John Hagel comes out with an excellent post on the leading internet companies approach towards future. He rightly warns that without a clear and differentiated sense of long-term direction, everything else would count for little in terms of sustained value creation. Watching the moves of all the major Internet players – Google, MSN, Amazon, Ebay and AOL – he gets the sense that have lost their sense of direction and differentiation. Rather than carving out and rapidly enhancing areas of distinctive advantage, these major players appear to be leaping like lemmings into the red ocean. He points to several traits like focus on aggregation of services, going after the dangerous narcotic-advertising revenue rather focus on value-add to users, emphasis on building infrastructure as against building services and merely replicate what the other one is doing ( sometimes it can get as insane as this) as concern causing.
While admitting that these could be good strategies in mature industries, the internet industry can support much more innovation amidst its increasing usage. Observers see the rise of “Internet conglomerates” where the assumptions seem to converge as leading companies will be vertically integrated and horizontally integrated, offering a broad range of their own resources to users who will “settle” into their spaces. Warning against this skewed view of future, john argues that internet business shall face the same set of challenges as the traditional business and need to confront the reality of unbundled corporation(s) and the sad reality he argues is that none of the Internet leaders appear prepared to confront these choices yet. Instead most of them seem to be going after an array of choices that lay in front of them. The Irony is that this approach stands in sharp contrast to the strategies that enabled the Internet leaders to carve out their leadership positions in the first place. Unlike the thousands of other dot.com start-ups that embraced hustle as strategy and speed without direction, the founders of these companies started with a very clear, even though high-level, long-term destination in mind. It helped them to make difficult choices in the near-term and to launch waves of initiatives that cumulatively built very large and successful businesses. It has stood them very well in the first decade of their business and now they are on the verge of undoing all of these and seem to have lost is any distinctive long-term view of what kind of business they will need to build to remain successful in a rapidly evolving business landscape. That’s where the business model matters a lot. As in the traditional industry corporations should be built in such a way that on their pursuit of their vision they should strive to adapt for the present and build for the future.
Category :Internet Players, Business Models