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| Just as we were putting the finishing touches on Evan Schwartz's insightful story about Henry Silverman's brand-management machine, Mr. Silverman's company, Cendant, discoled some accounting irregularities. Cendant's stock plunged 48% in one day. What to do? I wondered. Should I kill the story or trust that Mr. Silverman's strategy would win out? I decided to trust the strategy. As described in the story ("The Brand Man"), Mr. Silverman's emphasis on brand, to the exclusion of all else, has demonstrated an important way that companies can prosper in the Digital Age. In times of great uncertainty, customers go with the names they trust. And the tidal wave of information with which the Internet is swamping consumers has made these unsettling times for many people. Brand will become even more important as the Internet reduces geographic boundaries, letting companies exploit their brands in previously unreachable markets. Time will tell whether I should have been more cautious. But, as of this writing, Cendant's stock is well off its lows. And I believe that, even if Mr. Silverman is waylaid by his accounting problems, his brand strategy is still the right way to go. Others will follow. This issue includes two other features that, to me, point out truths of the digital economy. "Eating Your Young" shows the importance of being willing to cannibalize your markets before your competitors can make a meal of you. The story is an intriguing tale of how Schwab gambled on on-line stock trading, letting customers execute trades at a third of prior fees. "The Ultimate Designing Machine," about MBW, shows how customers are demanding mass customization. The book excerpt, from Unleashing the Killer App: Digital Strategies for Market Dominance, provides an intriguing explanation for why companies are having to change their strategies and move, for example, to a heavier emphasis on branding, mass customization, and cannibalism. The CEO User's Guide ("Getting Started") offers suggestions on how to transform corporate strategy groups, whose approach hasn't changed in almost two decades, even as technology has rewritten many of the rules of business. In our interview ("The Digital Civilization"), Nicholas Negroponte lays out the potential of the on-line world. He talks of customer cartels and tens of billions of devices, other than computers, hooked to the Internet. He figures teddy bears can draw narratives from the Web and tell stories like no stuffed animal ever has before. In a search for new voices for Context, we found two interesting ones. Brett Andrews, a fifth grader, helps us understand how kids use and think about computers. In Man and Machine ("Grow Up, Dad"), he is intolerant of the technical problems that we adults tend to accept as a cost of doing business electronically. Such insights will be important because attitudes like his will shape the way the on-line world develops over the coming decades. John Cleese, the comedian and actor, chimes in with an Inner Game fo Work column ("To Err Is Divine"). The idea is that the business world is changing rapidly enought that we should no longer ever pretend to be able to avoid mistakes. But Mr. Cleese somehow manages to also work in references to black bras and nursery tales of guided missiles. I'll leave it to him to explain. Cheers, Paul B. Carroll |
