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Business books are becoming as faddish as clothing. Everyone, it seems, wants to try on the latest bestseller to stay in fashion. This strategy du jour phenomenon injects a continuing stream of new ideas into the business world, but it lets the authors off the hook. It’s one thing to write a book that reflects the hottest companies and business trends of the moment. It’s something else to identify companies and trends that have lasting importance. So, Context periodically sets out to find those business books that stand the test of time. Last year we went back to the mid-1990s and looked at Built to Last, Competing for the Future, and The Discipline of Market Leaders. We saw that even Gary Hamel, the well-known theorist, came up short. Many of the companies he picked as outstanding in Competing for the Future—such as British Air, EDS, and Compaq—have been real losers. He wasn’t much better at predicting trends. The Internet was not mentioned once, even in the paperback edition that came out in 1996. So much for foresight. This year we’re going back to 1997-98 for another three books: Net Gain, Webonomics, and Unleashing the Killer App. [Time for a short disclosure. The author of Webonomics, Evan Schwartz, is an occasional contributor to Context. Chunka Mui, a co-author of Unleashing the Killer App, is Context’s executive editor. To try to minimize any conflicts of interest, Context’s editors gave an independent reviewer several books to choose from, which he narrowed down to the three mentioned here, and told him he had carte blanche to write whatever he wanted, no matter how unflattering.] The books were among the first to try to answer the question: How does one build a successful business in the era of the Internet? A lot about e-commerce was still unknown, and a lot of mistakes were still to be made. But the authors took up the challenge of telling business how to adapt to the Internet, so we’re going to hold them to it. First up, Net Gain: Expanding Markets Through Virtual Communities, by John Hagel III and Arthur Armstrong, published in March 1997. Give Hagel and Armstrong credit. They hit on the idea of community, which is one of the key ways business on the Internet is different from offline business. EBay is the classic example (although, in an oversight, it isn’t mentioned in the book). There are now more than 12 million registered eBay users, buying and selling millions of items. More buyers bring more sellers, which bring more buyers, etc. Hagel and Armstrong are clearly correct that this "network effect" can drive a successful Internet business. At times, the authors exaggerate the importance of community. Amazon.com, for example, is the largest consumer Internet company not because customers can post book reviews but because the site is simple to use and because Amazon delivers its products on time, while providing good service. Same with Yahoo! Sure, it has chat rooms, buddy lists, and the like. But most people use Yahoo because it is easy to navigate, reliable, loads quickly, and is useful. Net Gain comes up short on concrete examples of online communities that work, but then there weren’t many at the time. Oddly, perhaps the biggest shortcoming of the book is that the authors gave short shrift to online communities in the business-to-business world. The book touches only briefly on some of the electronic exchanges emerging on the Internet at the time and doesn’t predict the important effects that these exchanges are having on how businesses buy from and sell to each other. The book is strong, though, on the theory of online communities. No doubt hordes of entrepreneurs were inspired to create Internet companies by this book. Next up, Webonomics: Nine Essential Principles for Growing Your Business on the World Wide Web, by Evan Schwartz, published in April 1997. Schwartz is a longtime journalist, which sets him apart from the authors of the other two books, who are all consultants. Schwartz did what most good journalists do: He went out and talked to people in the e-business world to find out what works and what doesn’t. As a result, while the book is a bit short on theory, it’s long on practical information and real-life experiences. Most of the time, this approach holds up well. Even today, if you went out and followed the nine principles you wouldn’t be in bad shape. In fact, many of Schwartz’s ideas now seem like common sense. That shows how astute his observations were—but it also means Webonomics is not likely to have much lasting contribution. After all, who needs to read a book to learn common sense? Schwartz also comes up a bit light on advice for making money. Instead, Webonomics is too often about community, interactivity, style, and the like, in the belief that, if you create a good Web site, good things will happen. For instance, Essential Principle #1 says: "The quantity of people visiting your site is less important than the quality of their experience." Now it’s certainly important to create a site that people enjoy, but you ignore the volume of traffic at your peril. America Online and Yahoo have garnered so much of the advertising and commerce on the Web because they are heavily trafficked sites. Meanwhile, APBnews.com, a terrific and creative site that has a wealth of information for people interested in crime, filed for bankruptcy proceedings because it wasn’t pulling in enough traffic. To Schwartz’s credit, his prognostications turned out right more often than wrong. And he wasn’t afraid to state his opinions clearly. Here’s one: "Digital cash will fail." When the book was published, many companies and theorists were pushing the idea that credit cards would not work on the Web and that a new form of money was required. That was bunk, and Schwartz was smart enough to say so. Last up, Unleashing the Killer App: Digital Strategies for Market Dominance, by Larry Downes and Chunka Mui, published in May 1998. Like Schwartz, the authors of Unleashing the Killer App state their opinions fearlessly and boil their advice down to a list of key principles—in this case 12. Unleashing the Killer App was published one year after Webonomics and Net Gain. When writing about most other subjects, that wouldn’t be too big a deal. But when writing about the Internet, one year is practically forever. To their credit, the authors made good use of this time to add a layer of depth and insight that the other two books lack. But that’s not where the book really shines. The real strength of Downes and Mui is their overarching idea of the "killer app," which they define as "a new good or service that single-handedly rewrites the rules of an entire industry or a set of industries." Over time, some of the 12 principles for building killer-app businesses will probably change, but the idea of the killer app itself should continue on. The authors warn that companies shouldn’t just put their current businesses online; instead, they should find ways to use the Internet to create killer apps that will let them dominate their industries. Although the idea can be stated simply, it holds the book together, and the authors provide a number of good, useful examples. Sometimes Downes and Mui get carried away in describing the radical nature of the Internet. This is especially apparent in the wake of the near-collapse of so many dot-com firms that thought the rules of business were being completely rewritten by the Internet. They weren’t. Here’s one example. Design principle #12: "Hire the Children." In other words, it’s the youngsters who best understand digital technology and can lead companies to the future. And don’t just hire them. The book says, "You can succeed at digital strategy, quite simply, by putting them in charge." Yes, the kids can make contributions, but it might be good to have some adult supervision. Giving $100 million-plus to a bunch of energetic, inexperienced youngsters can give you Boo.com, the wildly unsuccessful British online retailer. Most good Internet businesses, such as eBay and Yahoo, are run by experienced executives. On the whole, the three books did a remarkably good job of offering up ideas, practical advice, and theoretical constructs that hold up today. Given all the change that has occurred over the past few years in Internet business models, that’s no small accomplishment. In the end, I doubt whether any of these books will rank as a classic. They are all too time-bound for that. Think of them, instead, as closer to historic documents, reports from the front when the Internet was just emerging as an important business phenomenon.
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