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Anirudh Dhebar
Sloan School of
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Management
Massachusetts Institute of Technology
38 Memorial Drive, E56-329
Cambridge, Massachusetts 02142-1347
Telephone: (617) 253-5056
e-mail address: adhebar@mit.edu
Information Technology and Product Policy
Information Products
(B):
Anirudh Dhebar
WP # 3856
August 1995
ICRMOT WP
# 134-95
U3RAR/ES
Copyright
©
1995 Massachusetts Institute of Technology
Information Technology and Product Policy
(B):
Information Products
Abstract
Information products are crafted from data, a totally different kind of raw material, and they
can be delivered in a range of media, physical as well as nonphysical, and permanent as well as
transient.
These characteristics make
and information technology
much
(IT),
like a potter's wheel,
for a special relationship
especially
when
between data, information products,
the technology
is
employed
to digitize the data and,
shape the pliable clay of (possibly multimedia) Is and Os into an
assortment of analog and digital products. Increasingly, consumers, too, have access to their
potter's
end
wheel of
there: the
IT
—
to
it
as a transient electronic
that includes "analysis"
it
own and
flicker;
and "transactions." This
are a special triad; next,
the issues,
their
fashion derivative products. iTs role does not
technology can also serve as the pot, the
displayed, albeit
IT
add value of
it
medium
in
which the clay
and as the conduit
article details
for
medium;
is
transported and
an expanded product scope
why data,
information products, and
articulates the important product-policy concerns; and,
considers IT'S impact on product policy in three cases:
product, physical
(2) digital
(1) digital
database, digital product, physical
database, analog or digital product, electronic
medium. The exploration
sketch of a topographically rich territory; but
we
own
is,
having framed
database, analog
medium; and
(3) digital
admittedly, only a rough
are in the early days of exploration, and even a
rough sketch can be of great assistance given the paradigm
shifts in play.
Mention "information technology," and many managers
will think of
centers for an organization's information, control, decision-support,
enablers of task automation; as foci of
new
computers
—as nerve
and communications systems; as
product-design and manufacturing technologies; as
coordinators of material flows and logistical support; and so on. While these information-technology
(rr)
applications can
This
is
—and do—
the second of
products and product
"smart" products
impact usually
affect a firm's products, the
lines.
two
articles focusing
on
IT
is indirect.
applications that have a direct impact
In the first article in the series (Dhebar, 1995c),
—physical products that have
IT
1
embedded
in
I
took
them; in this
up
on
the case of
article,
look at
I
information products, the "production" (information collection, storage, editing, and publishing),
distribution, access,
and consumption of which are increasingly dependent on
Information Products:
A Special Product Category
—a scoop of
Information products stand apart from other products
ream of
IT.
ice
cream, a haircut, a
office-copier paper, a janitorial service, a personal computer, a country-club
luxury sedan, a factory-construction contract, and so on
—in
membership, a
two very important ways:
building blocks are data, a totally different kind of raw material; and
(2)
(1) their
they can be delivered in a
range of media, physical as well as nonphysical, and permanent as well as transient.
distinguishing characteristics
make
for a special, multi-faceted relationship
products and information technology and
lie at
the root of
some
These
between information
rather unique product-policy
concerns.
Begin with data, the raw materials, the "clay" from which the
many information
products of
industries such as publishing, education, entertainment, financial services, broadcasting,
and
telecommunications are fashioned. As raw materials go, data are quite unusual:
1
The impact, though
indirect,
may
still
be
significant. Better
and more timely information, improved decision
support, design automation, flexible manufacturing, electronic data interchange, and so on, can have a
significant impact
on the product
line.
I
focus on direct IT effects in this article not on the basis of their
significance or otherwise but because of the product-policy issues that are raised.
-2-
They may be obtained from
•
number
a
of diffused sources, they
may
be abstract
in
nature, and, in and of themselves, they need not be represented in a specific physical
form. 2
Often, data can be repeatedly copied without depleting or diminishing the original
•
and, properly archived, will not deteriorate over time. 3
Even when data are represented
•
medium, they can be
in
an analog form and stored
and spliced with
sliced
and packaged and repackaged
The
at will.
relative ease in
in or
many
on
a physical
different
ways
data's shaping into finished products,
while bound by traditional rules of "grammar" and constrained by technology,
remarkably
free of the constraints
encountered
in the
is
case of other, non-information,
products.
Not only do data
•
additional information,
may,
in turn,
and
data for yet
details about the conversion of the data into information
form the basis
for
even more information
marketed as product, though not necessarily
Once data
may become
lead to information, the information itself
to the
—information that may be
same customer population.
are collected, "sanitized" (checked for relevance and accuracy, noise eliminated,
information content amplified, and so on), and stored, they can be rendered into and marketed as a
variety of products through the editorial, publishing,
2
Consider, for example, the sentence
letters of the alphabet),
"data can be
somewhat
in
which
this point
but the information contained in
abstract in nature,"
and
it
and distribution process, with
is
made.
