Digital nervous system

Introduction

In 1994 Marco Boglione founded Basicnet, in order to salvage the Maglificio Calzificio Torinese from bankruptcy. The company owned a sportswear trade name, Kappa and Jesus Jeans, controvert jean trade name of the 80 ‘ . He bought the hallmarks and the caput quarters from the Torino Tribunal. I will travel in more inside informations of the narrative in the 2nd portion of this work, but the chief fact is that in 1994 the company was to little and did non hold the critical mass to vie with the chief participants of the market such as Nike and Adidas if non with an advanced concern theoretical account. In that minute the enterpriser, Marco Boglione, which was rather involved and fascinated by the technologic development ( the first old ages with cyberspace, DOS, Macintosh ware running ) decided which was the route to follow, the vision, that he is still pass oning to the more so 300 employees and conveying in front today. To vie from the beginning with the large participants of the market he had to construct a faster, more dependable and flexible “ machine ” . Something different had to be invented to pull off to be instantly back on the market after merely one twelvemonth from bankruptcy and to be “ planetary ” from the get downing with really limited resources. He stated to believe to make the Zero Gravity company, with a Digital Nervous System ( this will be a cardinal construct in this thesis ) to do information flow at the velocity of visible radiation ( or of “ thought ” as Mr. Bill Gates says ) so that all the companies and enterprisers in the web ( In the Basicnet name, net bases for web of enterprisers ) could be able to hold all the information needed to take determinations right and every bit fast as possible. In 1994, an surprisingly powerful instrument was traveling it ‘s first stairss, Internet. He instantly understood the potency of this instrument for concern and started to work the development of the Basicnet “ System ” . His thought was to make a what he ( Marco Boglione ) called the Zero Gravity company, a clash free environment where information could go in existent clip leting the HR to take determinations faster and better.

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In 1995 Bill Gates wrote his first book, the Road Ahead. In 1999 he wrote his 2nd book, Business @ velocity of taught. The most of import one is for certain the 2nd 1. In this book, Bill Gates tells readers, how he thinks concern will be done in the undermentioned decennary ( 2000-2010 ) and what companies and enterprisers should make to work the chances originating from the coming of Internet and new engineerings. It ‘s a book written for CEO ‘s and top directors that are inquiring them selves how to put in “ Information Technology ” , really voguish word in the late 90 ‘ . He tells them that they should construct in their companies a Digital Nervous System, that is what was being done in Torino ( Italy ) , at Basicnet since 1994, but about anybody else did in the undermentioned old ages.

In that minute everybody, companies, multitudes and media ware concentrated on the new web sites that ware being launched and in the astonishing guess bubble that was turning on the stock markets between 1999 and 2000. The alleged “ New Economy ” . I am non here to talk about that, I want to talk about Digital Economy, that after an in-depth research, I found out that about merely Bill Gates and Marco Boglione spoke about in the last 10 old ages.

What has did non go on often in the last 10 old ages is that Internet and it ‘s unbelievable potency was really used for what it has been created for, to reassign information. In this thesis the word information will be cardinal. I the literary reappraisal I will analyze and seek to better understand the importance of “ information ” , and it ‘s power as a possible beginning of competitory advantage. As a effect how Internet can supply this information ad allow directors to construct a cardinal success factor around the information flow. I will so take the Basicnet instance survey as illustration, showing and analysing the advanced concern theoretical account based on a web of enterprisers connected through the Internet. I ‘ll take it as an illustration because it ‘s a SME and thanks to this concern theoretical account it manages to vie globally against bigger and richer rivals and because it ‘s a company that I know really good and about which I can hold entree to tonss of information.

The purpose of the thesis is to argument that Information flow can be a beginning of competitory advantage and that this possible competitory advantage is exploitable by constructing a Digital Nervous System and incorporating all the value concatenation of the company on the Internet. Basicnet will be the instance survey analyzed to implement my thesis. I will besides analyse the grounds for which this so of import invention did non hold the expected consequence on economic system in the last 15 old ages. In decision I will seek to make a model to understand if the Digital Nervous System is applicable to all companies, and in any instance what features should a company have to work the chance originating from this 15 old ages old invention.

Many other really of import and good established companies managed to make a sustainable competitory advantage working the potency of the Internet and of the Digital Nervous System such as Dell, Ryanair, McDonalds, Amazon and many others, that now and at that place I will utilize has benchmarks.

Not many have written about what I mean for the Digital Nervous System subject, so the chief beginning of information refering the Zero Gravity construct and the DNS will material coming from Business @ Speed of Taught and some other stuff coming from Microsoft the from archives of Basicnet. I will mention to other articles and books to heighten the importance of a Digital Nervous System as a beginning of competitory advantage, and it ‘s pertinence to traditional concern theoretical accounts.

