Review: Unleashing the Killer App
Two weeks ago I sat in a packed ballroom in San Francisco’s Moscone Center and listened to “usability guru” Jakob Nielsen give a talk titled “Web 2003: A Five-Year Perspective on the Future of the Web.” The majority of Nielsen’s talk was, not surprisingly, focused on usability: the number of websites is growing astronomically, and our global productivity will suffer if those websites aren’t usable. But about 30 minutes into his talk, when it actually came time to prognosticate on what the web will be like in the year 2003, Nielsen relied on the same tools that futurists have been beating to death for years: Moore’s Law and Metcalfe’s Law.
Just a reminder: Moore’s Law states that processing power will double every 18 months. And Metcalfe’s law states that as more users join a network, the utility of that network grows by the square of the number of users. Nielsen combined these two “laws” with some projected website growth figures to compute that in five years the Internet will be 10,000 times more important to us than it is today.
That’s right, 10,000 times more important. But besides serving up the usual whiz-bang technical details of what life will be like in the year 2003 (extremely crisp flat panel displays, high bandwidth and loads of processing power), Nielsen failed to deliver any descriptions of the applications that will be running on the Internet that will actually make it 10,000 times more important to us.
I kept wanting to scream at Nielsen, “So where’s the killer app that’s going to make this network 10,000 times more important in the space of five years?”
Larry Downes and Chunka Mui claim they have the answer to that question in their new book, Unleashing the Killer App: Digital Strategies for Market Dominance. Unfortunately, it’s not a terribly original answer. Electronic commerce, of course, is the next killer app.
Downes and Mui admit up front that “electronic commerce” really isn’t an “application” per se, but, rather, a way of doing business. Luckily for them, turning the killer app into a methodology brings the “unleashing” part down to earth. After all, management books aren’t meant to make the mid-level folks feel too far out of touch with the next great thing, or too powerless to actually change the dynamics of their microslice of the economy. The name of the game here is “empowerment,” and by broadly defining e-commerce as a killer app, they’ve made it easy for anyone with a digital strategy to feel like they can “rewrite the rules of an entire industry or set of industries.”
“Unleashing” shows promise in its initial chapters, but only for those readers (like this reviewer) who enjoy lightweight business theory. Despite yet another retelling of the laws of Moore and Metcalfe, part one of the book, titled “Digital Strategy” breaks some new ground in describing the effects of a pervasive, scalable network (like the Internet) on the core unit of business: the firm. Using Ronald Coase’s research on transaction costs as backdrop, Downes and Mui convincingly argue that the Internet will have dramatic effects on the actual size of businesses.
In the 1930s, Coase argued that the size of the firm is driven by transaction costs, and that it will expand until “the costs of organizing an extra transaction within the firm becomes equal to the costs of carrying out the same transaction by means of an exchange on the open market.” Today, what makes electronic commerce a “killer app” according to Downes and Mui is that it has the potential to drive transaction costs to zero. As the Internet expands its reach both geographically and organizationally, it will have dramatic effects on the cost of individuals doing business with other individuals in the marketplace. For example, it could eventually become cheaper for the average office worker to order her own office supplies over the web and have them shipped to her FedEx, then to employ an office manager to keep a stock of paper clips, pencils, paper and manila file folders available in the closet down the hall.
It’s probably inevitable, then, that Downes and Mui create a new law from this argument, “The Law of Diminishing Firms,” which states that “as transaction costs in the open market approach zero, so does the size of the firm.”
Unfortunately, after passing their new law, Downes and Mui fail to provide concrete ways to actually implement it. After being teased with such an interesting premise – that the network will have far reaching impact on the very nature of business – parts two and three of the book, titled “Designing the Killer App” and “Unleashing the Killer App” provide the reader the usual vague advice that plagues so many e-commerce books. When it comes time to actually tell managers how they can help create their own miniature killer apps, “Unleashing” does nothing more than rehash the same old examples (Spring Street Brewery morphs into Wit Capital to sell its own stock!) in the same old Wiredspeak (“communities of value play a powerful role in developing and managing brand”). There’s very little here for anyone who’s even remotely involved in building e-commerce applications to sink their teeth into.
If business managers and web developers are going to play a tangible role in the success of e-commerce, then they’ll need more than hype (10,000 times!), and they’ll need more than interesting laws. The true killer app would be a business book that gives down-to-earth, tangible advice on how businesses can use the web to actually decrease those pesky transaction costs while building lasting relationships with end customers. “Unleashing the Killer App” ain’t it.