners. In a business web, they stick to what they do best, and everyone benefits. Tapscott, Ticoll, and Lowy are among an increasingly noisy crowd trying to explain what's going on in today's economy. They come with major credentials. Tapscott, author of The Digital Economy, is considered by Vice-President Al Gore to be one of the leading cybergurus in America. Ticoll and Lowy are longtime market researchers and regular contributors to business and tech magazines such as the Harvard Business Review and Business 2.0. All three are also co-founders of Digital 4Sight, formerly called the Alliance for Converging Technologies, a consulting group. The book, which sprang from a multimillion-dollar research project run by Digital 4Sight, walks readers through the business web theory and its applications in consumer- and business-focused companies. Cisco appears as the very model of a company that has embraced new technology, including the Net, and contracted work out to grow big while staying lean. ''Though known as a manufacturer, Cisco itself owns but two of the 38 plants that assemble its products.... Its mind-set is shared responsibility for customer satisfaction--not control or micro-management,'' they write. But business webs don't have to be run by a single company. They can take hold organically, the authors write, and tie people and technology together. Take MP3, the digital music technology that allows Web surfers to play and record music on their computers. MP3.com (MPPP) is an example of what the authors consider a grassroots business web. MP3 digital music technology was invented in Germany in 1991, but it wasn't until about 1998 that it caught fire, thanks to the Web, consumers looking for alternatives to expensive CDs, and musicians eager to disseminate their music. ''Though MP3 is an informal, grassroots phenomenon, it has shaken the foundation of an entire industry,'' say the authors with just a touch of grandiosity. Digital Capital also touches on movements that have led to such developments as the Linux operating system, which some say could one day even challenge Microsoft for the control of computer operating systems. Finally, the authors get into the how-to stuff, and they do their best to explain how companies that sell more traditional products, such as cars, can put themselves in the middle of a fast-growing, high-profit-margin business web. One problem: Tapscott et al. try too hard to impose an analytical framework on their reporting. The wildly successful online auctioneer eBay Inc., for example, is labeled an ''agora.'' Agora? The name comes from ancient Greece. It's a place where people meet to buy, sell, and exchange products and ideas. It neatly applies to eBay, which has gained an almost cultlike following. But does affixing a buzzword really help us understand? (Others include ''aggregations'' and ''relationship capital.'') The founders of eBay stumbled on a near-perfect, low-overhead business model. Spelling that out would be better than attempting to stuff such important information into an esoteric category. In their zeal to put their stamp on trends that people in the high-tech community have been talking about for years, the authors create a distance between themselves and the companies they are discussing. There are other shortcomings, some of which the authors couldn't have helped. How could anyone have foreseen, for example, that Wall Street would so quickly turn against online retailers? Favorable references to companies such as Boo.com, Furniture.com, and PlanetRx.com (PLRX)--startups that have either gone out of business or are fighting for survival--come off as terribly dated. That said, the book's research is extensive, and it's surprisingly savvy about technology. There are even sections explaining the arcane programming languages that make business webs work. But take heed: This book is no beach read. It is chock-full of charts of business-interaction scenarios that can try the patience of even those most enamored of high-tech. Still, if you are trying to understand why some companies are flourishing and others are struggling under old-fashioned business models, Digital Capital is pure enlightenment. By JIM KERSTETTER Kerstetter covers software from Silicon Valley. _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP					RELATED ITEMS These Webs Set Companies Free PHOTO: Cover, ``Digital Capital'' INTERACT E-Mail to Business Week Online

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