Sunday, 2 June 2013

internet business model Part 3.5; of rules, methods, character, systems and economic models



[This is a re-post (originally posted on 19 Jan 2013) with minor edits, deleted the original post by mistake.]

The second is user-sensitive content.  This means that the site track how a consumer use it and reacts pro-actively to it.  Similar articles popping up when you read a news website is a simple example.  And if I am browsing a football website reading articles on Arsenal, I would prefer the site to automatically list other news on Arsenal rather than generic news of the other teams in the Premiership.  But I may also read articles on Arsenal’s main competitors but not anything else.  The site will continuously track this and list news on them as well so that the content is user-sensitive.  This way, I do not need to drill deeper into the site to look for other articles.  I click once for the first article and because the site displays similar articles, my second click gets directly me to the other articles; quick, convenient, good user experience.  I don’t have to return to the homepage.  Today most business websites do not even carry out simple tracking but it can be expected to change as companies engage the internet more deeply.  Wouldn’t it impress the client if a bank could let him know not just his balance when he checks online but the amount left after all his usual bills are paid?  These are elementary rules-based methods.

That last example was from a recent issue of the Economist on a special report on the future of banking, where it suggests that ease and convenience always create change.  It says that bank branch operations are already feeling the impact with the popularity of smart phones and the internet causing customers to visit branches less frequently but also sharply to increase the number of transactions with their bank.  Now, ease and convenience can be magnified online as the user experience rule dictates.  And should a banker retort that a bank is a physical business, downplaying online experiences for example, we know that money is becoming less physical and in time will become virtual, that is, an information business.  As with the music and media industry, the information age disrupts information-based businesses.

In the last few weeks, a few of the 20 direct and indirect ‘rules’ were presented.  This column will move on to other topics.  Now for some concluding remarks on this series on ‘rules’. 

First, like anything else, crowdsourcing, co-creation or other ‘rules’ is not applicable to everything all the time so analysis on the subject is required before application.

Second, I am sure you too have noticed the difference between the traditional and the new crop of companies, specifically on their differing approaches to business, using the internet to disrupt.  The sad case of Borders, a favourite of my daughter is a case in point.  The information cycle is at the ‘teenager’ stage and maybe that is the problem.  Teenagers never listen and are always trying to upend the order of things.  The front-line information-based industry – music, media, telco, travel agencies have already felt the impact.  Those that depend a lot on information are next - recruitment, travel, trading.  In fact, employing the ‘direct’ approach, hot new firms in commerce are sprouting up like locusts challenging traditional retailers.  But these retailers are not going away.   They will change.  They must because the internet cut costs.  One traditional business that is not impacted is logistics, in fact as I shared during a talk on the internet in a conference in early 1990’s, logistics is a great internet business, it will continue to grow.  Now though to grow even faster, they need to align with the internet online models.  Further along are industries where its core product is being digitised.  The next world war, still a distance away, could be in finance as money is virtualised.  Education and IT will also be the next big targets.  Actually Asia has not felt it much yet but ‘akan dating’ (Malay for ‘coming’).  And those that depend on regulation to protect them should not be too complacent.  The globalness of the internet will force their hands, sooner than later.  Who remembers dog years?  And maybe they could take a lesson from the telco industry.  The internet pioneers all knew this would happen back in the early 1990’s.

For companies hoping that incremental engagement of the internet is viable, consider these.  HuffingtonPost became the largest web newspaper within a few years, long after the traditional newspapers’ foray online.  LinkedIn is a better recruitment site.  It is just a few years old with a business model so different, it is like the women of Venus compared to Martian men.  Compare the time it took Amazon to leapfrog over traditional book sellers.  Obstacles for the traditional companies are as old as when the word ‘change’ came into the vocabulary; cultural inertia, complex legacies and political wrangling against the new and improved ways of working.

Lastly, openness is probably the single most important culture and strategy consideration.  One manifestation is the openness of the new generation of firms compared to the conventional wisdom of traditional companies to be closed.  They open up and engage the community deliberately, and benefits.  I also cannot help noticing that a lot of these developments seem in line with British Prime Minister David Cameron’s Big Society ideology!  Another 30 years after the normalcy of the European crisis?

These series of articles was an attempt to broach the internet business model and some of the methods used, perhaps to provoke.  From here, the blog will be a bit more random, discussing various topics including impacts in part by applying the ‘internet rules’, commentaries on the issues of the day, more ‘rules’, etc.

Be open!


“Paypal is possibly the world's biggest bank with more than 100m account holders” – The Economist.  Does the banking fraternity really know what’s coming and I’m not talking about Paypal!


LinkedIn – dr tommi chen (goggle + profile not completed)



©Chen Thet Ngian, InternetBusinessModelAsia.blogspot.com (2012, 2013).  Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Chen Thet Ngian and InternetBusinessModelAsia.blogspot.com with appropriate and specific direction to the original content