A brave new world

by Stan Shih, Chairman & CEO, Acer Group

The paradigm shift of the IT business model seems closely related to the evolution of computer architecture. As the system of computer operations has changed from mainframe to PC-based client/server, to Internet protocol; the IT business model has also shifted from the vertical integration of giant companies to the disintegration of various segment leaders, to the current global super-disintegration, characterised by simultaneous horizontal and vertical disintegration. The super-disintegration business model has generated unlimited opportunities in the Internet world.

In five years, when all the 3C (computers, communication, consumer electronics) products are connected, a new e-world will arrive. By then, all platforms of 3C products would have been well established. 3C services (content, commerce, community) will play a more important role than 3C products in the IT business.

To be successful in the new e-world, IT enterprises would need to be well positioned in providing 3C services in the global super-disintegration business model. As we move from the industrial economy to the new e-world, new business rules will replace old ones as conventional core competencies which companies currently enjoy become less important. The three key areas that determine a company's performance are the ability to provide innovative technologies, the adoption of a customer-centric business approach, and strong commitment towards 'diversified-focused management'.

Firstly, the global industry trend is heading towards an intellectual economy. In the IT industry, the main competition has shifted from manufacturing capability to service capability, from 'labour-intense' to 'brainpower-intense', from hardware to software, from tangible to intangible value, and from the emphasis of efficiency to innovation. I tend to measure a company's competitiveness as a function of value over cost. Innovation that brings significant value to customers can deeply enhance the company's competitiveness.

Secondly, being 'customer-centric' does not just mean listening to customers' needs or simply producing goods to fulfill those needs. Instead, a company needs to learn more about customers' needs, and make the product or service increasingly attractive or useful, thus exceeding customers' expectations. In the new e-world, it will be much easier for companies to gather customer data and analyse consumer behaviour. Through the Internet, 'mass-customisation' for each customer tier becomes possible, or even necessary, as opposed to standardised products and services.

Thirdly, 'diversified-focused management' is important for Asian companies, who usually own 'undersized' domestic markets. During growth spurts, extending the businesses to diversified fields is the norm. In the e-world, companies should focus on their core competencies, while leveraging on the strengths of their partners. In the current global-industry ecology characterised by 'competition with cooperation', only companies with 'diversified-focused management' capabilities will continue to thrive.

In regards to the super-disintegration business model, 3C services are based on Internet-enabling technology, products and software. Enhanced service infrastructures should be built in advance in order to be competitive in the 3C service business. In the new e-world, we are no longer just concerned with computing power or bandwidth for the services. Values linked to management know-how, technological innovation related to Internet technology, Internet appliances, Internet software and Internet content will become crucial in ensuring that the company is successful in the new e-world.