Deconstructing Competitive Advantage

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BLOWN to BItS
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Philip Evans
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THE ECONOMICS OF INFORMATION
Richness (Bandwidth, Customization,Interactivi
ty)
Traditional Tradeoff
Reach (Connectivity)
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THE PROPRIETARY PHYSICAL VALUE CHAINNewspapers

• CONTENT
• Copy
• Photographs
• Advertising

• PACKAGING
• Editing
• Layout
• Pagination

• DISTRIBUTION
• Printing
• Newsstand and home delivery

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THE PROPRIETARY ELECTRONIC VALUE CHAINNewspapers
CONTENT
PACKAGING
DISTRIBUTION
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THE DECONSTRUCTED VALUE CHAINNewspapers
SUPPLIERS
NAVIGATORS
DISTRIBUTORS
US Weather Service
Reuters
Pathfinder
Boston.com
TV Guide online
NYSE
Yahoo!
Net- scape
Microsoft Sidewalk
ISP
AP
Auto Trader
Geocities
CNN.com
Careerpath.com
Private Party Advertiser
BBC.com
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DECONSTRUCTION

• Connectivity and open standards
• Separate the economics of information from the
  economics of things
• Blow up the tradeoff between Richness and Reach
• These two events undermine proprietary
  information channels, and melt the informational
  glue that defines businesses and business
  relationships
• Value chain definitions
• Distribution channels
• Customer searching and switching costs
• Supply chain relationships
• The firms relationships with stakeholders
  (investors, employees)
• Organizational structures and boundaries