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Custom Results from Standard Inputs
Nothing has shaken our world like the Internet revolution that has taken root in a massive way since 1994. Despite the recent technology meltdown, particularly severe in the telecommunications field, the Internet revolution is continuing at a fantastic pace—the changes are still happening but they are occurring with less hype and more substance—below the waterline, so to speak.
Jack Welch said that in his 40 years at GE nothing matched the Internet in terms of its technical or technological impact and Jack saw a lot during his career as a CEO.
My colleague, Professor John Callahan, at
What this means is that we have transitioned from the days of an artisan or guild worker (now called a ‘consultant’) who produced one off creations to order (made to measure suits, for example) through to mass produced products (Henry Ford’s automobile assembly line) and now to made to order, custom products from standard processes and inputs (like the way Dell’s web site allows each client to customize their PCs to their specifications using only standard Dell inputs and processes). By reversing out the design work to the customer, Dell has created a powerful position in the marketplace and become the largest and most profitable PC maker on the planet.
The internet is all about automation and reversing out the work. Doesn’t apply to me and my business, you say? Well, it turns out that most of us have the ability to move up the value chain by using some of the revolutionary aspects of the Internet in our businesses
Let me give you another example. We have a number of home builders who are figuring out that they are soon going to be in the web site operating business and not the home construction business at all.
Today, with all due respect, the home building business is still largely a craft based endeavour which, if it were compared to the computer industry, would still produce five function calculators that look like primitive World War II vintage Turing machines (used for breaking Japanese and German codes)- big, clunky and expensive.
Ultimately, a home builder's web site will allow consumers to 'goggle' in to the site in three dimensions, to choose the model that they want, the lot that they want and then to load up their shopping carts with the features they desire. As they make changes to their design and add and subtract amenities, the calculator will tally and show them their costs.
Visa and MasterCard are moving upstream- their credit cards will be used for everything including buying a new car or buying a home. There is a small but fast growing market for power cards that carry credit limits in the hundreds of thousands of dollars.
But this home buying e-commerce transaction using a credit card is only the tip of the iceberg. In all probability, it is the e-business applications that will have the most dramatic impacts on home building. Pre-authorized suppliers and sub-trades will log on to the builder's web site to estimate the volume of work required and to bid on it. Scheduling, based on just-in-time delivery, will be net based. Payments will flow business to business via e-payments. Municipal inspectors will log on to see when they are required for inspections. Municipalities will recognize that home builders are their clients. The number of separate subcontractors and trades will fall from 25 or 30 today to perhaps just 8 or 9.
If former Russian President, Boris Yeltsin in his early days as a construction boss in Sverdlovsk (1,000 miles east of Moscow) could build five storey, wood frame apartment buildings in five days (albeit with a huge crew), surely we can learn to build houses in 45 days or less at higher levels of quality, with fewer defects, higher margins for the industry and lower prices for consumers.
The home builder will become a web site operator. Legal closings, land registry documentation, mortgage financings … all will be web enabled. And what does this do to profitability? There is no doubt that efficiency will climb, productivity will increase and in every instance where this has occurred, more wealth is created for all to share.
Americans are early adopters of technology and none is more earth shattering than their embrace of the internet. As a result, the Internet is eating an enormous hole in the world's economy. After all, it does not matter how little someone is paid in the third world, the Internet can do it faster and cheaper.
Old-line industries are going through incredible re-engineering.
A national advertiser who wanted to launch a national billboard advertising campaign just five years ago went through a six to twelve month process. They drew up a campaign theme, got the creative done by an agency, had the agency contract billboard locations with up to 25 regional billboard companies, sent the artwork out to all of them by courier, received back the proofs from all 25 for approval, made the necessary changes to get consistency in the artwork, sent them back, checked them again, signed off finally. The images were then often hand painted on huge strips and, at last, a crew went on site and glued them to the board.
Today, billboard companies put their inventory of available billboard locations on their web sites and agencies can book and pay for that inventory on line. Agencies then can download their artwork over high speed lines and, as billboard companies merge and become national and as they move towards replacing conventional billboards with high definition video boards, an agency can place a national campaign in a matter of hours or days. It does not matter how little a third world labourer is paid; the web can do it faster and cheaper.
That means that the entire global economy has to move up the food chain- and
the only way to do this is to invest in education, medical care and social
order, which happen to have been
To learn more, please visit my personal web site: www.dramatispersonae.org.
Copyright. Dr. Bruce M. Firestone,
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