Every industry in the world is running the gauntlet of the same, all-embracing, potentially murderous 'killer app'. Everywhere, the application of new digital technology threatens to create hugely disruptive, hugely profitable competitors, who are able and more than willing to undermine the industrial establishment. It is a kill or be killed world. The disrupted companies will be the victims as the two fundamental laws of the digital revolution, work in tandem.
In their book Unleashing the Killer App, Larry Downes and Chunka Mui give a revelatory account of how those two Laws interact: to repeat, Moore's states that every 18 months computer power doubles while cost stays constant) and Metcalfe's that networks dramatically increase in value with each additional node or user. The combination is downsizing even the mightiest industrial groups; replacing incremental change with exponential; and imposing a whole new set of managerial imperatives.
Today, the killers 'reshape the landscape': for instance, by cannibalising their own markets with abandon to create new ones, treating each customer as a market segment of one, and creating 'communities of value' (Internet clubs, say). They build new connections with customers and suppliers, and they 'redefine the interior'. In the latter process, assets are becoming liabilities (like all those High Street and Main Street banks), and old value chains are being destroyed by new linkages.
To kill rather than be killed, companies must learn new ways to manage innovation ('as a portfolio of options', the authors suggest). They should also 'hire the children'. This is a young person's and young company's world: which means that older people and companies need to learn new tricks very fast. They must introduce their own 'killer apps', and the bigger the better. The assassins, to quote the pregnant sub-title by Downes and Mui, are first and fastest at creating 'digital strategies for market dominance'.
It's the killer app in this broad sense that is putting increasing pressure on management. The applications of new technologies - primarily those involved with the Internet - are expanding at amazing speed and working to change the way in which businesses communicate, the way they are managed, the way they win competitive advantage and the way in which they do business; all this in an age in which companies large and small are going triumphantly global. That globalism, too, hinges to a great degree on the killer app.
Within this wider picture, though, a myriad of gains can be made, not by revolutionising the entire organisation, but by making swift use of readily available technology. These may not be killer apps in the full Downes-Mui meaning: but they can kill off problems that have bedevilled companies for years, even decades. Adopt these new methods before the competition does, and you may have a competitive advantage which is all the more potent for being invisible - and therefore inimitable.
The Halifax Building Society, as it then was, had trouble with files - millions of them, outnumbering even its 20 million customers. The files got lost, items went missing, the branch couldn't get access because they were at the business centre (or vice versa), they couldn't be correlated because of differing systems, and so on. An Intranet, installed by British Telecom in a matter of months, replaced chaos with order. Now electronic files, updated and intact, can be tapped anywhere in the company by anybody with a terminal.
That may seem a simple matter. But the work that we have done with companies always begins by revealing knotty, costly problems, like those at the Halifax, that can be resolved with relative simplicity by applying basically off-the-shelf technology. The top five areas of attention could hardly be described as career-builders for the IT specialists:
• Sales support (shared Intranet pages)
• Human resources (shared documentation)
• Current financial data (brochure-ware and live feeds)
• Real time supply chain (back-reach to suppliers)
• Product development (shared e-mail, pages and forums)
Examples of solutions achieved during our work with BT put flesh on these bones. They range from e-mail attachments from Africa to customer-shared Web pages for feedback, engineering changes, and development: from shared knowledge of possible future products to taking competitors' orders through a 'virtual warehouse': from key customer e-mail capability to the 'virtual stationery cupboard', which means that you no longer need to keep a supply of printed forms.
THE KILLER APPLICATION WORKSHOP
We have developed the Killer Applications Workshop (KAW), a half-day facilitated event with a joint BT-client team, to identify critical killer apps. Then the Killer Applications Implementation Team (KAIT), multi-disciplinary and multi-level, takes a specific app identified at the workshop and uses a focused process and specific tools to ensure the essential involvement and commitment of the users. The seven-stage approach joins supplier and customer as partners and, logically and practically, relates needs to fulfillment:
1. Identify the need
2. Analyse the problem
3. Identify the solution
4. Plan and implement the app
5. Confirm that the app works
6. Incorporate the app in the system
7. Select the next need
An example from real life mentioned above is the company growing crops in Africa which neeeded to send regular reports back to London. The reports were sent by fax and required laborious entries by hand. The need was to find a faster, cheaper, more accessible method. The idea of using e-mail had not occurred to anybody, including the IT specialists. The app was quickly implemented, and the company was £120,000 a year better off as a result.
