New Patterns of Power and Profit (eBook)

Eric K. Clemons is Professor of Operations, Information and Decisions at the Wharton School of the University of Pennsylvania. For thirty years he served as the Founder and Project Director for the  School’s Sponsored Research Project on Information: Strategy and Economics. He worked with C-suite officers from organizations like Merrill Lynch, Marriott Hotels, Lever Brothers, and Continental Airlines, to develop research that advanced their daily decision making.  His experience includes analyzing bet-the-farm decisions with individuals as varied as the Chairmen of the New York Stock Exchange and the London Stock Exchange and the Chief of Naval Operations, to the president and chief operating officer of a rapidly growing craft brewer.  He is a pioneer in the digital transformation of business strategy. 

Table of Contents Chapter 1 — Introduction: You get control when you recognize the patternsIntroduction to Chapter 1                                                                                                                                                             Section 1.1 —          The Structure of This Book                                                                                                                     Section 1.2 —          Patterns, Pattern Recognition, and Thinking Strategically About Thinking StrategicallySection 1.3 —          Developing the Theory of Newly Vulnerable MarketsSection 1.4 —          The Complete Theory of Newly Vulnerable MarketsSummary of Chapter 1                                                                                                                                                                   Chapter 2 — Information Changes Everything:  It’s Not What You Know, It’s What You Know Before Everyone Else!Introduction to Chapter 2                                                                                                                                                             Section 2.1 —          Information Asymmetry and Market Collapse Section 2.2 —          Dealing with Information Asymmetry Through SignalingSection 2.3 —          Dealing with Information Asymmetry Through Screening:                                                    The Theory, and an Explanation for Capital One’s SuccessSection 2.4 —          Dealing with Information Asymmetry Through Data MiningSection 2.5 —          Versioning as a Form of ScreeningSection 2.6 —          Working with Signaling, Screening, and Data Mining:  Specific Examples Where We Need to Address Information AsymmetrySummary of Chapter 2                                                                                                                                                                   Chapter 3 — The Power of Framing:  If You Can’t Answer the Question, Turn it into a Question You Can AnswerIntroduction to Chapter 3                                                                                                                                                             Section 3.1 —          Introduction to Reframing for Easier SolutionSection 3.2 —          Learn the Useful Forms of ReframingSection 3.3 —          Transforming a Problem for an Easy Solution:  Section 3.4 —          Transforming a Problem for Easy SolutionSection 3.5 —          Reframing the Problem so it Looks Like Something You Have Already AnalyzedSection 3.6 —          Pushing the Problem to its Limit                                                                                                          Section 3.7 —          Using a New Sequence of QuestionsSummary of Chapter 3                                                                                                                                                                   Chapter 4 — Resonance Marketing in the Age of the Truly Informed Consumer:  Creating Profits through Differentiation and DelightIntroduction to Chapter 4                                                                                                                                                             Section 4.1 —          Resonance Marketing:  The Changing Marketplace for Craft BeerSection 4.2 —          Resonance Marketing:  Information Changes Consumer Behavior and Corporate StrategySection 4.3 —          Hyperdifferentiation:  With Modern Technology Firms Can Make AnythingSection 4.4 —          Hyperdifferentiation Plus Information Yields Retailer Profits and Customer DelightSection 4.5 —          Characteristics of a Successful Reviewing SiteSection 4.6 —          Hyperdifferentiation Plus Information Guides Manufacturers to Resonance Marketing and Customer DelightSection 4.7 —          Unrewarded Excellence and the Need to be Better than Good EnoughSection 4.8 —          Not Just Better Enough to be Liked, But Also Different Enough to be Loved!Section 4.9 —          Information Changes Everything For Producers and RetailersSection 4.10 —        This is Global.  Resonance Marketing is Everywhere.Section 4.11 —        The Rise of Astroturfing and the Threat of Fake Grass-Roots SupportSummary of Chapter 4                                                                                                                                                                   Chapter 5 — Online Brand Ambassadors and Online Brand Assassins:  Master The New Role of the Chief Perception OfficerIntroduction to Chapter 5                                                                                                                                                             Section 5.1 —          Tactical Implications for Companies:  The New Role of the Chief Perception OfficerSection 5.2 —          The First Role of the CPOSection 5.3 —          Tactical Implications for Companies                                                                                                   Summary of Chapter 5                                                                                                                                                                 Part II — Patterns for Power, Control, and Harvesting of ProfitsChapter 6 — Resources, Platforms, and Sustainable Competitive Advantage:  How to Win and Keep on WinningIntroduction to Chapter 6                                                                                                                                                             Section 6.1 —          Introduction to Sustainable Competitive AdvantageSection 6.2 —          Sustainable Competitive Advantage Based on Acquiring a Unique Set of ResourcesSection 6.3 —          Introduction to Platforms and Platform EnvelopmentSection 6.4 —          An Early Example of Platform Envelopment at Rosenbluth TravelSection 6.5 —          Platform Envelopment Strategies in Two-Sided MarketsSummary of Chapter 6                                                                                                                                                                   Chapter 7 — Understanding the Power of Third Party Payer Businesses and Online GatewaysIntroduction to Chapter 