Figure 8.9: Uniting inner and outer
Economic value in this model stems from speed, effectiveness, and complexity. Instead of arguing about who is right or wrong, each party cites the information that has informed its decision. In this way mental models are shared, and conveyed to the minds of other players, in a process where decisions are mutually qualifying.
For Amazon's customers, more and more data - such as reviews - is thrust before their eyes, often promoting opposite opinions. This is now more than caveat emptor (let the buyer beware). On the Internet that has been replaced by a new paradigm - caveat lector (let the reader beware).
Dilemma 5: Premier Pages: The Bridge between Gift and Sale
Romeo said to Juliet "The more I give you the more I have." This has always been the case of relationships based on true love, but only recently has it become more and more true of relationships between business partners. We are not talking here of well-springs of positive emotions, but of sharing important information and allowing the combinations of that information to procreate new knowledge and new synergies, usable by all parties in the interaction. Again we'll go back to Dell.
Michael Dell is typically eloquent on this topic. "The real potential of the Internet lies in its ability to transform relationships within the traditional supplier vendor customer chain. We are using the Internet to share our own applications openly with suppliers and customers, creating true information partnerships. We are developing applications internally, with an Internet browser at the front end, giving them to our customers and suppliers" (Trompenaars and Hampden-Turner, 2001).
Since Dell computers are an integral part of the information and knowledge communicated, as well as a means of storing, receiving, retrieving, and sending knowledge, the more this knowledge is "given away" the more necessary it becomes to purchase the computers to which this knowledge refers and by which it is organized. Several web entrepreneurs made their fortune by giving away programs, browsers, tools, etc. and asking users to make a donation if they found the gift useful. Their subsequent enrichment was largely or entirely the result of voluntary reciprocity. Similarly if Dell supplies you with vital information then buying their computers is a rational response and a means of keeping that information coming.
Instead of arguing whether this is "really" a gift or "really" a sale, we need to understand that co-generating knowledge on the Internet transcends this dichotomy and that gifts and sales facilitate one another. The bridge that Michael Dell has built between Dell, its customers, its suppliers, partners, and subcontractors, etc. are the Premier Pages which we've already mentioned. As described earlier, these are password-protected web pages, serving the special information needs of business customers and technology partners. There are over 40,000 of them and they serve as a dynamic interface for customers and partners to access relevant information. For a corporate customer this could include information on global accounting, preapproved pricing and configurations, technical papers, product road maps, and so on. At the click of a mouse, corporate clients have immediate access to a complete picture of their purchasing channels. For a particular client this could be the number of computer systems bought at its European operation, details of standing orders, or preapproved configurations and discounts. Of course, customers had to be willing to share information with Dell and its suppliers in the first place in order to benefit from better-informed relationships. Many purchasing departments are secretive by habit, but they learn that being more transparent can lead to more attractive and better-customized deals. What Dell does is to model the transparency it seeks from others and waits for them to reciprocate, so that confidences are mutual.
Michael Dell explains: "Driving change in your own organization is hard enough; driving change in other organizations is nearly impossible. But we believed and still believe that the Internet will become as pervasive as the phone. We know it was too important to our business and potentially to our customers' businesses to wait for them to figure it out for themselves. What teaches parties to reveal more about themselves is experience, the more that is known about your needs, the better others can serve you" (ibid.).
But the value of Premier Pages soon became evident. Companies no longer had to work through their purchasing channels every time they needed to purchase a computer. Dell made it a point to have this kind of information up and ready from the very beginning. Dell's Premier Pages have resulted in massive savings; companies have told Dell that they are saving millions of dollars by ordering their products and getting support in this way.
Michael Dell is persuasive about the economies achieved. "Early on, Ford Motor Company estimated that it saved $2 million in initial procurement costs placing orders through its Premier Page and Shell Oil saved 15 percent of its total purchasing cost. Premier Pages also allows us to deliver critical service and support information directly to our customers, based on the specific products they buy and use. This information is drawn from the same databases our own technicians and engineers use. This doesn't necessarily result in major cost savings for Dell. But it has resulted in significant cost savings for our customers, enriching their relationship with Dell."
Premier Pages are also a bridge to research and development between Dell and its partners: "The Internet is also changing the way we work with our technology partners. We are moving to truly collaborative research and development models, using the Internet to share information openly and work together in real time. We can also engage our customers in our product development, giving them the same level of access to critical information as our own people have. For example, we were able to develop and introduce an award-winning line of notebook computers, using the Internet to keep a common set of records by engineers in the United States and Asia. By making the same information available to critical partners we were able to close the information loop. A traditional, vertically integrated company would have spent months, if not years, designing parts and building them" (ibid.).
Dell has built supplier web pages for its top 20 suppliers, covering 90 percent of its procurement needs. These pages allow Dell suppliers to provide Dell with rapid information on its capacities, upside capabilities, inventories in their supply lines, component quality as measured by Dell's own metrics, and current cost structures.
Dell passes on to the supplier direct and immediate customer feedback, gathered in part through its customer Premier Pages. This covers such areas as quality in the field, current forecasts and future demand, special technical requirements, and end-user market pricing.
This type of collaborative partnership is a starting point, or a portal, for future innovation. Any innovative process will have to begin from a point where time and distance have been shrunk and where development speed is unimpeded. The quality and directness of the relationship, the speed with which you can channel information, and the dynamic forces that you thereby create will determine the long-term sustainability of your position in an industry with notoriously short life cycles. Like Dell, you will have blurred the traditional boundaries between buyer, seller, and supplier, and you will have created a radically new creative enterprise.
The process by which Premier Pages becomes the bridge between the gift and the sale is depicted in Figure 8.10.
Figure 8.10: Premier Pages - the bridge between gift and sale
What Dell has done is left behind the hard sell of hardware, and by gifting to all members of its network the relevant information, it promotes the computers and the relationships which convey that knowledge. The computers are the text within the context, helping to structure and move information across the bridges of knowledge, which join all members of Dell's ecosystem. In the progressive, mutual revelation of deep needs these bridges become preferable to all others. The wealth of knowledge that ties together members of this network would be very hard to duplicate or reconstitute. The Net binds its members by hundreds of threads.