The idea of a killer app is not new. The term has been applied to computer software programs since the 1980s Payroll systems, billing, accounting systems, BACS (the banks' clearing system), word processing, e-mail, electronic data exchange (EDI) and many more have, over time, established themselves as key, computer-based, fundamentals of business. The killer apps are continuing to be as simple as the functions described above. However, a key change from the past is the cheapness and speed at which the new killer apps are delivered to the marketplace.
In the past it has taken many years for systems to become an inexpensive fact of business life. Take word processing. The first systems cost about the same as a year's salary for the average secretary. Unless your business had a real need to duplicate documents (like lawyers and mailing houses), the cost could not be justified. Today it seems impossible to imagine an office of any size without a word-processor. What happened? The cost dropped to 1/20th of the annual salary of the secretary, systems became more flexible and user-friendly, and word processing, anyway, came loaded on the PC .
In turn, word processing become one of the stepping stones to the next software technology in the market: e-mail. New killer apps now cost a few dollars or even nothing at all. E-mail can be set up free, thousands of web pages are published free on the World Wide Web, the necessary software is borrowed for a month free (downloaded from the Net directly to your PC), and then costs a mere $40-100 to buy. Business economics are being transformed by technological revolution - and most of business has not recognised that funamental, inescapable fact.
In reviews and presentations with BT client companies, working with BT's Chris Downing, we spotted a array of potential killer applications in companies and organisations of all types:
• A major European airline with 1,000 suppliers (and some 100,000 individuals) in its supply chain. Only 5% of the communication involved electronic means. E-mail alone could achieve major operational savings and gains at no installation cost.
• A company which won 93% of its sales from eight multi-nationals. Establishing an e-mail facility with key customer staff members, and sharing web pages of production schedules and new product information, was an easy decision. The company remains the only supplier with this competitive edge.
• A Local Education Authority which adopted a 'virtual stationery cupboard' for its schools. The e-mail system that BT had already supplied had web page publishing facilities. The LEA only had to transfer forms via the PC for storage on the system's web pages. Result - no more storage (or running out) of forms.
Each of the above possibilities were known to the IT specialists. But they were working to another agenda, one that would use their technical expertise. Much of their time was spent keeping existing systems running, supporting users and correcting current problems. Also, they had become used to rebutting over-imaginative claims about the potential of the Internet. Between 1996 and 1998, Intranets were touted as offering 1,500% return on investment and six to 14 week paybacks. Business managers were understandably sceptical about the huge claims, and confused by the vast array of available technology.
WINNING BUSINESS BENEFIT
In the fast-moving markets of the Internet, where years are measured in months, and opportunities surface in bewildering variety, intimidated managers have left the IP decisions to the IT specialists. The latter have understandably focused on the best, most advanced technologies. But technology in itself has always been a slow route to market acceptance. Identifying a substantial, quickly won business benefit convinces management, speeds implementation, and wins competitive edge for the early adopters.
The US is perceived to be, and in some cases is, a year to eighteen months ahead of Europe. The American market offers many lessons. The huge successes, like Amazon.com (the first Internet book store) or CD Now (the first CD retailer on the Internet), or IT direct sellers Dell and Cisco, remain in the minority. But their example is encouraging a shift from technology to business-led implementations which is also appearing in the UK:
• Harley Davidson wanted to eliminate unacceptable delays of up to eight weeks on warranties. The company implemented HDNet to automate fax and phone-based processes. E-mail for dealers was launched through the simple application of a CD-ROM, a video, and a user manual. Huge benefits were gained in the first phases at very low costs, perhaps less than 20% of an equivalent IT version. Base technology: Internet e-mail.
• Saturn Cars (part of General Motors) generates 70% of new customers through the Internet. A simple Web page, which asks potential customers to type in their details, creates an e-mail link back to the corporate mini-computer, which alerts the local dealer by e-mail. Base technology: a few Web pages and an e-mail link back to Saturn.
