Unleashing the Killer App, by Larry Downes and Chunka Mui

Published in 1998, Unleashing the Killer App quickly became the seminal guide for managers committed to transforming their businesses in response to the explosive changes that technology is effecting in industry and society. Downes and Mui can be credited with widely disseminating the concepts of Moore’s Law, Metcalfe’s Law, Coase’s theories on transaction costs, the Law of Disruption, and the Law of Diminishing Firms that have served to codify what appear to be the chaotic dynamics of the digital age. In addition, Downes and Mui introduced 12 Design Principles that outline a blueprint for change: a process by which managers can discover and leverage the “killer app”—“a new good or service that single-handedly rewrites the rules of an entire industry or a set of industries.”[1] These concepts and principles have become part of the e-vocabulary, a standard language for success in the brave new world of e-commerce. These guidelines are certainly relevant and effective. But Downes and Mui move beyond presenting mere tools for application. They provide incisive insight on the implications of the effect of the digital age on the fundamental meaning of the firm and an organization’s internal practices.

First of all, Downes and Mui assert that the principles for success in e-commerce are the same as commerce in a more general sense. “The people making money with digital technology are people who are just doing business, taking advantage of new technologies…and taking advantage of your [competitors’]hesitation” (Downes and Mui, p. 200). Disruption is not a new business phenomenon. The authors cite several “killer apps” throughout history (e.g., the stirrup, the toll-free 800 number) that had cataclysmic economic and social influences. The fundamental business principles that protect a firm from extinction—serving your customers and integrating all aspects of your enterprise toward improving that capability—have not changed. However, the characteristics of the digital age (the rapid speed of technological advancement, the low cost of entry for e-based competitors, the low switching costs for customers, a company’s lack of channel control because of the open infrastructure of the internet) have altered the seriousness of the consequences of unenlightened management.

Downes and Mui contend that one key success criteria in the e-business environment is the need for baldly honest introspection in terms of the firm’s core competencies. The internet has facilitated disintermediation, destroying value chains and eliminating value-added opportunities. As firms lose control of their processes and systems to upstart, virtually asset-less competitors, they have to determine their true essential capabilities, and to prioritize what is worth protecting. This strategic approach has led Nike, for example, to recognize that it is primarily a manager of brand image. The company has outsourced manufacturing, distribution, advertising, and even product design so that they can focus on furthering the Nike brand through the expansion of their expertise beyond shoes into apparel and sporting event and talent management.

The authors also discuss the analogy of the frontier, which provides further insight into how traditional business practices must change to leverage the opportunities in the digital landscape. The historian Frederick Jackson Turner asserted a hundred years ago that while the physical American frontier had closed, the idea of the American frontier was ingrained in the American (and, increasingly, the entire world’s) experience. The new boundaries that are challenged have simply ceased to be tangible, as the advances in cyberspace demonstrate: social, political, and economic borders are being destroyed at an increasing speed by the relentless power of successive, knowledge-based “killer apps.” Because of this constant movement of the technological frontier, companies must not consider the transformation to a digitally-based firm to be a destination, but a continuous journey. Managing the future as a portfolio of options (implementing strategies and project prototypes concurrently that may well contradict each other, but reflect possible trends and outcomes), structuring the firm to protect revolutionary ideas from the inertia of current practices, aligning incentives to reward innovation, and effectively communicating the need for constant renewal are several organizational initiatives that are critical to the present survival and the ongoing triumph of companies in the face of the sweeping forces of the digital age.

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[1] Downes and Mui, Unleashing the Killer App (Cambridge, Mass.: Harvard Business School Press, 1998), p. 13.

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