("data
It
consists of
may come from
a
and of themselves, data are not necessarily
"in
Furthermore, the sentence
"pixels" on
it
my computer screen;
on paper
while others
3
The media
may
in
took shape
1
saved
it
in
on
my mind
a disk as
(in
what form?); then,
an electronic
file;
next,
I
it
"hear"
tied to a specific
words and alphabet
appeared as multicolored
used a laser printer
black-and-white and using Palatino font; and some readers will "see"
may
in
first
later,
wide range of
words (consisting, in turn, of
number of diffused sources,"
physical form") synthesizes several elements, and the synthesis transcends the specific
letters.
a
it,
to print
others will "read"
it,
it.
which the data are stored might deteriorate and, as
deteriorate in quality, but that
is
not the
same thing
a
consequence, some or
all
data
may be lost or
comment
as the data themselves deteriorating. This
docs not imply that the information value of the data may not deteriorate; indeed, some data, for example,
today's weather forecast, are perishable in that their value and relevance diminish once their time has passed.
possible user-level interactivity. Information products stand out in these regards as well, particularly
when
it's
that
IT is
employed
role falls into
is
the
facilitate
two
some
or
all
of these tasks. Staying with the data-is-like-clay metaphor,
categories: the "potter's
medium in which
wheel" that
is
used
to
shape the
the clay passes from the potter's wheel to the
end
clay,
and the "pot"
user.
The Two Roles of IT
The Potter's Wheel
While planning
this article,
I
happened
to talk to a friend
working on a CD-ROM-based
kitchen-design planning tool that used as a starting point a book which, in turn,
compendium
cases
to the
was a
print-on-paper
popular television program "This Old House." The core product
was information
—information on the same topic
(in the
case of
my
in all three
friend's project, kitchen
design) and launched off the same primary source, but with significant differences in content, format,
product-user interaction, delivery media, copyright considerations, and so on.
for the differences: the
fashion the digital
is
when
CD-ROM version employed
brew
An
important reason
and
to
wheel
IT
the potter's wheel of IT to digitize the data
into a very different kind of product.
And what an unusual
potter's
operating on data:
•
Through the process of
digitization,
it
converts data from analog clumps
of, for
example, text-charts-pictures-and-doodles-on-paper, sounds-on-tape, and images-onfilm into elemental strings of Is
and
Os.
4
information with the help of just two building
different
from other
potter's
press, the tape recorder,
4
Characterizing the bits of Is and Os as "the
some
length. Purists
form
in
of information,"
Negroponte (1995) explores
—correctly—that some information
digital
is
fundamentally
film editor.
would argue
which many data originate and the
ability to represent all
wheels as the pencil, the typewriter, the typesetting
and the
DNA
—the
elements— IT
In this regard
form
in
is
lost in
this
conversion
at
the translation from the analog
which they are stored
in the IT
medium. The
loss is
diminishing given improvements in sampling and data -compression technologies and falling prices and greater
availability of
more capacious memory
devices.
•
A
central difference
between
IT
and the more
traditional data processors such as the
and the film editor
pencil, the typewriter, the typesetting press, the tape recorder,
product
in the
more
data structures consisting of Is and Os are profoundly
possibilities:
pliable than databases consisting of analog text, numerical data, graphical
images,
still
pictures, sounds,
product-possibilities set.
and video footage, and the
Consider:
at a
result
very basic level,
a larger
is
it
and deeper
is difficult
together a paragraph of text with a chart with a video clipping with sound;
clumps maintain
create a multimedia collage, but the respective data
media
much
identities.
finer.
With
all
The
potter's
Negroponte (1995) characterizes the mixing of
wheel of
IT
to
meld
you can
their individual
data represented in the form of Is and Os, the granularity
media as "commingling." Commingling
•
is
is
and Os from
Is
is
different
the special opportunity of multimedia.
and the opportunity
to
commingle
bits not
only transform
the product-possibilities set, they also radically alter the economics of product
creation
—and thus further transform the product
compare
length,
friend
•
possibilities.
at the level of product, product-line possibilities,
and revision dates the book version
was producing. What
Then, there
is
of "This
production
of example,
cost, print-run
Old House" with the CD-ROM
my
are the consequences for product policy?
—of the data
the matter of keeping track of value
collected, of the different Is
By way
and Os once data are digitized
(all
when
they are
data, information-rich
or information-poor, are represented in the form of Is and Os but, value-wise,
and Os are not the same), and
of the
commingled
Is
all
Is
and Os once they are offered as
information products to individual consumers.
•
In
theory at least, the potter's wheel of IT can extend seamlessly from the
information-product producer to the end user, with each link in the distribution
chain performing value-added operations on the same Is and Os, raising thorny
questions about product integrity, boundaries, ownership, and so on. Furthermore,
with bits replacing atoms and on-line information services coming into their own, the
distribution-chain construct itself
The product does not have
•
can be
friend's
made
to
may need
be limited
to include user-level analysis
them
in isometric rendition,
countertop surfaces. While
it
was not
could also have been designed so
modem and
revisited.
Appropriate extensions
and
will
and
In the case of
transactions.
my
be able to plan alternative kitchen
virtually experience the texture of
the case in
my
friend's product, the
CD-ROM
having made the choice, the user can dial
in
place an order for the necessary materials, sign a contract with a
building contractor, and
...
that,
be
to "information."
CD-ROM, for example, the consumer
layouts, see
via a
to
make payments with
the help of "cybercash."
and The Pot
Information products do not have
medium (for example,
to
be represented
in or
on a "permanent," physical
as text printed on paper, sound recorded on tape, or images captured on film).
Instead, data can be compiled, transported, and, as a product, articulated as (transient) electronic
signals that, with the help of
such cases,
The
IT
provides the
(not exact)
metaphor
IT,
are heard as sound over speakers and /or seen
medium in which melded and shaped
is
that of the pot. 5
computer revolution brought
IT's potter's
news and information
to disseminate foreign-exchange
intelligence display terminals
5
—well before the personal-
(
wheel
to the individual
In 1973
represented physically.
