The major goals of this book are to help business executives learn how their companies have to evolve in order to defend against new killer apps and how to develop killer apps. The authors define a killer app as “a new good or service that establishes an entirely new category and by being first dominates it returning several hundred percent on the initial investment.” Killer apps cause havoc by destroying and recreating industries and disrupting existing relationships, and the impact of killer apps is much greater than anticipated. Although examples of killer apps have existed throughout time, digital technology has caused killer apps to be unleashed more frequently. The authors use Moore’s Law and Metclaf’s law to help explain this trend.
The authors present 12 rules for developing killer apps and several of the rules are highlighted below.
The first several rules highlight the need to alter how companies interact with their customers and business partners. Technology is enabling relationships that used to be impossible; it is enabling companies to communicate directly with customers and facilitate communication between customers. The ability to develop these types of relationships provides companies with several opportunities. First, companies can outsource customer service tasks to the customers. With Digital technologies, customers can perform these tasks at lower costs than the company, and customers often prefer to complete these tasks themselves. Examples of companies successfully outsourcing tasks to their customers are the Holiday Inn’s web-based reservation system and FedEx’s tracking systems. Second, technology enables mass customization, and companies can treat each customer as a market segment of one. Third, companies now have the ability to create communities of value. Companies can gain competitive advantages and develop customer loyalty by creating communities. AOL’s communities have helped it gain and keep subscribers even though many providers are now offering free access to the Internet.
Several of the rules also involve the construction of interfaces between a company and its business partners. The new types of relationships discussed above require companies to develop new types of connections with their business partners. One of the rules is to replace rude interfaces with learning interfaces, which means replace human interfaces with digital interfaces. Although it might seem impersonal to have your customers deal with a computer rather than a person, there are several advantages to using a computer; computers often provide better service at a lower cost and store valuable data regarding the transactions. Another rule is for companies to give away as much information as they can. Although this may be counterintuitive for many managers, the potential value that the information may have for their business partners may be great.
The final rules discuss changes that companies have to make to their internal organizations. For instance, companies have to treat their assets as liabilities. Physical assets that were once viewed as barriers to entry for new competitors are now liabilities. Technology is enabling newcomers to enter markets without making huge investments in physical assets. The newcomers are also able to maintain lower operating expenses than the traditional companies who have numerous facilities.