Not Walls, Windows: Capturing Value in the Digital Age
Posted: 19 Jun 2004
Much of strategy has been about defense, building the largest castle with the thickest walls to defend position and tying down the customer with switching costs, standards, and transaction costs. The digital age changed that, making ineffective the usual competitive advantages of size and scope, infrastructure, and the former capabilities. The metaphor has moved from walls to windows: for transparency, fresh air, connection, and some protection from the harsher elements. A proactive windows strategy assembles scale and scope collaboratively, creates relationships that make switching unattractive, develops intangible resources all along the value chain, and builds cospecialized capabilities. Illustrative examples come from three companies that have thrived in the digital age: eBay (a new company and industry), Lending Tree (new in an old industry), and Charles Schwab (old in an old industry).
Note: This is a description of the paper and not the actual abstract.
Keywords: strategy, value chain, capturing value
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