BLOWN TO BITS:

How the Information

Revolution Is Reshaping
Corporate Culture
An Interview with Tom Wurster

No industry, company or business concept can escape the impact

of today’s information revolution, according to Tom Wurster and
Philip Evans, whose recent book, Blown to Bits, has sounded an
alarm for businesses worldwide. The authors, who say that
technology “blows to bits” the glue that holds today’s value chains
and supply chains together, warn that technologies – particularly
the Internet – will disrupt many companies. At the same time,
the information revolution will create significant opportunities.

LP: What impact will the new economics of information

have on existing organizations?
In the information age, the hierarchical corporate structure is no
longer a workable model for most organizations, and companies
are being forced to eliminate layers of management, decentralize
operations, take greater risks, seek short term investors, and
deal with employees who are loyal to their profession, not
their employer. Silicon Valley companies demonstrate the new
information culture best. With high employee mobility, dot.coms
are often temporary alliances or collaborations with porous
boundaries. Their employees and investors come and go regularly,
and view the company as a temporary stopping point.

LP: Business as we know it is about to be “blown to bits”

by the new economics of information. Can you explain how?
Digital networks are making it possible for everyone to commu-
nicate everything with everyone else. This phenomenon is
creating a new economics of information, rendering the behavioral
patterns, institutions, and asymmetries that have defined
marketing, supply chains, organization, and the boundaries of
the corporation obsolete.

LP: What forces are driving these new economics of

information?
The channel choices for marketers, the inefficiencies of consumer
research, the hierarchical structure of supply chains, the
organizational pyramid, and the boundaries of the corporation
itself will all be thrown into question when everyone can exchange
rich information without constraints on reach. This is already
happening in a number of industries, and over the next five to
ten years, we predict many more relationships throughout the
business world will deconstruct.

LP: What industries are most vulnerable – and who will

the winners be?
The winners in this new game will be the players who are good
at one thing, or more precisely, the smaller number of things
that define advantage in a deconstructed business arena. Delivery
services like Federal Express, efficient warehouse operations
such as Wal-Mart, and even Schwab functioning as a brokerage
transaction platform could gain massively from using their
specialized, focused capabilities (physical or informational) to
support the new intermediating models of others.

LP: How will these players compete?

On three dimensions: reach, affiliation, and richness. Reach,
for a navigator, means the size of the universe across which it
can navigate – the bigger the better. Agency affiliation means
the closeness with which the navigator identifies with the
interests of its client(s) (who may be any combination of consumers,
retailers, and suppliers) and serves as an agent for the clients’
interests. Richness means the quality and customization of the
information that the navigator delivers. This competitive dynamic
has no necessary connection to the physically defined ways that
traditional navigators compete, opening up tremendous profit
opportunities for these new players and rendering a potentially
devastating threat to existing businesses.
 LP: How can incumbents respond to the challenge?
By mimicking the characteristics of new economy, deconstructed
cultures. Internally, they can reward divisional managers as
owners of the “company” they control by measuring performance
in ways that approximate those of capital markets, like measuring
each business unit’s contribution to the corporate stock price.
This shifts risk to managers’ shoulders – and creates new
opportunities for personal wealth. Externally, companies can
collaborate with customers and even competitors to pool
competencies and gain business.

LP: How will the information revolution affect leadership

and corporate culture?
Since the information revolution will cause leaders to rethink,
and possibly discard previous notions about business definition,
competitor threats, and competitive advantage, corporate
culture has become a precious asset. Culture, not factories,
brands, business definitions or ownership patterns, defines an
organization. And an organization’s unique culture is a conscious
and deliberate creation of leaders who established it through
incentives, election of other leaders and above all, by example.
Tom Wurster, co-author of Blown To Bits (HBS Press: 2000) is senior vice president
of The Boston Consulting Group in Los Angeles and co-leader of the firm’s media and
convergence practice.

Hallmarks of the
Infotech Culture
Organization becomes soft wired
Grouping and regrouping into teams
Individuals handle multiple projects simultaneously
Fluidity Teams work out their own roles and responsibilities
Roles substitute for fixed job descriptions
Neither roles nor teams have permanence
Continuously self-organizing and adapting
Number of tiers in hierarchy radically reduced

Flatness Informal channels for sharing, reassuring, coaching

Informal interventions (not formal planning and reviews)
Managing by email vs. managing by meetings
Everyone’s actions become more transparent
Disgruntled people and poor performance harder to hide
Trust Management successes known without trumpeting
More motivation to appear to be a good corporate citizen
High level of collaboration