NOTE: This was from my old A&L Enterprises blog – but I thought it was interesting…
I enjoyed reading “What Would Google Do?” by Jeff Jarvis. This book, despite the title, was not so much about Google but about the impact of Google/Internet has had on companies – especially looking to the future. Overall this book was a good read – as you can tell Jeff Jarvis is a college professor by the insights he has into the effect of Google. If you wondering what the future will possibly be like for many businesses in an Internet age I would highly recommend this book.
For my own sake (and hopefully yours) I will now note some of the items I really learned from this book:
The Internet (especially Google) has a disruptive effect on the business environment
- One of the profound things the internet has done is to fundamentally alter the business environment – especially in terms of the money involved.
- Example #1: – Craigslist has changed how we advertise. I have a client who rents houses – Craigslist is one of the major ways he advertises rentals. Great for him as it’s free and effective – bad for newspapers as the classified ads were a major source of revenue for them.
- Example #2: Anyone looked in a yellow pages lately -the physical book? I never look again – but always look on the internet. Good for me as it’s both convenient and building web pages makes me money – bad for the companies who make the yellow pages as business don’t want to pay them large fees for little benefit
Cost of doing business is changed forever
- Jarvis has a fascinating concept: Instead of charging as much as the market can bear you need to charge as little as the market can bear. The concept is that if you charge little you can’t be undercut
- Some of the success companies of this age have chosen the path of low (or free) cost in exchange for rapid and large scale growth
- Example #1: There are many new broadcasters such as one of my favorites – TWIT – that produce content at a greatly reduced cost than ever before. You want to broadcast? Get a camera and a laptop and you too can be a broadcaster. Technology has changed this equation significantly.
- Example #2: You want to sell something – you don’t need inventory anymore to survive. There are services like cafepress.com that let you sell items without overhead – they print on demand. You still have to do work – but don’t have to have large amount of capital to start a business.
- Strangely enough I just started reading a book on Lincoln that uses the peers of his age to put his life in context. One of the comments they made was that it was an age where men created their own opportunities. I wonder if this Internet age is creating a new golden opportunity for America and the world.
Customers are your partner – not just someone who gives you money
- Customers are paying attention more than ever before – not just to you but to each other. The web has opened up avenues of communication in scales that never existed before.
- Customers can be your best friend or your worst enemy – they talk about you – and they listen to each other. Jarvis mentions his incidental rant about Dell that turned into an internet phenomenon
- Customers can participate with you in new ways to develop your product. Technology has allowed that process to be both more effective and more timely
- Customers are to the point where they expect you to listen to them – and respond to them. Not just for them to listen to you.
Middlemen must provide value equal to their pay
- The power of the web has made it easier for a consumer to go directly to the source – middlemen don’t control the world like they used to.
- Jarvis takes issue with Real Estate Agents in terms of the cost (6% commission) vs. the value they provide
- I’ve had a good experience with a buyer’s agent when I bought my first home – for me they provided lots of value – but then again I didn’t pay for it.
- I’ve also used a seller’s agent – but I was uncomfortable with the fees and was able to find one with a lower rate.
- If I was paying an agent full commission I would expect them to work very hard for that commission – doing more than just posting it on the MLS – but doing open houses, networking, etc. – a marketing machine.
- I also think part of the reality is that too many Americans (not that I’m an exception) couldn’t come up with a up-front fee for an agent. The commission comes out of the sale of the home – so the seller doesn’t have to front any money.
- If you think about a lot of retail sites they aggregate items from many manufacturers to provide me with lots of choice – so they add value. What I wonder is if a company like Amazon goes through a distributor or if they go directly to manufacturers…
- I also know of a company that was looking deep into their supply chain – all the way to China – to more directly source their products and understand clearly what the costs are – not just taking a distributor’s word for it. Good for the company – bad for the distributor.
Power of the Extensible Network
- Jarvis talks a lot about the power of the network – using Google and Facebook as examples.
- Amazon is another example of building a network – a platform – for more than just yourself. Amazon doesn’t make these products – it sells them for other people. It also has extended to create an platform – the marketplace – for others to sell. In fact, when you locate an item there may be other choices available. Amazon both makes a cut of their sales and extends it’s product inventory without doing the work themselves – but allowing others to build onto it.
- This also goes to his point about control vs. trust – do you want to own the whole thing or do you trust others to work with you. It’s the case of Google vs. Yahoo – Google gets you where you want to go – Yahoo is a portal where they want you to stay – the destination. Which is bigger and more profitable now?
Understand what business you are really in
- In this age of disruption if you really don’t know what your business is, what your value is you can be in big trouble
- Many companies are not what they appear to be – what really is Amazon? A bookstore, music store – or is it a platform for distribution and marketing? It’s been so successful that they allow other people to sell there.
- Do you sell a widget or a service? Do you just sell or rent houses – or a certain experience and relationship?
Mass vs. the niche
- The printing press really began the era of the mass market – with bring a single source of information to many people.
- In the past the costs of distribution and content creation were high – so only a few could supply the information
- As technology has improved the cost of distribution has lowered
- When I grew up I remember starting out with just network TV, then came what we call “lifeline” cable – which was great at the time. CNN and TBS were new things.
- Then cable TV grew in #’s of channels – to the point of confusion.
- Now the Internet is a new source of entertainment – with shows to watch there – new content that never existed before
- Retail has also changed – the mall is not the only place to go anymore (even though teens still haunt it). Ebay and Amazon have exploded the marketplace with lots of options. Many new very small retailers exist for niche products – something a small group of people care about – as the cost of selling goods is so much cheaper now.
- I agree with Jarvis that there will always be the “mass” of the market – as if it provides the best value it’s still important. However I think it’s great that there are so many more opportunities for people to create their own businesses
I think I will be absorbing the message and observations of this book for some time (I may even buy it – sorry Jeff – I went to a library). It’s an exciting age for many people – as the opportunities evolve. The risk is if you don’t pay attention as the involving marketplace can leave you behind.