Information, Technology, and Innovation
Resources for Growth in a Connected World

With all of the recent emphasis on "big data," analytics and visualization, and emerging technology architectures such as smartphone networks, social media, and cloud computing, the way we do business is undergoing rapid change. The right business model can create overnight sensations?think of Groupon, the iPad, or Facebook. At the same time, alternative models for organizing resources such as home schooling, Linux, or Kenya's Ushihidi tool transcend conventional business designs. Timely and visionary, Information, Technology, and the Future of Commerce looks at how the latest technology trends and their impact on human behavior are impacting business practices from recruitment through marketing, supply chains, and customer service.

• Discusses information economics, human behavior, technology platforms, and other facts of contemporary life
• Examines how humans organize resources and do work in the changing landscape
• Provides case studies profiling how competitive advantage can be a direct result of innovative business models that exploit these trends

Revealing why traditional strategy formulation is challenged by the realities of the connected world, Information, Technology, and the Future of Commerce ties technology to business and social environments in an approachable, informed manner with innovative, big-picture analysis of what's taking place now in information strategy and technology.

Preface xv

Acknowledgments xix

Section I Foundations 1

Chapter 1 Introduction 3

Cognition 4

Innovation 6

The Macro Picture 8

Earthquakes Every Year 11

Themes 18

We’ve Seen This Movie Before 21

Notes 23

Chapter 2 Demographics 25

Is There a “Net Generation”? 26

Digital Natives 28

Millennials at Work 29

Behavior and Expectations 30

Looking Ahead 30

Notes 33

Chapter 3 Behavioral Economics 35

Challenges to Economic Man 35

Behavioral Economics in a Networked Age 37

Looking Ahead 40

Notes 41

Chapter 4 Information Economics 43

Information Goods 44

Pricing Information: Versioning and Bundling 46

Network Effects 48

Lock-in 49

Looking Ahead 50

Notes 55

Chapter 5 Platforms 57

Strategic Levers 60

Looking Ahead 63

Notes 63

Chapter 6 Power Laws and Their Implications 65

A Bit of History 65

Long-Tail Successes 67

Cautionary Tales 67

Facts of Life 68

Implications 69

Looking Ahead 70

Notes 71

Chapter 7 Security and Risk 73

Landscape 73

Information Space Is Neither Average nor Normal 75

People Systematically Misestimate Risk 76

Doing It Right 77

Looking Ahead 81

Notes 81

Section II Work and Organization 83

Chapter 8 A Brief History of Organizational Innovation 85

1776: Division of Labor 85

1860–1890: Railroads and the Rise of Administration 86

1910: Scientific Management and the Further Division of Labor 87

1930s: Alfred Sloan at General Motors 88

1937–1981: Transaction Costs 88

1980s: Economies of Scope and Core Competencies 89

1995: Linux as “Commons-Based Peer Production” 90

2000: Offshore 91

Looking Ahead 91

Notes 92

Chapter 9 Firms, Ecosystems, and Collaboratives 93

Emerging Nonfirm Models 93

Distributed Capital 98

Looking Ahead 100

Notes 101

Chapter 10 Government 103

The Biggest Employer 104

Government Hiring at a Crossroads 107

Inevitable Downsizing 108

Government on the Technology Landscape 110

Looking Ahead 112

Notes 113

Chapter 11 Crowds 115

Crowdsourcing: Group Effort 115

Information Markets and Other Crowd Wisdom 119

Varieties of Market Experience 122

Looking Ahead 123

Notes 124

Chapter 12 Mobility 127

Bottom Up 127

Search Costs 130

Supply Chain Efficiency 130

Mobile Phone Industry Impact 131

Risk Mitigation 132

Apps for Change 133

Looking Ahead 136

Notes 137

Chapter 13 Work 139

The Big Picture: Macro Trends 139

Where 141

Outputs 143

Skills 144

Work 146

Looking Ahead 149

Notes 150

Chapter 14 Productivity 153

Classic Productivity Definitions 154

Services Productivity 155

