Book review: Digital Capital, Harnessing the Power of Business Webs

Information Management Journal, Jul 2001 by Shultz, Robert

IN REVIEW

TITLE: Digital Capital, Harnessing the Power of Business Webs AUTHORS: Don Tapscott, David Ticoll, and Alex Lowly ISBN: 1-57851-193-3 PUBLISHER: Harvard Business School Press PUBLICATION DATE: 2000 LENGTH: 248 pages PRICE: $27.50

SOURCE: Any bookstore

The "digital revolution" is evolving all around us, both in our personal and business lives. As we witness these fast-paced changes, it is difficult to maintain a perspective on what has happened, what is happening, and what the future will bring. Digital Capital takes a look at all this in a new and different way.

The reader is presented with an overview of how the power of the Internet and business Webs opens the door to alternative business models. This leads to innovative concepts in connectivity, information sharing, business alliances, and customer relationships. As the book explains, digital capital adds new dimensions to traditional business formats. Entirely new "value propositions" are created as "human capital," "structural capital," and "customer capital" are recast into "digital capital." Organizations with the foresight needed can leverage these possibilities, evaluating and effectively executing the adaptations needed to be successful.

The authors have presented the information in a stimulating and thought-provoking way. Digital Capital begins by providing the reader with an overview of Internet-based business relationships: agoras, aggregations, value chains, alliances, and distributive networks. Next, the human element is covered. This pertains to in-house staff, employees of businesses participating in a B-Web alliance, and customers. The question is, how do we best manage the human capital within changing organizational frameworks? Strategies may rely less on in-house staff than independent specialists or other "inter-enterprise" relationships.

Defining who the real customer is has become increasingly important and difficult. The reader is presented with case studies illustrating how businesses must transform to operate within an increasingly price-sensitive, customer-centric environment. Value/ supply chain arrangements demand full disclosure and cooperation between partners and the end customer. As a result, nothing is secret anymore. Everyone knows the participants in the supply chain, their costs, and profit margins. This book does a good job of making these points very clear,

The classic "four Ps" of business are fading in importance as "digital capital" gains prominence. The terms product, price, place, and promotion no longer apply in the same way. As the authors explain, these were terms used in a world based on unidirectional control. Traditional businesses market to a defined customer base. The business creates a product and defines its features and benefits to the user. It sets prices, selects where to sell, and aggressively promotes what it sells through advertising, public relations, direct mail, and other inyour-face programs.

The book concludes by providing a nicely detailed framework for action. Alternative strategies are discussed, and specific focus areas are identified. Readers will find this information useful when designing and implementing their own B-Web strategy.

Overall, this is a valuable resource for the reader to come up to speed on terms, concepts, strategies, evaluative approaches, and templates for action. The authors present the material in a logical progression of information, with useful definitions and specific case examples. "Leaders' Guides" provide summary information on definitions, the significance of material discussed in the chapter, and other pertinent facts. This book is not, however, designed for the casual reader or skimmer. There is a lot of material here, and while it will help you build a B-Web business model, it unfortunately reads like a college text.

Almost as a testimony to the rapidly changing B-Web environment, the authors missed the boat on a couple of points. They expressed unbridled optimism as to the future of B-Web companies and their increasing value in the marketplace. The role of the Internet in the California power grid and increasing dot.com stock values were used as examples. Recent history has told us that these predictions may not be true. Also, little is said about the need for business fundamentals to be in place. Selling products and services at a profit within an intelligent business structure is a must to survive. The digital world provides access to participants - it doesn't sustain a poorly run business.

Robert Shultz is Vice President of Corporate Credit and Customer Finance for Sony Pictures Entertainment. He can be contacted at robert_shultz@spe.sony.com.