The Digital Economy and the Zero Gravity Concept

The first thing I will make is to briefly stipulate a construct that is really of import to right construe this work. What do I intend for Digital Economy? What is the difference between the celebrated “ New Economy ” and what Bill Gates calls “ Digital Economy ” ? I will so travel to specifying the Digital Nervous System and the Zero Gravity construct and the facets that characterize this sort of economic environment. Important will be to give some grounds of the importance of the information flow for directors and companies in order to reason how this instruments can supply a company with a sustainable competitory advantage.

“ New ” or “ Digital ” Economy?

For digital economic system I mean that economic system where companies and enterprisers use and exploit the chances originating form invention in the engineering sector utilizing it to better their degree of productiveness, fight and planetary presence.

Nowadays people tend to tie in the name Digital Economy to the New Economy and the dot.com bubble of the terminal of the 90 ‘ . That period, between 1995 and 2000 was characterized by and exceeding economic growing, where the coming of Internet and new engineerings created a minute of euphory on Economic and Financial markets, “ in 1995, Newsweek coined the phrase ‘New Economy ‘ to mention to this happy province. Harmonizing to many observers in the late 1990s, “ Investings in Information Technology had eliminated economic fluctuations and ushered in a aureate age of economic prosperity ” [ 1 ] .This hyperbole continued for many old ages, making its maximal degree the 10th of March 2000, when the Nasdaq collapsed with the dot.com

bubble, and had his worst minute in June 2002 with one of the biggest bankruptcies in USA ‘s history, the WorldCom 1. With the prostration of the guess bubble, the New Economy phenomena was resized and gained a more “ human ” dimension. But the thought that people still have of Internet associated with concern is that you can make easy money with it, I do a web site, do it popular and sell it for 1000000s of dollars. Really few of them managed after 10 old ages to be really profitable, if non by utilizing the Internet to better an bing concern thought. The dotcom dream is still alive, in the Silicon Valley Internet start-up ‘s are created every twenty-four hours, but it ‘s non about this that Bill Gates was believing in 1999 when he wrote Business @ Speed of Thought.

His vision and prevision of the radical consequence that Internet could hold had on economic system and on competition in any market is well different from what really happened and from what the companies and stock markets are still waiting for. Him and many others in the late 80 ‘s and in the 90 ‘s idea that IT could truly hike the universe ‘s economic system to a new degree of productiveness and prosperity. But it was non the instance. Quoting the Nobel Prize for economic system Robert Solow, “ You can see the computing machine age everyplace but in the productiveness statistics ” [ 2 ] , stating this, he started the so called “ productiveness paradox ” related to the “ New Economy ” , concept that many research workers developed in the undermentioned old ages and are still developing now. In 1994 E. Brynjolfsson argued “ one hypothesis to explicate the productiveness paradox is that computing machines are productive, yet their productive additions are realized merely after a lag period, during which complementary capital investings must be developed to let for the usage of computing machines to their full potency ” [ 3 ] . Even if besides this quotation mark is rather old, it gives a good point of position to understand why really few companies managed in the last 15 old ages to truly work the potency that IT and Internet could give them in footings of productiveness and competitory advantage. This because the cost in footings of clip, attempt and money is really high ; a strong entrepreneurial vision was needed to go on puting in the execution of what Bill Gates defined as a Digital Nervous System ( this construct will be widely developed subsequently on ) , which is what truly would hold given companies a competitory advantage based on ICT ( Information Communication Technology ) , and productiveness harmonizing to Business @ Speed of idea. We all know that the large bulk of companies and directors have to show quarterly studies to shareholders, and long-run investings are ever hard to convey preface, particularly when the top of this investing is really hard to see for who does non hold the entrepreneurial vision and particularly for who has a short-medium term puting skyline. Besides J. Triplett [ 4 ] ( 1999 ) argues that you still ca n’t see effects on productiveness straight originating from holding computing machines and Internet in offices, because this, as for the debut of electricity, will take clip, and benefits will be seen in the long slowdown. It ‘s shortly traveling to be 20 old ages since Internet started to be available, and a large portion of the companies in the universe are still stuck on the “ website and e-commerce ” construct, and still did non pull off to work the existent potency of invention.

Sum uping, the economic system that was built around Internet in the last 15 old ages, can be called “ new ” , the result of this period are companies such as Google, Facebook and similar sites, societal webs and hunt engines well, that are the lone 1s that can truly be defined “ new ” since they could non be without Internet and they have wholly advanced concern theoretical account. They are considerable radical from a societal point of position, but non from the economic 1, they did non alter the manner of making concern around the universe, they did non alter the manner companies are managed, and did non better productiveness or the GDP of any economic system. I ‘m stating this, because in the 90 ‘ the outlooks towards the engineering and IT inventions ware really high and this outlooks have perfectly non been reached. Bill Gates was one of those, but his outlooks ware mentioning to something else that the dot.com passion, much bigger and that was expected to truly revolutionise the manner of making concern.