—Reuters Holdings PLC,
consumer
organization, started a Reuters Monitor
and money
"dumb"
Money
rates electronically to subscribers
Rates Service
worldwide on low-
terminals with no local computational capability and
The metaphor is not exact because the real, earthenware pot, a physical
pot employs the electronic medium to articulate data which,
rr -based
display. In
data are represented as information.
An example will help illustrate this IT-is-the-medium role.
a London-based
on a video
—
made of clay; in contrast, the
we saw earlier, do not need to be
entity, is
as
little
6-
local
memory). 6 Reuters distributed the information as "pages," which
was displayed and updated
at
also
how
the information
each subscriber's terminal. The pages were pre-composed and the
them
subscriber could not electronically slice and splice
system employed
is
IT in its first role (the potter's
at will.
Reuters' production
and distribution
wheel) for data collection, editing, storage, and
information composition; communications technology for the distribution of information to
subscriber terminals; and
IT in its
second role (the pot)
at the
subscriber end for display.
The Rcuter Monitor Money Rates Service pages were transported and accessed as complete
pages.
In that sense, they
were analog
interesting features of IT in
access
medium
for
role as the pot:
IT:
can be used
and provide
one of the
a user-level
the potter's wheel or as the pot, the use of IT in the production, distribution, access,
A
lot
raises a
number
—and will continue
of data start off
how
far
down
what stage
—in analog form
to start off
if
at all,
(live
sound and
should the data be digitized and
the distribution chain should they be kept in digital form? Also, at
in the chain
What about
and
of product-policy questions:
video footage are two examples). When,
(2)
to transport
is
Product-policy Questions
consumption of information products
(1)
it
That
analog as well as digital representations of information products.
Information Products and
As
its
—and not digital — information products.
should the data be converted into information?
data collected and transformed into information before digitization
technologically possible
and economically
practical?
such data around. Should these data be digitized
There are
to
(literally)
was
volumes of
render "new-and-improved"
products?
(3)
At what
stage,
if
at all,
be packaged into (or on
6
along the product-distribution chain should information
to)
bits
physical media?
Sec Dhcbar (1995a) for a description of the dynamic interplay between Reuters' technological choices, the
company's products and markets, and the evolution of demand for financial information.
Even
(4)
should
(5)
(6)
IT
be used as a transport and display medium for pre-composed information?
To
the extent that (1) through (4) result in a change in the user interface,
the
new
interface be?
what should
How would the user navigate through the data/information?
How much
user interactivity should be built into the product, and should the
interactivity
be
local (for
example, the ability to analyze data or perform simulations)
and/or with the product supplier
with other product users
(to
supplier establish and
how
or to play a game)?
integrative a (digital) database should the
how much commingling
require the supplier to revisit
The above questions are very
query a database or to place an order) and/or
(to enact a transaction
In the case of multimedia products,
(7)
what extent
the data and/or the information product are not digitized, to
if
real
some or all
of the
and very current
for
should there be? The answer
may
above questions.
product managers in the publishing,
education, entertainment, financial services, broadcasting, and telecommunications industries as they
redefine existing products
and launch new ones
in the
wake
of the "information superhighway," the
increased capability and accelerated penetration of multimedia hardware, and the yet-to-be-seen-in-
what-form convergence of the telephone, the television
separating hype (and there
because they
is
make sense and
a lot of hype) from reality and
set,
and the computer
making sure
are posed.
The
and of
itself
—the problem
principal reason for this
context-specific: the
answers are
is, it is
difficult to
conceptual level
—
I
name but
will
the while
answers are chosen
is that truly
likely to
at the level at
useful answers are, with
be quite different
a few. Accordingly
frame the issues somewhat
—and articulating them has
answer them
for, say,
Sega video games, Time-Warner cable, Citicorp banking services,
learning programs, to
all
not because they are the fashion of the times.
While the above questions are of great contemporary import
intrinsic value in
specific
—
—and
to
exceptions, highly
Penguin books, Disney
MCI
on-line services,
add value
differently.
some
which they
and
films,
distant-
to the reader at the broader,
-8-
Specifically,
will
I
following generic cases:
(2) digital
examine some
(1) digital
database, analog product, physical
medium
database, digital product, physical
a CD-ROM);
and
(3) digital
Money
Reuters Monitor
more important product-policy
of the
medium
its
The
digital descendants).
first
third case takes
classification
scheme
up
will
article);
medium
(example: the
case focuses on IT-as-the-
potter's-whecl at the producer end, the second case extends the potter's wheel
and the
(example: this
(example: a demographic database available on
database, analog or digital product, electronic
Rates Service and
issues in the
down
to the
consumer,
the case of IT-as-the-pot, with or without the potter's wheel aspect. This
allow us
some
to get to
of the
more
interesting product-policy issues
without getting mired in the finer details.
Digital Database,
Analog Product, Physical Medium
Traditionally, information products
physically,
a stock
have been created, distributed, and used
and without much commingling. 7
exchange display board, and
at least the vestiges of
storage, editorial,
an
IT
is
in digitization
product. Thus, the distribution system
in the
can bear
fruit
By working with
It
is
not as one seamless interconnected data
to distribute
final
and the consumer may continue
medium, but with improvements
flexibility at the
to
in data accuracy,
information-producer end:
a digital database rather than an analog one, the producer can, at
the very least, reduce the time,
7
if
—even without any apparent change in the
system productivity, publishing economy, and product
•
An obvious
form of individual workstations.
may continue
receive the "same" analog product in the physical
equity prices on
producer end. Indeed, today, most information
at the
architecture,
and publishing system, then
The investment
all-text newsletter, a table of
analog form,
audio cassette are good examples.
a pre-recorded
starting point for the use of IT in this setting
producers have
A printed
in
money, and hassle
useful to distinguish coexisting media from
—not
to
mention the possibility of
commingled multimedia: books have
sketches and movies have synchronized video and audio tracks (coexisting media), but that
is
text,
graphs, and
not quite the
same
thing as a hypertext -linked multimedia CD-ROM where the user can construct multitudinous information sets by
stringing together digitized audio, video, text, numeric, and pictorial data.