• Life sciences company Genzyme used a student on summer vacation to develop a private Intranet, built with basic tools, to meet the needs of 3,500 employees in 30 branches world-wide. The system contained a wealth of previously unavailable industry news, research and regulatory information. Base technology: Intranet implementation package and e-mail.
• IntelSat is a multi-national 'co-operative' that runs 20 satellites offering bandwidth for telephony, data and television around the world. The board used to meet in Washington every six months and then produce a full 16-page report in four languages. IP technology made this report available without the costly need for hard copy versions. Next, bandwidths and schedules available for transmission from the 20 satellites were put on the Web, updated as and when needed. Base technologies: Web publishing, Intranet package and e-mail.
'Simple stuff' (a phrase much beloved by management guru Tom Peters) applies to all the above. 'Five-minute implementation' is another catch phrase. You may not be able to develop the world's most sophisticated Internet site in five minutes - but then maybe you don't need it. But you may well need Web technologies to give customers and functional managers a user-friendly, simple access route to complex core mainframe databases and applications. The Internet becomes a kind of glue that sticks together separate systems and provides an easy-to-use front-end for established information systems. And these new applications, remember, are either free or need only a small fraction of the established costs.
DUMBING DOWN THE TECHNOLOGY
The developing change is the dumbing-down of the technology and the new emphasis on business-driven, real and measurable competitive edge or excellence in customer service. By making this the new focus and keeping the technology away from the solution, business people can now feel confident about identifying opportunities based on computer applications they all understand - e-mail and Web pages. Keeping the systems simple enables fast implementation and the ability to change information, processes, structures and content format almost as fast as typing speed.
The systems can be used with customers, suppliers and internally with very short lead-times. If change is needed (as it certainly will be), pages and processes can be modified in minutes. Our experience confirms that a deliberately limited approach (one killer app at a time) is enthusiastically accepted. Consultants' 'shopping lists' identifying some fifty or so applications somehow step beyond the human ability to manage. 'Simple stuff' is starting to rule in this marketplace, to the mighty relief of managers.
They must still watch out for economic icebergs. The switch from an inflationary climate to one of stable or declining prices is an example. In Fortune magazine, Ram Charan analysed the switch and arrived at six examples of iceberg zones where tried and trusted strategies and tactics need urgent revision. These icebergs are pricing, market response, cost, resource allocation, flexibility and communication. Each of them provides an opening for a killer app where IP technology can play a pivotal role:
• Shift the emphasis to service. Establish interactive Websites that handle service enquiries, speed response times and enable a customer dialogue
• Shuffle the product portfolio. Get continuous reports on profitability and growth potential on the Intranet to raise issues of removal and replacement in real time
• Reform the supplier relationship. Drive down costs through higher purchasing volumes by cutting the number of suppliers drastically and taking them into partnership, with Extranets as a key means
• Switch resources to the most profitable uses. Have salespeople sell a whole range in one city (more effective than one person selling one line in several areas), backed up by Web access over a PC
• Break away from the annual planning cycle. Hold strategic meetings whenever issues present themselves, rather than wait for the annual planning round, by setting up a 'virtual' war-room on the Net
• Network the whole business. Whether the company is large or small, and whether you go simply for universal e-mail and shared databases, or jump to an Intranet, get everybody hooked up. Whatever the task, that will increase speed of execution.
That's yet another mention of speed, which is no coincidence. An article in the HBR is entitled Time Pacing - Competing in Markets that Won't Stand Still. It advises adding speed and time measures to your existing performance metrics. Then, look at critical transitions (say, from old to new products). Can you simplify, shorten or even abolish elements? (Netscape no longer gives new products out to selected customers for pre-market testing, for instance). Then, are your 'rhythms' synchronised with those of suppliers, customers, etc?
Once you start organising the business round faster execution, without loss of quality, nothing can remain sacred. And that includes the IT systems. The object of the exercise is to find the killer apps and the killer opportunities that the apps unwrap. Your motto, in the words of the cop drama Hill Street Blues is 'Let's do it to them before they do it to us'. Get your retaliation in first. Second is last.
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