The Hindu Business Line : Cause reactions between customer groups

Catalysts in business are those who can similarly cause reactions between customer groups, say David S. Evans and Richard Schmalensee in Catalyst Code ( www.landmarkonthenet.com). “ ;These customer groups are attracted to each other. They need each other in some way. But without the catalyst, the two groups might never come together.”

For instance, Frank McNamara who started Diners Club more than 50 years ago, after he found himself in a fix without a wallet and a chequebook at a restaurant, was an economic catalyst. His credit cards brought together merchants and customers.

As per the latest reports, about 22 million credit cards are in use in India, and the value of transactions has doubled over two years, to nearly Rs 34,000 crore. In 2004, the US banks “earned profits of $33 billion just from issuing credit cards.” Microsoft Windows is another example of an economic catalyst. “In 2004, companies that sold applications that ran on Windows had worldwide revenues of $42 billion.”

Among the world’s richest people on the Forbes list, you can find many who have made their fortunes by developing or shepherding catalysts, say the authors. “Some — like Pierre Omidyar, the inventor of eBay; or Lar ry Page and Sergey Brin, the founders of Google — became wealthy by tapping into the power of the Internet revolution to create valuable catalysts.”

Evans and Schmalensee spot catalysts among auction houses, financial exchanges, and nightclubs. “So are the Palm operating system, the Sony PlayStation, TiVo, and i-mode, the most popular wireless Internet service in Japan… A significant portion of the value created by today’s economy now comes from catalysts and their communities.”

The book identifies three technological developments in the last quarter century as key to the increasing importance of catalysts. These are: steep fall in the cost of computer processing and storage; significant reduction in communication costs and widespread use of broadband connectivity; and the rise of software platform technologies.

The last factor is the least well known, say the authors. “Software platforms not only serve as catalysts to bring different groups of people together, they are increasingly the engines running many businesses.” Examples are TiVo and Xbox. Software is at the heart of these, though users may tend to focus on the tangible aspects such as the hardware that is plugged in and turned on.

A book that can ignite innovative thinking.

A milestone invention was the HP model 524A high-speed frequency counter.

Milestone inventions

Chapter three in Michael S. Malone’s Bill & Dave ( www.penguinbooksindia.com) is titled ‘That damned garage’. It begins thus: “In January 1939, Bill Hewlett and Dave Packard signed the papers and formally incorporated Hewlett-Packard Company. Bill agreed, as part of the deal, to advance some money to the company to purchase some components and tools. Packard contributed the equipment he’d brought from General Electric…”

The book is about how Hewlett and Packard built the world’s greatest company. The easy narrative straddles several decades and technology generations.

Take, for instance, the period 1950-1960, when the company grew thirty-fold, from $2 million in annual revenues to $61 million. In 1951, HP had just 215 employees. Yet it averaged 20 product introductions per year, “introducing new products — even inventing whole new categories,” writes Malone.

A milestone invention was the HP model 524A high-speed frequency counter. The company had identified an unmet need for a counter that could measure the frequency of a radio signal. “There were already instruments on the market that could perform this measurement, but they were painfully slow — taking as long as ten minutes to make a single measurement of a high-frequency signal.”

It was Al Bagley, a member of the early HP engineering team, who took one of the prototype nuclear counters, added a second electronic gate, and created a frequency counter that could measure 10 million cycles per second. “This was 50 times the performance of the then best frequency counter on the market, which had a top limit of just 2,00,000 cycles per second. In practice, this meant that, instead of the usual ten minutes, the HP524A could precisely measure a signal in just one or two seconds…”

Just one of the many absorbing anecdotes in the techno-biography.

There are two kinds of companies, those that work to try to charge more and those that work to charge less.

Two kinds of companies

Instant global news, instant global impact; geography matters less; nine to five becomes 24/7; size matters less; short-term focus becomes even shorter; the Net levels the playing field; and people are the ultimate scarce resource.

These are some of the ways in which technology has changed the way that organisations and their people work, writes John Middleton in Gurus on e-Business ( www.vivagroupindia.com). The boo k brings together the views of the world’s thought-leaders on e-business.

“There are two kinds of companies, those that work to try to charge more and those that work to charge less. We will be the second,” reads an e-bite of Jeff Bezos of Amazon.

Andy Grove of Intel has this to say: “Within five years all companies will be Internet companies or they won’t be companies at all… Companies not using the Internet to improve just about every facet of their business operation will be destroyed by competitors who do.”

Get also to read about Michael Hammer (the man who popularised BPR or business process reengineering), Jonathan Ive (Apple’s award-winning vice-president of industrial design), Kevin Kelly (first editor of Wired magazine), Ray Kurzweil (inventor of the Law of Accelerated Returns), and more e-gurus.

Niklas Zennstrom, co-founder of Skype, appears as the penultimate one, in the book. Using VoIP (Voice over Internet Protocol), Skype allows users to make free, unlimited calls via their Internet. “The idea of charging for calls belongs to the last century,” he says.

And the final e-guru, the fortieth in the book, is Shoshana Zuboff, the author of ‘In the Age of the Smart Machine’. “The informated organisation is a learning organisation… Learning is no longer a separate activity that occurs either before one enters the workplace or in remote classroom settings,” she wrote in that book. “Learning is not something that requires time out from being engaged in productive activity; learning is the heart of productive activity. To put it simply, learning is the new form of labour.”

Quick thought-bites.

Tailpiece

“He lacks e-mail etiquette!”

“Doesn’t run a spell-check before pressing the ‘send’ button?”

“Worse! He sends me mails on a Sunday!”

dmurali@thehindu.co.in