Basicnet was one of the few innovators in the Digital Economy, but the lone effect ( besides a good and sustainable public presentation achieved in the last 15 old ages in a really competitory market such as the sportswear one ) of this advanced thought was that in 2000, likely because of a misinterpretation due to the “ net ” in the Basicnet name, some journalists wrote on the first page of Milano Finanza ( on of the two most of import fiscal newspapers in Italy ) that the company was a trap, and as for other dot.com ‘s, behind the New Economy name there was nil. The stock plunged in the undermentioned yearss and it took old ages to retrieve. At that clip, Mr. Boglione ‘s and Mr. Bill Gates ‘s vision about Digital Economy and the importance of constructing a Digital Nervous System was public, but cipher seemed to see the difference between the New Economy and the Digital 1.

What does Bill Gates mean for digital economic system?

In 1999 with his book, Business @ Speed of idea, Bill Gates was conceive ofing that in a few old ages clip, the universe of concern was traveling to be revolutionized by Internet and it ‘s application to the bing concern theoretical accounts doing them more efficient, flexible and competitory if compared to the others on the market. In the average clip, Marco Boglione and the Basicnet squad ware already using this theory and developing a digital nervous system that would hold allowed them to sell jerseies all over the universe.

Is it E-Commerce?

The first thing that a reader could believe is, good, Digital Economy = E-commerce. The phenomenon is acquiring bigger and bigger you can purchase about everything on the web. E-commerce, is now accounting for about 4 % [ 5 ] of entire B2C commercialism in the USA. Even if it ‘s turning rapidly and in comparative Numberss it ‘s really large, it still a little piece of the bar and still did non alter the manner concern is done.

Having an online store is a retail solution, efficient, economic and necessary in many concerns. But it does non intend that the company is Web Integrated. However it could be seen as the first mark that something is been done in order to better the web-integration of the company. In 1995, with: The Road Ahead, Bill Gates used the term “ Friction Free Capitalism, to depict how Internet was assisting to make Adam Smith ‘s ideal market place in which purchasers and Sellerss can easy happen one another without taking much clip and disbursement much money ” [ 6 ] . Well, the E-commerce is the firs measure towards this ideal market, but the distribution is merely a portion of the value concatenation, and e-commerce is the digitalisation of this peculiar measure of the value concatenation of a company, and even if it ‘s a really of import portion of it, it ca n’t vouch a sustainable competitory advantage on it ‘s ain. There must be a Digital Nervous System behind the e-commerce web site so that all the procedures, from production to the logistic are synchronized and that everybody in the company can hold all the information in existent clip.

Digital Nervous System

The nervous system is the manner our organic structure has to reassign information about. This thesis is all about information, and how good managed this charming word can give companies a competitory advantage. The importance of this really powerful instrument has non ever been underlined, and frequently it has been considered as a back uping component.

From the theorical point of position

The construct that stands behind the thought of the Digital Nervous System is that Internet can let to the information to flux with no clashs within and outside the company, and that this can give a company a competitory advantage. In simple words, we are giving the information a high value because information can give us high added value.

The information has an indispensable function in the value creative activity of a company, but as for Rolf Weiber and Tobias Kollmann, “ the information has in the past ever been considered holding a secondary function in the creative activity of a competitory advantage ” [ 7 ] .

They so expanded the construct of the importance of this digital flow of information, they theorize that in analogue with the “ physical ” market place there is a “ cyber marketspace ” , “ characterized by information fluxing on electronically powered information systems, where information is handled, processed and utilized, through which practical value creative activity ironss are brought about within informations webs ” [ 8 ] . Rayport and Sviokla ( 1994 ) specify this practical universe as “ marketspace ” , “ this marketspace can be seen as an unreal, intangible market for information ” [ 9 ] . This division between market place and marketspace, ever citing Weiber and Kollmann, can take to public presentation betterment in the market place ; information is cardinal to accomplish an addition in efficiency. Information can be seen as a freestanding end product, and can be traded in the marketspace. And eventually “ Information can supply extra consumer value in marketspace. Trought the parallel use of the marketspace and market place, information can organize the footing of an extra public-service corporation in its ain right over the above physical offer in the market place ” . This is merely a small portion of the big literature that there is sing the importance of information. All this is functional and supportive to what I am seeking to indicate out, the critical importance that digital information has for the success of a company. The Digital Nervous system that Bill Gates is showing in his book, is the instrument that can let the information to flux within the company, non merely. It ‘s the instrument that can let the company to work the competitory advantage that is “ latent ” in their value concatenation. This value is in the connexions between what we have merely defined as the physical market place and the “ practical marketspace ” . It ‘s in the manner and the velocity with which the information flows between the “ rings ” of the concatenation of value creative activity of a company. And non merely within the company, but besides how this information manages to interact with the external participants of the game, such as clients and providers.