-9-
—that go into transcribing analog data from one location, format, or medium
errors
to
another, converting the data into information, and publishing and distributing the
information as a product in an appropriate physical medium.
In a competitive environment, these benefits should lead to a cleaner, crisper,
•
cheaper, more-customized product that gets faster to the end user.
Indeed, the
information producer should be able to more speedily and economically introduce a
greater variety of products in the information marketplace. 8
It
whoever
behooves the information-product manager
is
in charge of information systems
—and
—not
not the chief information officer or
above benefits
to take the
for granted.
Information-product managers would do well to bear in mind the following considerations as they
go about digitizing databases and turning
to the potter's
wheel of
IT for
converting digital data into
information products:9
•
IT is
beguiling
when
it
comes
to a
balance between form and content:
sucked into the game of getting the appearance "right"
editorial
and publishing system lose sight of the
does not do much good, for example,
if
it is
easy to get
—so much so that parts of the
fact that content, too, matters.
a piece of text looks attractive
if
the writing
It
is
of poor quality.
8
I
began
lines
the
and
same
this article
by making
stating that the article
pre-
and post-
IT,
a distinction
then the reader
applications to information products
what
reduce set-up costs and bring the efficiency,
production batches
—and
between
would focus on
it's direct
direct impacts.
may
and
If
indirect impacts
on products and product
the final information product looks and feels
well ask, "Isn't this an indirect impact?
Aren't such
IT
manufacturing systems are to physical products?: Both
economics, and quality discipline of mass manufacturing to small
flexible
both only indirectly affect product policy."
The point
is
well taken, but the
manufacturing systems and computerized data collection and storage, content
editing and composition, and information-publishing systems is not quite valid: the former do not interact with
comparison between
the
raw
flexible
materials of the physical products that they are used to manufacture in the
of rr
on product policy
direct rather than indirect
sensitivity than a flexible
9
same way as the latter do. It
(IT) that makes the impact
the basic interaction between the clay (data and information) and the potter's wheel
is
manufacturing systems
—and a reason for managing the
IT initiative
with a different
initiative.
These considerations are the information-product equivalents of rr-related product-policy challenges identified
Dhebar (1995c) in the case of "smart" products physical products that have IT embedded in them.
in
—
-10-
Product customization
•
is
a
worthy goal, but there
Just because data
variety.
digitization
is
such
a thing as excessive
product
and editorial-and-publishing-system
automation reduce setup costs and transform the economics of product variety,
does not mean
it
product manager must increase the extent of variety. In the
that the
final analysis, the distribution
consumers should value
system should be able
to
handle the variety and
it.
Data digitization and editorial-and-publishing system automation enable the product
•
manager
to
introduce
advantage. But there
some
may
new products more
is
rapidly in the marketplace.
also a risk: digitization
of the old-style supply-side constraints,
introduce
and automation
That
is
an
relax or eliminate
and the less-restrained supply side
new and new-and-improved products
faster than the distribution
system or the consumers can avail themselves of the new versions. 10
The above
application of
realized
IT
and the
benefits
and
risks are only the first-order effects of data digitization
as the potter's wheel at the information-producer end.
pitfalls
Once
and
the
the benefits have been
avoided, the real action can begin: the consolidation of multifarious digital
data bits into one large integrated digital database (stored centrally or networked over several
workstations), the feeding of these data through a computerized information "turbine," and the
creation of
may
new products by shaping
the data in entirely
be analog, not multimedia, and rendered
contained in them are shaped
in a physical
may make them
some transcendental
information products from the data
set that the real
nowhere near
10
large, that
is
what
it
medium,
the
the novelty with
new products
which the data
particularly attractive in the marketplace.
consolidation of islands of data into
And, by and
new ways. Even though
larger set
opportunity of
and
in the creative
It
is in
shaping of
the
new
IT lies.
remains, an opportunity: most information producers are
the ideal of one large integrated digital database, computerized information turbines
See Dhcbar (1995b) for a more detailed discussion of situations where speeding producers of new-andimproved products may run into balking consumers.
-11-
are
more (hyped up) goals than
real systems,
and creating non-traditional cross-data products
requires traditional product managers to think outside the box.
Digital Database, Digital Product, Physical
Medium 11
A printed all-text newsletter, a table of equity prices on a stock exchange display board, and a
—
pre-recorded audio cassette
in all these cases, the user receives information
hear, record, clip, save, or whatever,
There
is
can add
Specifically,
it is
may see, read,
and add value through understanding and comprehension.
on the type and amount of value the user can add, and how he or she
a fundamental limit
it.
he or she
often difficult,
if
the information provider began with and to
not outright impossible, to back out into the
add value
with value as added by the information provider,
differently;
and even
if
the user
is satisfied
not always easy or convenient to take the
it is
printed newsletter, stock-quote display board, or pre-recorded cassette and physically mix
other pieces of information to create
new
as an electronic
distributed
marketed
file
on a floppy disk
on a CD-ROM
in a
on
The
result:
text, the
(instead of a display board),
at first blush, the
table of equity prices,
the information product
medium. Thus,
(instead of printed text
of (hopefully) value
even though,
same
a physical
if
if
table of equity prices
12
For a case study illustrating
sit
at his or
added operations on the
her
own
potter's
Intellectual, or
and mixing
it
in
mental mixing,
is
consumer may be getting the same information
issues raised in this section, see
of course possible, and
we do
it
all
your mind with other information already contained
level of understanding.
