Tuesday, February 21, 2006

Information Disadvantage and Value Added

Any part of any business that is based on information disadvantge is threatened. That includes both the large and small. Textbook publishers, traditional education delivery systems - including Universities, Colleges, Community Colleges and K-12, and of course newspapers are in danger of radical transformation.

Clay Christiansen,et al. outline a theory and strategy for thinking about sources of innovation, in Seeing What's Next. The chapters on the health and education business are particularly interesting.

So...business has to figure out how to "add value". Sometimes this concept becomes unduly complicated. "Value creation" is actually pretty straightforward. What can your business do for $x, that people will gladly pay $(x+y)?

The basic rule is that "better, faster, cheaper" always wins. But, as Apple has shown with the iPod, and that Starbucks has shown with their coffee, "cheaper" can be a very complex concept.

In the GME, in the developed world, people will gladly part with $, in order to pay for an experience they want.
And in the developing world, P&G has shown that you can make lots of money by selling single use shampoo in China for 2 cents.

The right product, for the right person, at the right time for the right price - produced and delivered at a profit.

Monday, February 20, 2006

The end of information disadvantage business models

Real estate agents, like travel agents before them, are under seige. As the Freakonomics guys pointed out in their book, real estate agents take advantage of their control over information (buying and selling prices in a particular area) to encourage their clients to sell as quickly as possible.

However, check out Zillow.com, which is seeking to end this monopoly.

The age of the knowledge-hoarder is over. Agents of all kinds must focus on services and other value adds...