Beyond the bubble.

The Strategy Machine

By Larry Downes

Harper Collins

US$26.95

This book is based on a premise: The Internet bubble that burst two years ago was merely a stock-exchange bubble. According to the author, a revolution along the information highway has sent out roots and has changed--and continues changing--the way that business is done.

Larry Downes, an e-business consultant and author of the hit book Unleashing the Killer App, uses statistics to prove his hypothesis: In 2000, when the dot-coms collapsed in the stock market, worldwide use of the Internet tripled, to 18 million users from 6 million, and e-commerce in the United States increased to US$250 billion, of which $45 billion was consumer purchases alone.

Downes points out that America Online bought Time-Warner, and not the other way around, as would have happened if the Internet had suffered a devastating setback. During the first three quarters of 2001, he continues, speculators invested more than $25 billion in information technology companies--much more than what was invested in 1997 and 1998 when the Internet rose towards its zenith.

Why this avalanche of dollars for the digital world? Because investors noticed that beyond the ups and downs or the cataclysms of the stock market, the Internet and its technologies had created an authentic revolution capable of transforming industries, sectors and activities (communications, advertising, sales, etc.)

In this book, Downes offers a guide for executives, a guide centered on creating a "strategy machine" that can take advantage of the information revolution. This "machine" constantly generates strategies applicable to commercial operations. The strategies change in tandem with computer innovation and, at the same time, use the power Downes calls "the invisible capital" of companies. That's to say, information assets, such as name brands, knowledge, the relationships with clients and with sup-pliers--factors that many companies do not value fully.

The author makes liberal use of diagrams and tables as he illustrates how to create this "strategy machine." And he identifies both the catalysts and the tools available to executives who want to overcome internal and external obstacles as they push their companies to success. Downes also quickly points out that the biggest stumbling block on the road to great inventions (or, at least, the road to a solid bottom line) is resistance to change, a resistance rooted within human nature. Change is always difficult, even when it stands to bear benefits. The most powerful technology at the disposal of a company as it enacts change is leadership, the leadership of its executives, the vision of its directors.

Citing numerous examples of companies that failed because their leaders did not anticipate or assimilate the metamorphosis created by the information revolution, Downes explains why companies--regardless of their size or their industry-must create these "strategic machines." He explains how managers can alter their companies to encourage frequent innovation and to integrate new technology into their processes. For Downes, distancing a company from the metamorphosis generated by information technology advances is a recipe for disaster.

This book, therefore, is about the information revolution and the future route of business. And although past predictions of how to maneuver within the Internet gold rush were error-ridden, Downes does not stray from the course he has set. Rather, he affirms that we are at the dawn of the computer age and that microchips will play a ubiquitous role in human activity; from applications in business to usefulness in the daily tasks of life. That affirmation, in effect, is easy to prove. We are already surrounded by silicon tablets whose power we take advantage of every day, many times without realizing it: when we drive our cars, when we heat a frozen meal, when we pay our taxes, when we write a book review. What the future (a near future) brings has already jumped from the field of imagination to the field of planning.

--Andres Hernandez Alende

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Excerpt from: The Strategy Machine:

"Forget the Internet and the World Wide Web. They are only harbingers of the Information Revolution, dominated not by computers doing more things but by more things becoming computers, embedded into whatever you can think of, from clothing to food to the seats on the airplane where you are reading this book, intelligent products than can send and receive data across a global network--from the factory, from the store or from your suitcase."