But even the brain has
wheel of
its
limits
when
it
Dhebar
in
your brain
(the
same
digital rendition is a very
The
principal
(1992).
the time. Indeed,
comes
IT
digitally represented information.
and the same audio recording), the
many of the
were
and the pre-recorded audio segment were
different product with a very different value proposition than the analog version.
11
were delivered
the newsletter were available
on paper), the
computer-readable format, then the user can
and perform all kinds
them with
information. 12
Some or many of these limitations can be overcome
to the user in digital form, albeit in or
raw data
you are reading this
to arrive at a (hopefully)
to information mixing.
text
new
-12-
reason for the difference: the user can add his or her (idiosyncratic) value, and thus fashion entirely
—sets
new information
that the original information-product supplier
sets
population of consumers could not have conceived of or found
Earlier,
during the discussion of
CD-ROM-based kitchen-design planning
IT'S role
it
as the potter's wheel,
in the
In the
CDROM
rendition,
in isometric form,
in the
two very
either read the section
With
may
of countertop surfaces.
book and the CD-ROM may seem the same,
my
friend's
on kitchen
play with the CD-ROM.
Clearly, even though the
it is
definitely not the same.
different products with very different value propositions.
The CD-ROM example points
or multimedia.
to
be able to "try out" alternative kitchen layouts, "see" them
will
and "experience" the texture
"information" contained
We are looking at
consumers
had alluded
I
print-on-papcr-book version of "This Old House," or they
design
to a large
viable to implement.
The consumer can
too.
marketing
text,
to
graphics,
accessed by the user as such
another source of difference: the possibility of commingling,
still
frames, motion video, and sound
weaved together
—and
— the information conveyed to the user and the complete product-use
experience are very different from the CD-ROM's book or television counterparts (the book allows
greater user interactivity but offers very
richer
media mix, but
—as of now—
little
in
terms of multimedia; the television program offers a
little interactivity).
information products can allow the user to take
Appropriately designed and used, digital
maximum
advantage of the information
possibilities
contained in the supplier's multimedia database, and this further sets apart the digital product from
its
analog predecessor,
if
any.
The transformation
digital
product) does not
of the product
and the value proposition (by going from an analog
to a
come without some challenges, however. These challenges bear explication,
especially given the widespread excitement about information superhighways, multimedia
computers, and CD-ROM-based "edutainment" (infoedutainment
descriptor) products.
In this
is
probably a more appropriate
hype-charged environment, established publishers and information
entrepreneurs alike are rushing digital versions of a plethora of heretofore analog products to
market
—not always without making sure that
13-
(1)
the analog products in question lend themselves to a digital rendition;
(2)
from the consumer's point of view, there are significant value-added opportunities
in obtaining the information in digital rather than analog form; 13
the information producer
(3)
is
able to shape the
raw data
in a
form most conducive
to
consumers making the most of these value-added opportunities;
(4)
consumers have the
(1)
make
the most of the value-added opportunities (consumers
through
(3),
IT
kind of potter's wheel and pottery-making
consumers know how
(5)
(consumers must
of
(6)
hardware and
given
it);
make
to
know how
to
the most of the value-added opportunities
work with
for all of these points to
work out
pot they would like to
make
the data clay
and how
to
make pottery out
consumers must have a vision of the type of
right,
—and the information-product producer must know
commercially available multimedia software
And
for reasons
are discovering
illustrates
— and
—getting
somewhat deeper than those
(or
all
might
be).
as the uneven quality of
of the above six points right
often
made between
CD-ROM-based encyclopedia or
Os.
13
to a digital
product
From the point of view
Limited for
next section.
now
art gallery.
is
no
A comparison
the multimedia software revolution and the Gutenberg press, but there
basic difference: books existed before the Gutenberg press; there
an analog
is
articulated in the points themselves.
For an appreciation of the somewhat deeper reasons, begin with the product.
is
right
and
As many information publishers
feat.
must have the
tools);
what the vision of different consumer segments are
small
ancillary software tools to
The difference gets
is
is
a
no similarly close counterpart of a
to the heart of the
problem: going from
not simply a matter of replacing analog representations with Is and
of product consumption, everything is/can
to delivery in or
on
a physical
medium.
I
take
be different:
up the case
of the electronic
medium
in the
—
14-
product content
•
for
example,
terms of what the reader can do with
(in
very different from an electronic
is
file
it,
this
paragraph on paper,
version of the "same" paragraph
saved on
a
•
medium
(paper
•
value added and analysis possibilities (information supplier's end
•
product-use infrastructural requirements (somewhere to
paper
v. a
floppy disk),
v.
floppy disk),
sit
user's end),
v.
and hold and read
the
personal computer with a floppy-disk drive and operating-system and
applications software),
product-user interface (reading a paper held in a hand
•
mouse and reading from
a
operating a keyboard and a
v.
computer screen), and
product-consumption experience (reading and thinking
•
thinking [mental] and
[IT
reading and iterative
v.
based] analysis).
