So what's new in the 'new economy'? 5 myths of e-business

Sheffield Business School 26/10/00

So what's new in the 'new So what's new in the 'new economy'?economy'?

5 myths of e-business5 myths of e-business

Phil ShanklandOasys




what do we mean by the ‘new economy’ ? characteristics of the new economy examples dotcom failures why companies fail 5 myths 5 hits conclusion – new acronyms



Phil ShanklandOasys – e-strategy/e-marketing

1,500 web enquiries per month300 new/used car sales per month£2m turnover per month

80,000 prospects in 70 countries650 stock machines – ‘live’ database30,000 fax/email shots per month



mybands.com£5.5m music infomediary –

web/wireless/DTV


What do we mean by the ‘new What do we mean by the ‘new economy’?economy’?

2 views:

the e-vangelists the e-conomists

Kevin Kelly :(publisher ‘Wired’)

New Rules for the New Economy –

10 Ways the Network Economy is Changing Everything

Amazon sales rank: 3,421

Carl Shapiro and Hal Varian:(professors)

Information Rules –

A Strategic Guide to the Network Economy

Amazon sales rank: 286


What do we mean by the ‘new What do we mean by the ‘new economy’?economy’?

the e-vangelists the e-conomists

Pierre Omidyar:(founder of Ebay.com)

"What I wanted to do was create a marketplace where everyone had access to the same information."

(Oct 2000 – 19m registered users)

Allen Morgan:(Mayfield Venture Capital)

“There aren’t any new business models.”

Johan Konings :(Pythagoras Participations)

“There’s no such thing as a New Economy, it’s about creating value propositions.”


Characteristics of the new economyCharacteristics of the new economy

Knowledge creation sharing exploiting IP

Charles Leadbeater:Living on Thin Air – the New Economy

"Knowledge is our most precious resource.”

Communication global instant/interactive low cost

Kevin Kelly:New Rules for the New Economy

“Communication is the foundation of society, of our culture, of our humanity, of our own individual identity, and of all economic systems.”

Business models B2B/B2C/P2P portals infomediaries

John Hagel III, McKinsey:Net Worth

“…custodians, agents and brokers of information, marketing it to businesses on customers’ behalf whilst at the same time protecting their privacy.”



‘old’ ‘new’

Knowledge products content

Communication/ physical electronicdistribution

Market place on-line



‘old’ ‘new’

Marketing mass one-to-one

Selling brand brand

Supply chain fragmented integrated


Characteristics of the new economy e.g. Characteristics of the new economy e.g. musicmusic

‘‘old’old’ ‘‘new’new’

Knowledge CD subscription

Communication/ record co. web/wirelessDistribution distributor digital TV

Market retailer anytime/ anywhere


Opportunities in the new economyOpportunities in the new economy

Knowledge content Time-Warner

Communication/ infrastructureAOLdistribution

Market broadband ‘always on’


Examples of ‘new economy’ Examples of ‘new economy’ companiescompanies

B2B B2C P2P

Portal – horizontal

Portal –vertical

Infomediary ??


If the ‘new economy’ is so hotIf the ‘new economy’ is so hot how come it’s gone how come it’s gone cold?cold?


If the ‘new economy’ is so hotIf the ‘new economy’ is so hot how come it’s gone how come it’s gone cold?cold?


A to Z of dot com failures including:A to Z of dot com failures including:

• auctions.com• boo.com• boxman.com• clickmango.com• ……• worldspy.com• xenote.com…… next?


companycompany reasonreason

boo.com poor financial control

boxman.com poor sales

clickmango.com poor customer service

Q: are these ‘new economy’ reasons?


Are there any new reasons to fail?

• the slow fail – inflexibility/sticking to the plan

• the chasm trap – vendor promise/market acceptance

• the tornado dive – first mover/value chain lag

• the dead zone – modest gain/high pain

Geoffrey Moore


No surprises:

• new idea

• new business model

• unproven market

• new management

• speed to market

• cash burn


“In high-tech ventures, you can expect to fail many, many times. That's part of the deal.”Geoffrey Moore, Chasm Group


“The combination of weak financial structure, mounting competitive pressures and investor flight will drive most US Web retailers out of business by 2001.”

Forrester Research, April 2000.


Myth #1Myth #1

“There are new rules for the new economy.”

x


Myth #2Myth #2

“In order to succeed you need first mover advantage.”

x


Myth #3Myth #3

“In order to attract users you need to burn cash.”

x


Myth #4Myth #4

“Achieving scale is more important than making money.”

x


Myth #5Myth #5

“Disintermediation will see the end of the middleman.”

x


5 hits of e-business #15 hits of e-business #1

B2B e-commerce

“Ecommerce in Europe is set to go into ‘hypergrowth’ in the next two years, according to a new report published by Forrester Research. It predicts that worldwide Internet commerce will hit $6.9 trillion in 2004, with West European e-commerce reaching $1.5 trillion.

http://www.forrester.com



Supply chain – B2B exchanges

“E-procurement could save UK manufacturers millions of pounds according to a new report commissioned by MRO.com. But they found that UK manufacturers are lagging behind other sectors - such as banking and finance - in taking advantage of e-procurement. Half of UK manufacturing companies surveyed will have some type of e-procurement system in place by 2001.”

www.mro.com



Wireless internet

“Europe will lead the US in the growth of m-commerce over the next year, states the Patricia Seybold Group. It its predictions for 2000 - Looking Ahead to the Year 2000 - it says that the growth of broadband wireless will outpace cable deployment outside the US. It also predicts that merchandise returns will plague e-tailers with inventory management becoming a major ebusiness roadblock.”

www.psgroup.com



Personalisation

“Personalisation is by an order of magnitude the single most important factor in the future success of mobile commerce.”

Patrick Neil - Vodafone



Infomediaries

• a trusted holder of consumers’ personal preferences

• a deliverer of specific value added services across multiple vendors to a consumer

• permission, relationship and trust based

• high initial build cost, long term asset value becoming more valuable over time

• the link between vendors and consumers


Conclusions – new acronyms Conclusions – new acronyms

B2B “back to basics”

B2C “bending to customers”

P2P “path to profitability”




Questions

Documents

So what's new in the 'new economy'? 5 myths of e-business