Services Productivity and Information Technology 156

Information Technology and Unemployment 158

Looking Ahead 159

Notes 160

Section III Business Model Disruption 161

Chapter 15 Business Model Overview 163

Definition 164

Changing Minds, Changing Models 165

Disruptive Innovation 166

Disruptive Innovation as Paradigm Shift 168

Looking Ahead 168

Notes 169

Chapter 16 Data and Communications 171

Evolution of the Incumbent Business Model, 1877–1996 171

Business Model Disruption, 1996–2010 174

Implications of “Stupid” Networks 177

Looking Ahead 178

Notes 178

Chapter 17 Software Business Models 179

Incumbent Model Pre-2000 179

Business Model Disruption after 1998 181

Looking Ahead 187

Notes 188

Chapter 18 Music Business Models 189

Incumbent Model Pre-2000 189

Business Model Disruption Pre-Napster 192

Business Model Disruption Post-Napster 194

Looking Ahead 197

Notes 198

Chapter 19 News 199

Incumbent Formula Pre-2005 199

Business Model Disruption 203

Looking Ahead 205

Notes 207

Chapter 20 Healthcare 209

Definitions 210

Healthcare as Car Repair for People? 211

Following the Money 212

Where Information Technology Can and Cannot Help 214

Disruptive Innovation 216

Looking Ahead 219

Notes 220

Chapter 21 Two Disruptions that Weren’t 221

Retail 221

Real Estate 227

Notes 229

Section IV Technology Landscapes 231

Chapter 22 Code 233

Intangibility 234

Fungibility 235

Code Embeds Value Judgments 236

Metadata 237

Social Metadata 238

Looking Ahead 240

Notes 241

Chapter 23 Sensors 243

Historical Roots 243

Ubiquity 244

Current Examples 246

Phones as Sensors 249

Looking Ahead 250

Notes 251

Chapter 24 The Internet and Other Networks 253

Legacy Telecom Network Principles 254

Defense Origins of the Internet 255

Internet Principles 257

Consequences of Internet Principles 259

Looking Ahead 260

Notes 260

Chapter 25 Location Awareness 263

Variations on a Theme 265

Landmarks 266

Location, Mobility, and Identity 268

Looking Ahead 270

Notes 270

Chapter 26 Clouds 271

Both Technical and Economic Innovation 272

Cloud Computing and the Enterprise 273

The Cloud Will Change How

Resources Are Organized 275

Practical Considerations 276

Looking Ahead 278

Notes 278

Chapter 27 Wireless 281

Precedents 281

The Breakthrough 286

Looking Ahead 289

Notes 290

Chapter 28 Search 291

Why Search Matters: Context 291

The Wide Reach of Search 294

Valuing Search 296

Looking Ahead 297

Notes 301

Chapter 29 Analytics 303

Why Now? 304

Practical Considerations: Why Analytics Is Still Hard 308

Looking Ahead 309

Notes 310

Chapter 30 Information Visualization 311

Supply 311

Demand 311

Audience 312

Definition and Purpose 312

Current State 313

Looking Ahead 316

Notes 317

Section V Some Big Questions 319

Chapter 31 Identity and Privacy 321

Privacy 322

Scale 323

Invisibility 325

Identity 326

Looking Ahead 327

Notes 329

Chapter 32 Communications and Relationships 331

Connections 331

Networks 336

Creation 340

Looking Ahead 341

Notes 342

Chapter 33 Place, Space, and Time 343

Virtuality 345

Organizations 346

Automata 347

Implications 348

Looking Ahead 349

Notes 350

Chapter 34 Conflict 351

Warfare between Nation-States 351

Non-Nation-State Actors 353

Emerging Offensive Weapons 357

Looking Ahead 358

Notes 359

Chapter 35 Innovation 361

Amazon 361

Crowds 367

Looking Ahead 369

Notes 370

Chapter 36 Information, Technology, and Innovation 371

Macro Issues 371

Globalization 372

Strategy 373

Organizations 380

Marketing 381

Supply Chains 385

The IT Shop 386

Implications 387

The Last Word . . . 388

Notes 388

About the Author 391

Index 393

JOHN M. JORDAN is a clinical professor in the Department of Supply Chain and Information Systems at the Smeal College of Business, Penn State University, where he teaches IT strategy to undergraduates, MBAs, and executives. His research focuses on emerging technologies and their impact on business strategy, design, and practice.