Musings on Entrepreneurship and Innovation
Sunday, January 12, 2003I just finished reading John Hagel's latest book, Out of the Box: Strategies for Achieving Profits Today and Growth Tomorrow through Web Services. The title notwithstanding, this is a book on business strategy. It's a good one.
The basic themes of Out of the Box are unassailable:
- Flexibility is valuable in the face of uncertainty. Modular architectures -- technological or business -- can unleash tremendous value (as is documented in Design Rules: The Power of Modularity). However, modular architectures are predicated upon well-defined interfaces among the components.
- Specialization is a key driver of economic growth. However, in the absence of well-defined business interfaces, most businesses are a bundle of business processes that create a host of internal inefficiencies and contraditions.
In this latest work, Hagel argues that web services offer the possibility that a class of technological interfaces (based on XML-related protocols) will unlock value and catalyze leveraged growth by encouraging (and, indeed, requiring) increasing specialization along the dimensions of business process networks. He discusses the conditions that will need to emerge to ensure the application of web services technologies to mission-critical business processes: a prospect that is certainly possible, but not ensured. One predicate is the existence of a middleware-like grid of services like those to be offered by Groove Networks in its upcoming release: fault-tolerant messaging, security, and user management.
In his previous book, Net Worth, Hagel popularized the term "infomediary," which came to be associated with a variety of failed dot com business models. (It was clear that too many dot coms read the book selectively.) Out of the Box is an extension of this previous work, and it reflects learning from the painful lessons of the Internet bubble. As a consequence, it's better.
