A Cambridge perspective
on the digital world
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January 2003
At the end of 2002, the world appears more uncertain than it has done for
many years. What is the best strategy for dealing with uncertainty? In 2002,
people and organisations adopted a 'wait and see' approach: carry on with
what we were doing, tighten our belts, and see if the problems will go away.
But the problems haven't gone away. In many areas of business, society and politics the world has changed dramatically, and it isn't a temporary blip but a permanent shift. In business sectors from telecommunications to retail, the fundamentals have altered.
2003 will be a year of action in the face of uncertainty - because action is the best way to regain control. Action does not always turn out right. But inaction in the face of dramatically changed circumstances is certainly wrong, and is wide open to criticism from bosses, shareholders, customers and everyone else.
And there is no doubt that circumstances have changed, in every industry sector.
Take telecommunications for example. Once seen as a licence to print money for both operators and suppliers, the past year has seen a dramatic shakeup, with some companies going to the wall, and others a shadow of their former selves. A glut of investment in capacity ahead of demand, together with industry structures more relevant to the old world than the new, led to the inevitable result. New organisations - and some old ones - are emerging to pick up the pieces, and the industry is rebuilding itself in a new shape, more responsive to the new patterns of demand.
Or take the music industry, long dominated by the distribution of recordings on physical discs. Online technology, digital recording, and formats such as MP3 have altered the basic economics of the music business. This story has yet to play out, as a fierce technical and legal fight takes place over copyright and distribution. But inevitably, the music industry will end up a different shape from the way it has been for decades past.
Or take media. Digital television and radio have both arrived with a bang, dramatically increasing the number of channels available, while interactivity is becoming a standard media tool. Many of the techniques we pioneered on the Cambridge Trial of interactive TV in 1994/5 are now becoming mainstream. Advertising is changing, as new ways emerge to reach customers directly, including text and multimedia messaging. The BBC and others are making full use of the Internet, as a medium for time-shifted viewing and listening, a source of additional material and much else besides. Meanwhile the combination of text with conventional broadcasting creates entirely new possibilities. The media landscape has shifted, permanently.
The
story can be repeated in every industry sector. Companies that have not yet
felt significant change will soon do so.
For individual companies, these upheavals present key challenges, for which the least successful strategy will be 'carry on as before'. The winners will be those that take action. The losers will be those who stick their heads in the sand and wait for it all to blow away. If, by great good luck, they avoid being run over, they will eventually raise their heads to find their products obsolete, their customers gone and their suppliers dealing with someone else.
