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New technologies are valuable only if many people use them. The usefulness, or utility, of a network equals the square of the number of users.
Every eighteen months, processing power doubles while cost holds constant.
The Law of Disruption, or Second-order Effects
"atoms to bits" is the second-order effect of the killer apps in the digital age. We refer tot hese second-order effects, the combination of Moore's Law and Metcalfe's Law, as the Law of Disruption. It can be simply stated as follows: Social, political and economic systems change incrementally, but technology changes exponentially.
Cyberspace is not a solid structure located in a certain place but a collection of digital technologies that together create an increasingly believable illusion of place. The more activities the environment can support, the faster organizations and individuals alike must adapt to its atmosphere, its gravity, and its physics.
Manifestations of the Law of Disruption, the visible catastrophes that puncuate the invisible workings of Moore's Law and Metcalfe's Law.
- Six Parts
- Search costs: Buyers and sellers find each other.
- Information Costs: Learning about the products and services of sellers and the basis for ther cost.
- Bargaining Costs: Setting the terms of a sale or contract
- Decision Costs: The cost of making the final decision.
- Policing Costs: Taking measures to assure quality.
- Enforcement Costs: In the case of mischief attorneys and pattents, suing etc.
The Law of Diminishing Firms
As transaction costs in the open market approach zero, so does the size of the firm.
Digital strategy consists of twelve design principles that guide the process for finding and shaping killer apps, and techniques that organizations of any size and in any industry can use to gain market dominance.
Sustainable competative advantage- plus new forces
- Must have control of one of the "Five Forces"
- 5-new entrants
- New Forces
The set of activities an organization performs to create and distribute its goods and services.
Three stages of Designing a Killer App
- 1-Reshaping the Landscape
- Understanding the enviornment and its constraints.
- 2-Building new connections
- Create the architecture for users both internal and external
- 3-redefining the interior
- rehabilitate the interior of the structure
Reshaping the landscape
- Four Principles1-Outsource to the customer
- 2-Cannibalize your markets
- 3-Treat each customer as a market segment of one
- 4-create communities of value
Building New Connections
- Four Principles1-Replace rude interfaces with learning interfaces.
- 2-Ensure continuity for the customer, not yourself.
- 3-Give away as much information as you can.
- 4-Stucture every transaction as a joint venture.
Redefining the Interior
- Four Principles1-Treat your assets as liabilities.
- 2-Destroy your value chain.
- 3-Manage innovation as a portfolio of options
- 4-Hire the children
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