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Infinite bandwidth opens infinite business opportunities Add to ...

Imagine a world of infinite bandwidth, where people and companies receive any amount of information they want, in any form they need it, at any time and any place, and at zero cost.

This world sounds incredible but it's not a fantasy. It's almost here today as the power of data processing, storage and analysis improves dramatically, and as bandwidth and wireless technologies advance.

About 20 years ago, a laptop modem could barely muster 1,200 bits per second (bps) over a phone line. Today, low-end laptops come standard with 115,000-bps modems. Improvements in networks - wired and wireless - far exceed this change in capability, as well as many others from the past decade. These emerging capabilities represent virtually infinite enhancements over previous technologies.

The Internet revolution opened up radical new opportunities in the business-to-consumer world while the more arcane applications of business-to-business went unnoticed. The same is happening today with infinite bandwidth. Business leaders, distracted by the consumer and social applications of increasing bandwidth, are paying scant attention to the new business-to-business opportunities.

Companies that know how to leverage the power of bandwidth are more productive than competitors, find more profitable and efficient ways of conducting business, and even create new businesses, while rivals struggle to catch up.

Yet, many executives are not keeping pace with the bandwidth revolution. Some haven't identified ways to use technological advances to competitive advantage and open up new, strategic opportunities.

I am part of a Boston Consulting Group team that has been discussing trends in bandwidth use to create a competitive edge with more than 60 executives at companies in North America, Asia and Western Europe that provide and use advanced telecom equipment.

Most can articulate the opportunities they are pursuing to reduce costs. But seldom are they creating sustainable advantage: Their competitors can buy from the same vendors.

A handful have used increased bandwidth to re-engineer their business models to perform in ways not possible before. But very few have seen the opportunity to really leverage the trend to infinite bandwidth and conceive all-new businesses.

In Japan, Coca-Cola Co. is an example of a company that has gone through all three phases: cost reduction, re-engineering an existing business model, and creating an all-new model.

Coke and its bottlers own and operate one of the world's largest vending-machines networks. Keeping the machines stocked is a challenge, as buying patterns vary by location, product, time of day and season.

Coke first exploited bandwidth to enable its machines to communicate their inventory status to bottlers, which quickly and efficiently deployed trucks to restock machines with whatever fast-moving product was about to run out.

Later, Coke installed sensors to monitor temperature and time of day when consumers purchased certain products from machines in different locations - and varied prices accordingly. As bandwidth increased and its cost came down, Coke also installed devices to enable consumers to pay for their purchases using their cellphones. For the first time in the company's history, it knew the identity of its consumers and quickly followed with frequent buyer programs.

Over time, Coke developed a new business model. It's not the bandwidth Coke uses that gives it a strategic advantage; it's the way the company uses it to strategic advantage.

Coke provided Japanese consumers with more convenience - and boosted its revenue. It enhanced its competitive advantage by installing the technology before its rivals did, and achieved new operational efficiencies in distribution and increased its earnings from reduced stock-outs. It used its network of machines to learn more about its consumers and then acted on this knowledge in ways that competitors can't easily imitate because of Coke's accumulated experience.

Consider also the medical imaging industry. Today, most of what constitutes radiology (image capture, display, interpretation, and doctor-patient consultation) occurs within the walls of hospitals, and at great cost to health care providers and patients.

Equipment is expensive to purchase and maintain. The services of the radiologists are costly. Equipment utilization rates vary and are often low, thereby driving up per-image costs. Medical imagery, if transferred electronically, is the highest consumer of bandwidth in a hospital.

GE Healthcare first exploited bandwidth to remotely do complex diagnostics of its medical-imaging equipment to lower the maintenance costs by alerting GE to equipment problems and the machine's imminent need for servicing. This resulted in increased uptimes for its equipment in the hospitals, improved GE's operational efficiency and reduced its cost of maintaining the equipment.

But its competitors also began to use remote diagnostics. So, GE pushed further and developed new businesses.

Today, for example, radiologists don't need to be located where the image is created. Images taken at a clinic where the patient is located are transmitted from the imaging machine to a distant image-analysis centre - an entirely new business made possible by increasing bandwidth at ever-falling costs.

Other new businesses will follow: As the best physicians are brought online, diagnostic accuracy will improve; as researchers mine data history, the profession's overall diagnostic skills will improve; and organizations that have the strongest network of specialists will gain the edge, because hospitals will be reluctant to switch to another network. Each is a revenue-generating opportunity.

How can you best use infinite bandwidth to steam ahead of rivals? Examine your portfolio of businesses and identify those that would benefit most from increasing, low-cost bandwidth. These enterprises will likely have high-cost-to-serve businesses. Such enterprises are people-intensive and rely on "feet on the street" - sales and service people who must be on site in front of the customer to provide information, help with purchase choices and provide service. Examples include suppliers of electronic equipment and computer systems for corporate clients, and cleaning chemicals and equipment for food manufacturers.

Ask yourself how different parts of your organization could use infinite bandwidth technology to provide the information your customers want and need - in real time - and to help them use the bandwidth to meet these needs.

You and your executive team will also need to summon up new levels of daring not often seen in established, successful organizations. But I urge you to get your best people thinking and talking hard about how infinite bandwidth could help your company pull ahead of rivals. The potential for improved profitability, sustained growth and competitive advantage that infinite bandwidth offers is too great to ignore.

George Stalk Jr. is senior adviser of the Boston Consulting Group of Canada Ltd. and adjunct professor of strategic management for the Rotman School of Management at the University of Toronto.

 

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