The “new Internet” and business

Interesting panel discussion from Wharton on “Wikis, Weblogs and RSS: What Does the New Internet Mean for Business?” Contrary to the title, there is very little discussion of the specific impacts of blogging or RSS, but a lot of good discussion about general business shifts: lowering transaction costs as a way to enable business process flexibility, the rise in importance of economies of scope, shared benefits from collaborative improvements in products, and so forth.

Ross Mayfield of Socialtext gets one of the killer quotes of the article:

It used to be easy to measure transaction costs especially when looking at economies of scale and speed. That’s what helped justify centralization in vertically integrated firms. In the more dynamic and decentralized world, the value shifts to economies of scope. The real problem that we have is we have no transaction-cost analysis like “build versus buy” for determining whether I should share an asset and cooperate with other firms to develop greater capabilities. To create such opportunities and convince managers and decision makers that they are worthwhile, you have to deal with the fact they have been schooled in a different kind of thought. Fundamentally they have been schooled in a competitive environment where you gain by hoarding information and where there’s no rationale for more open architectures and participation.