Business Webs (Re: Bricklin: "Small Business and Web Sites")

Gary Lawrence Murphy garym@canada.com
12 Oct 2001 15:49:36 -0400


This is an issue near and dear to my nanocorp heart; IMHO the solution
is in forging "business webs", loose federations of small business
nanocorps that leverage Internet technologies to achieve the close
integration found in the large multinationals of the previous century.
Effective and ubiquitous use of Internet by small business will come
when the lines of communications are opened between themselves, and
when the "customer APIs" become more limited.

The big problem with the nanocorp is not capabilities or quality of
service, but scale.  A nanocorp is restrained by their own size.  For
example, Disney recently claimed the bid to supply all educational
software to the British Columbia school systems, not because Canadian
companies lacked quality solutions, but because no one Canadian
company had the resources to assign someone to wining and dining the
minister of education for months, and none could provide a complete,
one contract K-12 full curriculum solution.  I see this scenario
replayed every day.

Because the nanocorp is stuck with the contracts scaled to their own
size, they operate with very limited profit margins.  They are unable
to compete for the larger multi-million dollar contracts that would
give them the surplus they'd need to afford expensive lobbying.
Because of restricted resources, they also become niche players.  No
local bookstore can hold the entire Amazon catalog, so each picks
their niche and stays with it.

The solution is simple to state: Each nanocorp functions like a
department of a large enterprise.  Each business web uses freelance HR
people, freelance project managers, engineers, accountants, sales,
call centers and legal talent.  Business webs are assembled and
re-assembled ad-hoc to fit each contract, and the coordination of
these units follows all the same time-proven and well understood
dynamics of large organizations ... only each remains an independent
"ruthlessly small business" -- small, lean, and intrinsically human.

Take, for example, Amazon (or Barnes and Noble or any other market
leader).  What if all Amazon was consisted of an interface to a
distributed inventory database and POS system linking every small
bookstore in North America, like the old public-library catalog?  What
if I asked Amazon for a book, it took my postal code and told me it
could deliver tomorrow for local-delivery charges while simultaneously
informing my local Wiarton bookstore that it had just sold a book to
me?  If it's a rare book, it might tell a bookstore in San Francisco
that it had just sold a book to be routed through the Wiarton outlet,
while telling me that the shipping for this one item is going to be a
little more.

Or take our software industry. Which is better: eLance offering me 40
micro-contracts a day and offering each buyer 5 dozen would-be
contractors, or a single point of entry that distributes the load
globally, as happens if you call on IBM or Anderson?  Is it better to
have thousands of "our product" software sites, or one site that just
asks "What did you need?" and finds it or creates it?

Which is likely to generate the most overall business: One famous
URL that leads seemlessly and silently to the optimal vendor(s), or
100,000 forgotten and obscure, badly designed partial-solution
shopping-cart sites hidden on 5,000 scattered webhosts?

Business webs have a potential flexibility beyond what an Anderson
Consulting or IBM Professional Services can muster.  There are no
demoralizing layoffs, no dead-weight kept on because of slack time.
No huge capital asset costs.  Each node simply pulls its own weight.
Like Mardi Gras in Rio, we build something amazing for a few dollars
here, a few dollars there, each providing what they can where they
can.

Business webs would nimbly assemble and dissassemble on a per-task
basis.  Comparing nanocorps to megacorps is like comparing insects to
mammals, or better still, comparing mammals to dinosaurs: They are
more numerous, more efficient, and adapt to changing conditions with
greater speed.  Humanity is a great example of how an otherwise
defenseless critter can rise to great power through network
communications.

Last year, I worked with Industry Canada on a prototype solution, and
projects such as Collab.net have also tried to crack this "industry
co-op" business web model.  I think we both failed for the same
reasons.

Some have proposed that the problem is of VC, claiming banks and VC
would rather fund one winner than 100 maybies, but our work with IC
disproved this: The Bank of Montreal was one of our first vocal
supporters, and with their endorsement, most of the others chimed in.
BMo even offered to fund a pilot project to prove the concept.

The real problem was a bootstrap issue. By definition, unless the
communications infrastructure exists, small businesses are unable to
rise to the task of building the infrastructure, and no large
enterprise would dare build the infrastructure that would undermine
their dominance.  Of all the edu-ware participants in our IC pilot,
not one could afford to apply even a single resource toward the
invention of this infrastructure.  After a year of planning, and even
with the carrot of the BMo project in hand, the initiative fell apart.

Of course, it was not so completely simple. There were loads of other
issues.  For example, when the federation received a request for a
bid, how do they decide between member nanocorps who may offer similar
capabilities?  How do we equitably distribute the work?  How do we
ensure and follow-up on quality control?  How do we handle complaints?
Who owns the intellectual property?  

But as I said, these are the same business process issues faced daily
by the megacorps; it's not something they were born with, they had to
learn all those answers on the fly, but today, the answers are the
meat of your average industrial engineering or MBA degree.  I'm
also finding out that many of the bootstrap issues are common with
the farming co-op movements after the Great Depression.  It seems
/solvable/.

For those interested, there's more thought-prodding on nanocorp
business web issues at http://www.sohodojo.com

If anyone wants to bankroll my local-bookstore-network idea, 
I'm available ;)

-- 
Gary Lawrence Murphy <garym@teledyn.com> TeleDynamics Communications Inc
Business Innovations Through Open Source Systems: http://www.teledyn.com
"Computers are useless.  They can only give you answers."(Pablo Picasso)