July 28, 2005, 4:03 PM — I sell widgets. You rent apartments. My business is not in competition with yours. Your business is not in competition with mine. We both have front doors through which our customers walk. Some customers that come in my door are interested in renting apartments. When that happens, I point them to your door once they have finished with me. Some customers of yours are interested in buying widgets. When that happens, you point them at my door once you have finished with them.
What we have here is the simplest form of a business alliance. In the real world, they get a lot more complicated of course. Many players, many complex routes through the maze of "alliance partners". It is a well known and heavily utilized approach to drumming up business through synergies. Enlightened self interest. Everybody wins.
Happy days.
Not surprisingly, many of the business alliances we see in the physical world also exist in the online world of the Web. Airlines/Car Rental, Theatre Tickets/Restaurants, Guided Tours/Museums and so on. I won't dwell on these. My interest lies in what new forms of business alliances the Web might enable - or might not enable - and why.
So what is on my mind? Well, I recently took a photograph with my digital camera and loaded it up to an online photo album service. Towards the end of the process, it asked me if I had a blog that I might like to put the picture on as well?
Why thank you for asking! As a matter of fact I do. I provided by account details and magic happened. A thumbnail appeared on the blog with a link back to the full picture in the photo album. All very seamless and painless.
Happy days.
I was impressed. I'm not easily impressed so I took a moment to think about why I was impressed. My analysis went like this. First we had websites. We pointed our browsers and our minds at these things. For a long time, the websites simply mirrored the physical reality of existing bricks and mortar companies and the separate front doors they operate. My website is over here. Your website is over there. If we have an alliance going on, we might link to each others websites. I will point my customers to your portal and you will point your customers to my portal. Anything else, any more seamless form of integration between our two businesses, is too hard.
It seemed to me that the deeper integration between the photo album service and the blog server, heralded an important sea change - at least in my head. Here was an example of a purely electronic alliance. Digital photo storage has no bricks and mortar incarnation. Neither does blogging. So what happens when you form a purely electronic alliance? Does deeper integration than is possible in the real world emerge? A quantum leap forward in customer service perhaps?
Then my bubble burst somewhat. As it turns out, the photo album service provider in question is owned by the same company who provide the blogging service. A beautiful emerging theory ruined by an ugly little fact.
The ownership relationship makes seamless integration less magical. Is this example just an unfortunate special case for my shattered thesis? Surely similar integrations are popping up across companies that are not part of the same commercial entity? It is difficult to say if it is a special case because alliances between pure e-businesses is still a very new phenomenon.
The challenges to seamless integration across commercial boundaries are very significant indeed. Perhaps the most significant of all is the exchange of identity information of customers from one alliance member to another alliance member.
If the integration problems are cracked, especially the identity-related problems, perhaps we will see an explosion in the amount of electronic alliances being formed. Perhaps we will see wonderful win-win situations emerging left, right and center. That would indeed be happy days.
However, my brain hurts thinking through all the integration problems. The challenges are very real. Perhaps so real that it will be easier for businesses to drum up new business by simply buying the complimentary businesses. When you own all the end-points, many gnarly integration problems - especially concerning identity management - can go away.
If this proves to be the pragmatic route then I think it follows that e-business on the Web will, over time, coalesce into a small number of very large, diversified e-conglomerates. A business elite who create happy customers by leveraging deep and seamless integration of systems of which they have end-to-end ownership. An era of Big E may result that could make Big Oil and Big Pharma look like hotdog stands.
Happy Days?