Quite possibly, two very different product and product-user paradigms, with significant implications
on the demand and the supply
From
side.
a product-policy perspective, the analog-to-digital
consumers cannot make something positive out of
add value through heretofore-not-necessary
dimensions of paradigm
Which
shift
in particular,
analysis.
if
move
will
they cannot
be of no avail
—or choose not
That means adjusting
to all the
if
to
above
—not only for the consumers, but also for the information producer.
takes us to an interesting challenge for the producer: especially in the case of
electronically delivered information products
and even
it,
product
in the case of
downstream migration
some
(we
them
will consider
in detail in the next section),
physically delivered digital information products, there
of value added, from the information producer
(whose
role
may be
may evolve
a
into
data provider) to the ultimate user, with significant implications for product commoditization and
profit margins.
Take the case of the
may have computed some
table of equity prices.
financial ratios, plotted
analysis" newsletter service to
its
some
A more
trends,
sophisticated information supplier
and offered
customers. With digitization,
a
more complete
some consumers may
"stock
say, "Don't
15-
and plot the
calculate the ratios
we want. And,
whatever analysis
a
trends. Just give us the
much lower price than what you
What
is
incidentally, so-and-so is also willing to
and we
do
will
supply us the raw data
at
charge us for the stock-analysis newsletter."
With
may
add, kept the value addition proprietary, and charged the consumers for an
to
essential service the
conversion
of equity prices,
the information producer to do? With the product in an analog form, the producer
decided what value
information.
raw data
producer provided: converting raw data into easily accessible and digestible
digitization,
producer profits accruing as a result of the data-to-information
diminish or disappear altogether as competition for providing information
transforms into competition for peddling data.
There
is at least
one way
to
make up
for this profit loss: to
change the product
line so the
information-product supplier offers not only data and information, but also some of the tools that the
consumers can use
to
analyze and add value to the digital data and information. But
talking about a fundamental organizational transformation.
publisher.
The corresponding change
journalistic data
consumers can use
that business,
and
to "publish" their
become an
own
newspapers
to selling
raw
newspaper-composition software that individual
newspapers. Can the newspaper publisher, successful
effective developer
in
and marketer of story-editing newspaper-composition
software? The two businesses require different
No
are
Take, for example, a newspaper
there will be from publishing
selling story-editing
now we
—and product
skill sets
policies. 14
product-policy discussion of the digital information products can be complete without
consideration of the installed-database issue.
extensive archives of vintage data and, in
Many
many
information producers and suppliers possess
cases,
complete analog products. Thus, there are
dog-eared manuscripts and music scores, old editions of books and periodicals, vintage recordings
14
Reuters, the
company
talked about earlier in the Reuters Monitor
Money
Rates Service example, has
experienced some of these transformations. In the wake of personal computers, intelligent workstations, and
sophisticated financial technologies (options, futures, hedges, derivatives, and the like), Reuters' customers cared
about pre-composed information pages and more and more about raw, digital datafeeds. The
less
and
are
much more commodity-like
started
less
moving
its
products, with possibly
much lower
profit margins.
latter
In the late 1980s, Reuters
products to the digital datafeeds model, but also started marketing analytical software.
-16-
and video footage, and so on and so
commercialization
"Can we do
do
sense to
some
(in
and
of print,
classic recordings are
On
digitize
it
it,
market the
answer
go with
the other hand,
digital version
add
it)
answer before rushing
on
it is
When
it
products (really
Say the
say
it
comes
a floppy disk or a
"Is there net
is
legal to
question
still
CD-ROM and hope
is
is,
question that
an old novel,
consumers
does digitization (and
all
the
will read
paradigm
information producers must
all
really improved?), there is also a philosophical question to bear in
mind.
and existing databases
may be
is
into
answered
thorny issues of copyright on some or
if
at all, are, say,
his or her
book or painting
permission be sought? The probable answer
—
"If
—and
—and
in the affirmative
all
of the content).
respect for
The
— the original
an author's or a painter's original design precepts
is
marketed on
a mutation or violation of the original design precepts?
should go ahead"
that
to take
digital
(there
if
make
it
"new-and-improved"
words, how,
mutated and violated
there
A
makes sense
remains, what are the implications for the integrity
In other
version?
not
and marketed, often with great
it
value or benefit for the consumer?" question
do so
is
database libraries and waving their digital wands.
to digitizing vintage
new and
such cases
second question has clearly been
to the
arguable whether
net value to consumers?
to their
in
and
being cleaned up, digitally remastered (sometimes with a
on a computer screen. The operative question, of course,
shifts that
ripe for digitization
The relevant question
creative mixing of today's talents with yesterday's sound),
marketplace success.
and
usually "Yes," though perhaps at a large cost), but "Does
is
so?". For music-recording companies, the
a "Yes": vintage
some out
cases, re-commercialization).
answer
it?" (the
All analog,
forth.
it
is
legal
and
if it
a
CD-ROM? Does
it
matter that
Should the author's or painter's
makes business sense
to
do so we
—begs the underlying philosophical questions.
Nonphysical (Electronic) Media
If
digitization
and the World Wide
and multimedia are the trend
Web
in publishing, then on-line services, the Internet,
are major business and cultural happenings, affecting not only the product
policies of existing information-product suppliers, but also
expanding the product mix of
a
much
-17-
wider range of businesses
to include "information,"
analysis," "communication,"
and the product mixes
and "transactions." What we have
Worldwide Web phenomenon
is
include "remote
an opportune marriage of information and telecommunications
major product-policy implications of
Money
all to
in the on-line services-Internet-
technologies to unleash an information revolution. 15 In this section,
To help
of
I
shall try to conceptualize the
this revolution.
structure the discussion,
let
us go back to the Reuters example. The Reuters Monitor
Rates Service, introduced in 1973, was neither Reuters'
first
nor
last financial-information
product delivered over a information-plus-telecommunications technology network: 16
•
As
early as October 1851, the company's founder, Paul Julius Reuter, used
telegraph wires under the English Channel to supply customers in
newly
London and
laid
Paris
with price information from major European stock exchanges.