From a practical point of position

This construct can look rather abstract, to do it a small spot “ concrete ” I will cite a important sentence of the debut of Business @ Speed of idea that absolutely summarizes this thought and besides fits with the company topic of the instance survey since Mr. Gates is talking of a new stile of fabricating company, that is precisely what Basicnet is: “ A maker or retail merchant that responds to alterations in gross revenues in hours alternatively of hebdomads is no longer at bosom a merchandise company, but a service company that has a merchandise offering. These alterations will happen because of a demilitarizing simple thought, the flow of digital information. We have been in the information Age for about 30 old ages, but because most of the information traveling among concerns has remained in paper signifier, the procedure of purchasers happening Sellerss remains unchanged. Most of companies are utilizing digital tools to supervise their basic operations: to run their production system ; to bring forth client bills ; to manage they ‘re accounting ; to make their revenue enhancement work. But this is merely automatizing old procedures. “ [ 10 ] It was 1999 when M. Gates wrote this book, he thought that the digital-business age was behind the corner, he was incorrect, still nowadays really few companies are utilizing digital engineering for new procedures that basically better how they work, that gives them the full benefit of all their employees ‘ capablenesss, and that give them the velocity response they will necessitate to vie in the emerging high-speed concern universe.

The success of the failure of a company depends on how they get, manage and utilize the information.

Bill Gates introduced this topic the first clip in 1995 with his first book in a superficial manner, and more in item in the 2nd one in 1999.

that we can happen in the value concatenation presented by Porter ( 1985 ) that divides the company in strategically, that there is a really high value in the information that flows between the ironss of the value creative activity procedure.

analysing the value concatenation with the Porter attack,

The clash free marketspace that was quoted supra is merely a small portion of what Bill Gates nowadayss in his book.. This is the definition he gives of Digital Nervous System: “ A Digital Nervous System is the corporate, digital equivalent of the human nervous system, supplying a well-integrated flow of information to the right portion of the organisation at the right clip. A Digital Nervous System consists of the digital processes that enable a company to comprehend and respond to its environment, to feel rivals ‘ challenges and clients ‘ demands, and to form timely responses. A Digital Nervous System requires a combination of hardware and package, it ‘s distinguished from a mere web of computing machines by the truth, immediateness and profusion of the information it brings to knowledge workers and the penetration and coaction made possible by the information ”

“ Business theoretical accounts based on today ‘s mostly inactive information architectures face challenges as new ways of making value arise. When a client ‘s purchasing penchants are sensed in existent clip at a specific location, dynamic pricing may increase the odds of a purchase. Knowing how frequently or intensively a merchandise is used can make extra options-usage fees instead than straight-out sale, for illustration. Manufacturing procedures studded with a battalion of detectors can be controlled more exactly, raising efficiency. And when operating environments are monitored continuously for jeopardies or when objects can take disciplinary action to avoid harm, hazards and costs diminish. Companies that take advantage of these capablenesss stand to derive against rivals that do n’t ” [ 11 ] .

Why is it better?

The importance of the information flow

The digital nervous system

Time – Space – Cost

Case survey: Basicnet

Why Basicnet?

The entrepreneurial History

Vision and Mission

Business Model

Key success factors

Internet, entrepreneurship and COMMUNICATION

The cardinal success factors of the concern theoretical account How can internet be a cardinal success factor for a traditional company? the importance of the web of enterprisers for basicnet Is this concern theoretical account applicable to other industries and other companies?

Can a company become digital or does it hold to born digital?

Decisions

Bibliography

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  • Rayport, Sviokla ( 1994 ) “ Pull offing in the Marketspace ” , Harvard Business Review
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  1. Wikipedia, Search: New Economy
  2. Robert Solow, 1987
  3. E. Brynjolfsson, 1993
  4. J. Triplett ( 1999 ) , The Solow productivityparadox: What do computing machines make to productivity?
  5. Quarterly E-Commerce, U.S. Department of Commerce, 16th February 2010
  6. The Road Ahead, Bill Gates, 1995
  7. Rolf Weiber, Tobias Kollmann ( 1998 )
  8. Rolf Weiber, Tobias Kollmann ( 1998 )
  9. Rayport, Sviokla, ( 1994 )
  10. McKinsey Quarterly ( 2010 ) , The Internet of Things