7                                                                                                                                                             Section 7.1 —          Introduction to Third Party Payer SystemsSection 7.2 —         Mandatory Participation Third Party Payer Systems:                                       Third Party Payer Systems in the Absence of CompetitionSection 7.3 —         Learning the Lessons of PowerSection 7.4 —         When Mandatory Participation Third Party Payer                                       Systems Combine with Online Gateway SystemsSection 7.5 —         Power is not UnlimitedSection 7.6 —         The Origins of the Credit Card Industry, Before it Became an MP3PPSection 7.7 —         Mandatory Participation Third Party Payer Systems Outside of Search:  Credit Cards’ Transition to a Powerful MP3PPSummary of Chapter 7                                                                                                                                                                   Chapter 8 — The Continuing Power of Third Party Payer BusinessesIntroduction to Chapter 8                                                                                                                                                             Section 8.1 —          MP3PP Systems in the Internet Age: How Can They Still be Dangerous?Section 8.2 —         The Recurring Pattern in Third Party Payer Models:                                      When the System Really Start to Use Its PowerSection 8.3 —         And now … Coming soon to a Search Engine near You … Platform Envelopment and Vertical IntegrationSummary of Chapter 8                                                                                                                                                                   Chapter 9 — Power and the Potential for the Abuse of Power in Online Gateway Systems:  An Analysis of GoogleIntroduction to Chapter 9                                                                                                                                                             Section 9.1 —          Quality Scores and the Power to Make and Defend Arbitrary DecisionsSection 9.2 —          Vickrey Auctions, Pseudo-Vickrey Auctions, and the Power to Charge Whatever You WantSection 9.3 —          The Illusion of ChoiceSection 9.4 —          Can We Show that Monopoly Power Has Been Abused in Search and Extended Beyond Search?  Is There Evidence?Section 9.5 —          Should You Care About Reverse Price Wars?  Do Higher Prices Charged to Sellers Really Affect Consumers?   Some of the Money Goes to You, Right?Section 9.6 —          Why Should Anyone Do Anything About Monopoly Power in Search?  Won’t Technological Progress Fix any Problems Better and Faster than Regulation?Section 9.7 —          Is it Fair to Complain?  After All Google has Done for Us?Section 9.8 —          But What Should Regulation Look Like?  Section 9.9 —          A Final Cautionary Note on RegulationSummary of Chapter 9                                                                                                                                                                   Appendix 9.A. — Showing that there is Monopoly Power in Search —  How Would You Know? Part III — I got it!  Learning to work with these Patterns?Chapter 10 — Scenario Analysis and Managing Strategic Ambiguity:  How to Remember Future Events, before They Actually Occur!Introduction to Chapter 10                                                                                                                                                          Section 10.1—         Remembering The Future and Using Scenarios for Rapid Recognition and Rapid ResponseSection 10.2 —        Learn to Ask the Right Questions, Even If You Can’t Answer ThemSection 10.3. —       When “Good Data Goes Bad”, or What to do When “Convincing Data Actually Lies to Us”!Section 10.4. —       Learn to Ask the Right Questions, Even If You Can’t Answer Them:  Lessons from The Future of Chinese Consumer BehaviorSection 10.5 —        Working with Questions if All You Have is Questions:  Remember What  They Say About Making Lemonade if Life Gives You Nothing But LemonsSection 10.6 —        The Future of Consumer Behavior in ChinaSection 10.7 —        Working with the Scenarios for the Future of Consumer Behavior in ChinaSection 10.8 —        What’s So Special about Four Scenarios?Summary of Chapter 10                                                                                                                                                              Chapter 11 — Examining the Wide Range of Business Models Currently in Use in Online Businesses:  How to Understand A New Business Using Existing FrameworksIntroduction to Chapter 11                                                                                                                                                          Section 11.1 —        Fully Digital Business Models and Partly Digital Business ModelsSection 11.2 — The Full Range of Online Business ModelsSection 11.3 —        Selling Real StuffSection 11.4 —        Using Ads to Sell Real StuffSection 11.5 —        Selling Content OnlineSection 11.6 — The Digital Transformation of Higher EducationSection 11.7 —        Selling Online ServicesSection 11.8 —        Creating Exchanges for Business-to-Consumer and Direct Consumer-to-Consumer InteractionsSection 11.9. — If the Sharing Economy is Transformational, Maybe We Should Say a Bit More about Building Sharing Economy WebsitesSection 11.10 —      Control of Search and Charging for Customer AccessSection 11.11 — Selling Virtual Experiences and Virtual StuffSection 11.12 — Harnessing Social Networks the Right WaySection 11.13 — Selling Referrals Based on Snooping or ContextSection 11.14 — Using Contextual Referrals to Direct Ads to Mobile UsersSummary of Chapter 11                                                                                                                                                              Chapter 12 — Information Changes Everything:  Implications for SocietyIntroduction to Chapter 12                                                                                                                                                          Section 12.1 —        Let’s Just Do the Right ThingSection 12.2 —        Fake News:  Is this really a big deal?  Isn’t this just bigger, faster, more personal, and efficient?Section 12.3 —        How Price Discrimination Affects Fairness for All of UsSection 12.4 —        How Much Should We Value Efficiency?  How Much Should We Value Fairness?Section 12.5 —        Why is Fairness a Social Policy Issue?Section 12.6 —        Privacy in the Online WorldSection 12.7 —        Fairness Considerations in Platforms and the Sharing EconomySection 12.8 —        Why is it So Hard to Agree on Fairness?Section 12.9 —        So Where Should We Draw the Line?Section 12.10—And, Finally, What Should We Do Now?Summary of Chapter 12                                                                                                                                                              Chapter 13 — Epilog: What could go really, really, wrong? Introduction to Chapter 13