•
Later, in 1923, the
company
equity-price quotations
started using the
and exchange
new
technology of radio to broadcast
rates several times a day.
By
1938, Reuters
was
broadcasting commercial information to 26 destinations in Europe, the Middle and
Far East, India, Africa, and South America.
•
In the 1960s, the
company entered
the world of computers and, in 1970, introduced
the Videomaster, a 72-digit screen display on which subscribers could select from
over 9,5000 world stock and commodity prices that were collected by Reuters, fed
•
into computerized databases,
and distributed over voice-grade telephone
The Monitor Money Rates
Service, with its electronically linked
lines.
network of
information contributors and recipients, followed in 1973.
15
A more appropriate term would
probably be a "data swamp for surfers." With some exceptions, what on-line
and the World Wide Web are doing at present is inundating the consumer with lots and
lots of data. And it is a stretch to go from screens and screens of data to useful information, not to mention
knowledge or wisdom.
services, the Internet,
16
See Dhebar (1995a) for a selective look
at Reuters'
technology, product, and business history.
•18
In 1981,
•
Reuters introduced a Monitor Dealing Service, a major step forward in the
information value chain: the service allowed subscribers to follow
•
up
the Monitor
Money
Rates Service information with deals for buying and selling foreign exchange.
By the
late 1980s, as personal
computers and powerful workstations began dotting
the financial community's desks throughout the world, the
the financial product space, providing
historical) price
and
in
worldwide subscribers not only (real-time and
related information about a broad range of financial securities
from major world markets, but also general news,
analytical
company spread out
still
and position-keeping software, and the
conversational trades.
pictures, television footage,
ability to
conduct matched or
All with the help of automatic input datafeeds
and manual
data contributions; computerized database management, editing, and publishing;
multimode
(wire, wireless, cable, telephone, satellite,
and so on) telecommunications
and networking; and proprietary- and open-system terminal electronic display
—and
without permanent recording on a physical medium.
The Reuters story provides valuable conceptual hooks
for structuring
our IT-and-product-
policy discussion, beginning with three models of electronic-information distribution: 17
(1)
One-way, point-to-mass broadcasting: the same information
where
significant value is
added)
is
(or data,
depending on
broadcast from a central point to a
geographically dispersed population of consumers, without the possibility of
consumers interacting with the supplier or each other over the same broadcast
network.
While the same information
hardware or software
filters
(premium cable channels are
17
The following
and
is
not
meant
classification
to
is
a
may
is
broadcast to everyone, consumer-site
allow restricted or selective information access
good example).
motivated by product-policy focus of
this article.
The schema
is
highly stylized
—and should not be read as—a definitive treatment of networking and communications.
bo
-19-
(2)
Networked information dissemination with one- to-many two-way communication
linkages: in this model, the information supplier can selectively distribute
information,
and
the
consumer can use the same communication channel remotely
query and analyze the supplier's database, "talk back"
to the supplier, transact
to
with
or route a transaction via the supplier, and so on.
(3)
Networked information dissemination with many-to-many two-way communication
linkages: this
model
offers similar capabilities as the second
model
—and,
the possibility of intelligent inter-consumer linkages (for data
transfer, database query,
The
first
remote computing, transactions, and so
model allows the broadcasting
selected distribution of information
of information; the second
and supplier-customer
directed, selective distribution of information
interactivity;
and networked
model allows
third
What
interactivity.
is
and information
on).
and the
supplier does with the different models in terms of product offerings
in addition,
up
directed,
model allows
the information
to the supplier, the
technology (both information and telecommunications), regulations, and custom.
In theory,
•
all
three models allow the information supplier to
bypass traditional information-product distributors and intermediaries and establish
direct linkages with information
in a
•
form most convenient
reach a
much
to the
—and deliver information
consumers
at a place
and
—and
at a
consumer;
larger population of geographically dispersed
consumers
very low marginal cost (indeed, in the broadcasting model, the marginal cost of
reaching one more consumer
•
is zero);
transform the "pot" representing the information into which the "clay" of
information
physical
is
turned at the "potter's wheel" of the information supplier from a
medium into
a transient flicker on an electronic (video or audio) screen (and
physical exchange of information products into an electronic transfer over wired and
wireless telecommunication links);
-20-
depending on the context, deliver information
•
of periodic dispatches;
form
in "real time" rather than in the
and
deliver the information promptly (literally in seconds rather than minutes and hours)
•
and
the
at
same time
(irrespective of
whether the consumer
is in Brasilia,
New
York,
or Ulan Bator);
The transformations
in distribution system,
market reach, product medium, core and augmented
product, and value proposition cannot but have significant implications for product policy.
be "back
to the
with a clean
If
drawing board"
for
product managers; a question not
just of retrofitting
It
must
but starting
slate.
such a thing
is
even cleaner
possible, the clean slate should be
in the case of the
second
model, which allows for selective information distribution and two-way supplier-consumer
interaction.
The consumer's
ability to
query and analyze databases remotely requires a major rethink
of the information product, the supplier's ability to distribute information selectively has major
implications for the product line (which can
different levels of value
of
added
to
expanding the product scope
raw
data),
now have much
greater product variety and, possibly,
and two-way interactive capability
to include not include data
offers the possibility
and information, but also analysis and
transactions.
