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Net Worth: Shaping Markets When Customers Make the Rules Hardcover – January 8, 1999
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No one ever said consumerism was easy. At one end, the poor consumer faces a bewildering array of goods and services. On the other, vendors contend with a diverse and fragmented marketplace that makes finding the right set of customers akin to finding the proverbial needle in the haystack. And in between are the billions misspent on muffed purchases and broken marketing campaigns that serve only to stuff mailboxes and alienate the very customers that vendors are trying to attract. The rise of e-commerce has only intensified the problem by offering consumers even greater choice and vendors more competition. John Hagel and Marc Singer think they've got a better idea, and in Net Worth, they present an online scenario that would end this chaos and give both customers and vendors what they really want.
At the heart of Hagel and Singer's solution is the "infomediary" that sits between the customer and vendor. For the consumer, the infomediary acts as a trustworthy agent who knows the needs and habits of the client. For the vendor, the infomediary is the holy grail of consumer behavior, a marketer's dream. The infomediary brokers client information to vendors in exchange for goods and services for the consumer. The result? Happy consumers, satisfied marketers, and a very lucrative business model that awaits those entrepreneurs and companies that are bold enough to embrace the idea. The authors painstakingly outline the challenges and opportunities of developing an infomediary business and go as far as to peg the potential market cap of a dominant player at $20 billion by its fifth year of operation. While the idea of software agents is nothing new, Hagel and Singer may be breathing new life into the idea at just the right time. And even if infomediaries never arise, following the thinking of Hagel and Singer is well worth the price of admission. For marketers, managers, entrepreneurs, and just about anyone who thinks about e-commerce. Highly recommended. --Harry C. Edwards
From Publishers Weekly
Looking at the future of e-commerce, Hagel (coauthor of Net Gain) and Singer, both principals in the consulting firm McKinsey & Company, add a provocative twist to the conventional view that those companies with the best information about their customers will be the most successful. They examine not only how companies can acquire information about consumers but also, crucially, how consumers can control dissemination of their personal information and even charge companies for their use of it. To the ever-expanding e-commerce lexicon they add a new term: "infomediaries." These third parties will serve both consumers and marketers: consumers will use infomediaries to help them find products at the best price, avoid unwanted product pitches and protect their privacy; in turn, via the use of sophisticated filters, infomediaries will be able to provide targeted consumer profiles to companies. The companies will then be able to anticipate consumers' needs and offer them appropriate products. While some companies, such as Intuit or AOL, currently perform some of these functions, the authors predict that the infomediaries are likely to be new companies formed by partnerships between existing firms?most likely between companies with large consumer databases and newer, more Internet-savvy entrepreneurial ventures. Well-written and full of scenarios of how these infomediaries will develop, this book will interest marketers and those consumers who are eager to explore the electronic frontiers of the economy. 50,000 first printing; $150,000 ad/promo.
Copyright 1999 Reed Business Information, Inc.
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The material in Net Worth is carefully organized within three Parts: The New Infomediaries, Entry Strategies, and The Infomediation of Markets. Hagel and Armstrong also provide an Appendix: The Technology Tool Kit, followed by excellent suggestions for further reading. According to Hagel and Singer, "We came up with a key insight. Digital networks such as the Internet might for the first time provide the tools necessary for customers to capture information about themselves and to deny vendors access to this information....It became clear that there would be an opportunity for a new kind of business -- we call it `information intermediary' or `infomediary' -- to help customers capture, manage, and maximize the value of this information."
Hagel and Singer challenge a number of common views about the Internet: "First, we urge senior managers not to view the Internet simply as a way to do the same things cheaper and faster....Second, we reject the notion that the Internet is uniformly leading to disintermediation, creating opportunities for vendors to connect directly with customers while relentlessly eliminating all intermediaries that previously came in the way....Third, we question whether the real value of the Internet is in information access. The Internet instead is a powerful platform for connecting people or businesses with each other, enriched and enhanced by relevant information....Fourth, we are suspicious of claims that the Internet will systematically lower barriers to entry and lead to fragmentation of businesses." These excerpts from the text correctly suggest that (a) Hagel and Singer believe that there are several quite serious misconceptions about the Internet relative to virtual communities and (b) they have quite specific opinions about how best to shape markets at a time when customers determine what the terms of engagement are.
They assert (and I wholeheartedly agree) that companies playing the "infomediary" role are now -- or will soon become -- the custodians, agents, and brokers of customer information, marketing it to businesses (and providing then with access to it) on consumers' behalf, while at the same time (key point) protecting their privacy. In the final chapter, Hagel and Singer observe that "This book has argued that infomediaries can play an extremely valuable market role in reconciling the tension between the growing value of customer information and the growing concern over customer privacy....[Over time] infomediaries will reshape firms and markets. In doing so, they will unleash broad social changes and call into question many conventional approaches to public policy. Our response to these social and public policy issues will in many respects determine the pace and the ultimate effects of this innovative new business model." It is probably impossible to calculate the full value of what Hagel and Singer provide in this single volume. Theirs is a stunning achievement.
Beyond its obvious implications for multi-national enterprise, the concept of "infomediation" may well be the defining principle of global connectivity and interactivity for decades to come. My strong recommendation is that Net.Gain be read first, then Net Worth. My further recommendation is that both books be used to formulate the agenda for a workshop or what is generally referred to as an "executive retreat" (preferably for two days and located offsite) with all participants required to read both books in advance. Those who share my high regard for the two books are urged to check out Peter Senge's The Fifth Discipline as well as O'Dell and Grayson's If Only We Knew What They Know. Both can also help with the planning and then implementing the off-site workshop recommended earlier.
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Net Worth is relevant to three very different audiences.Read more