Monday, June 20, 2005


Good interview by Kevin Werbach, Wharton professor of legal studies and business ethics and host of the SuperNova conference, and some great bits of information by the panel:

... Philip Evans is a senior vice president at Boston Consulting Group, known for his work on information technology and business strategy; he is the co-author of the book, Blown to Bits. Janice Fraser is CEO of Adaptive Path, a user experience consulting firm. Her essay, "It's a Whole New Internet," will be the basis of a workshop at Supernova 2005. Ross Mayfield is CEO of Socialtext, a startup provider of lightweight business collaboration software based Wikis. (Disclosure: Werbach serves on Socialtext's advisory board.)

Werbach: Let me start with you, Janice. You recently posted an essay that got a great deal of attention called, "It's a Whole New Internet." I'm curious what you think is potentially new about the Internet today and what that might mean for business?

Fraser: Two things are new about the Internet today. I'm going to separate technology from human beings. Some new technologies are coming out now that make different kinds of interactivity possible with online applications. But what is really new is what people are doing with existing technology.

I have seen lots of excitement in the last six months about what's possible. There have been, for example, applications such as Google Maps that have allowed people to envision new ways of working -- but when I say it's a whole new Internet I mean there's new vigor. And that's going to lead to more creative thinking.
Evans: That's exactly right. There's a spectacular example which illustrates that technology isn't really the key. When you compare Toyota with the Big Three automakers in the U.S. there's a fundamental difference in the way they deal with their suppliers. The Big Three basically negotiate to the last penny. In particular, if a supplier succeeds in a process improvement that lowers costs, he knows darn well in one negotiation round that General Motors will come back and demand a price concession taking away that benefit. That gives that supplier a very powerful incentive not to share with anybody, least of all General Motors, what that process improvement was.

Toyota has a different philosophy. The company allows its suppliers to keep the benefits of their innovation, but it insists that that process improvement in technology is shared not just with Toyota but also with all the other component suppliers. As a result, you see among that population of 60 or 70 companies a rate of sharing ideas beyond what you see in the U.S. It has a cumulative effect over time of driving up productivity in the whole Toyota supply chain. Over a 30-year period, its productivity has gone up six times as much as in the U.S. system. I think that's entirely because of the difference in philosophies. At a time when 50% of the cost of a car comes from outside components, and your suppliers are 600% more productive, that buys you one hell of an advantage -- even if you give some of it back to them in price concessions. (full article)

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