The
transactions
third
model pushes the product-offering envelope even
among any two
parties connected to the
further, allowing as
—
and
In
does
network and with the necessary transaction-
access rights. Required of the product manager: a very, very clean slate
strategy,
it
in
terms of product vision,
policy.
summary,
electronic
media and telecommunication network-based information-product
distribution have three levels of implications for product policy:
(1)
product change: possibly different
(broadcasting) or a
more customized
slices
through the data;
a
more mass product
or customizable product (selective distribution);
21-
and
shift
—from the consumer to the supplier or from the supplier to consumer—of
value added and the mix between information and data-plus-analytical capabilities;
more product
product-line change: less (broadcasting) or
(2)
variety (selective
and
distribution);
product-scope change: to include analysis, contextual information, and transactional
(3)
capability (between supplier
and consumer and among consumers, directly or routed
through the supplier).
Making
the necessary changes in product strategy
and
enough
policy, difficult
for the
traditional information supplier, is a particular challenge for suppliers of products other than
information
who suddenly discover opportunities
product scope to also include information, and
consumers
to
(3)
conduct transactions. What ought
into the existing product offering?
The questions, while
financial institutions,
How should
difficult,
augment
be the "new" product offering?
be positioned?
do not seem
How should
to deter the
political parties, individuals,
newcomers
is
expand the
it
to
allow
How does it link
be priced
many automobile
(if
at all)?
manufacturers,
packaged-goods companies, physical-product distributors, transportation-
and
not-for-profit organizations,
to establish a
presence on the Internet. The
service providers, other commercial organizations, educational
phenomenon
their core product, (2)
use the information network to conduct or
to
it
to (1)
and so on, who are rushing
particularly interesting because, unlike traditional information providers, these
to the information business
do not necessarily have the
requisite experience base,
business systems, or the decision-making processes to craft an effective product policy.
Of course, the
flip
side of the no-experience-and-therefore-difficult coin
preconceived-notions-and-therefore-open-to-new-ways-of-thinking:
chemicals manufacturer to
move
it
free-of-
easier for, say, a
aggressively into electronic on-line information distribution than,
for example, a print-media publisher deeply rooted in the print-on-paper
raises a question not so
may be
is
much about product
policy as about
paradigm. The observation
managing change: how does the supply
22-
chain in general and the information-product manager in particular embrace fundamental changes in
paradigms, nol willy-nilly but actively, intelligently, and wisely?
Concluding Comments
Increasingly, information products are electronically edited in editorial offices around the
world, electronically transmitted to local offices, and electronically composed for distribution over a
variety of
media
— hard copy, computer-readable discs, video tapes, public broadcasts, public and
private electronic networks,
and so on. The
potter's
wheel of
IT
furiously spinning products out of
highly pliable digital data.
Not
to
be outdone, consumers have acquired potter's wheels of their own. Newly endowed
with multimedia computers, data-analysis software, and information-management software
they are no longer content to
story,
compare
the numbers,
let
draw
consumers are demanding more
flexible data-navigation rights,
A
revolution of sorts
information products.
discovering
is
direct access to original data, greater control
under way
in
interactivity
—and
is
—compose the
—
all
Increasingly,
over value added, more
via a proliferating choice of media.
not limited to only the traditional suppliers of
IT,
opportunities in information.
testifies,
suppliers of non-information products are
Take commercial
aviation.
As
the battles
information about the timing routing, and
economic worth over and beyond the value derived from
availability of airline flights has intrinsic
impacted by
it
no small way by
over computerized airline-reservation systems
the actual flying.
add most of the value
the graph, lay out the page, or package the book.
and increased
Helped
new product
the information supplier to
tools,
Such information has become
a
product
in its
own
right, 18
and
it
is
directly
IT.
18
To appreciate the potency of the transformation of product mix, consider the periodic assertion by the
chairman of American Airlines, that if forced to choose between the airline and the company's computerized
reservation system, he may jettison the airline (the reservation system yields a steady and sizable income stream,
while the airline's fortunes tend to nosc-divc
at
times of fare wars and slowdowns in air travel).
-23-
Similar product augmentation and product-scope expansion are evident in
industries: there is the
growing use of video terminals
automobile dealerships, tourist bureaus, and the
like;
in supermarkets,
many
department
strategies
and
tactics for these
intriguing question
providers?
into on-line services.
is,
new
As
stores,
physical-product manufacturers are sending
consumers CD-ROMs and posting product information on the World Wide Web section of the
and banks are going
other
Internet;
these businesses go about determining appropriate
products (or augmentations to their old products), the really
for example, will they
be able to able
to
transform themselves into information
An interesting question, and one that transcends the discussion in
this article.
-24-
References
Dhcbar, A. (1992),
"HBS
Publishing Croup: The Case of the (Electronic) Case," Harvard Business
School Case No. 9-593-051, Boston,
(1995a), "Reuters Holdings
PLC, 1850-1987:
School Case No. 9-595-113, Boston,
(1995b),
MA.
A
(Selective) History,"
Harvard Business
MA.
"New-and-Improved High-Tech Products: Speeding Producer, Meet
Consumer," Working Paper No. 3849, Sloan School
of
the Balking
Management, Massachusetts
Institute
of Technology (August).
(1995c), "Information
Technology and Product Policy
(A):
"Smart" Products," Working
Paper No. 3855, Sloan School of Management, Massachusetts
(September).
Negroponte, N. (1995), Being
Digital,
New York, NY:
'18
I
Alfred A. Knopf.
Institute of
Technology
Date Du
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