BUSINESS AT THE SPEED OF THOUGHT: USING A DIGITAL NERVOUS SYSTEM BILL GATES
BUSINESS AT THE SPEED OF THOUGHT
by Bill Gates
ALSO By BILL GATES
The Road Ahead
BUSINESS AT THE SPEED OF THOUGHT:USING A DIGITAL NERVOUS SYSTEM
BILL GATES
WITH COLLINs HEMINGWAY 0WARNER BOOKS
A Time Warner Company
To my wife, Melinda, and my daughter, JenniferMany of the product names referred to herein are trademarks or registered trademarks of their respective owners.
Copyright (D 1999 by William H. Gates, III All rights reserved.Warner Books, Inc, 1271 Avenue of the Americas, New York, NY 10020
Visit our Web site at www.warnerbooks.com0 A Time Warner CompanyPrinted in the United States of AmericaFirst Printing: March 199910 9 8 7 6 5 4 3 2 1ISBN: 0-446-52568-5
CONTENTS
INTRODUCTION
- INFORMATION FLOW IS YOUR, LIFEBLOOD
- CAN YOUR DIGITAL NERVOUS SYSTEM Do THIS?
- CREATE A PAPERLESS OFFICE
- COMMERCE CHANGES EVERYTHING
- RIDE THE INFLECTION ROCKET
- THE MIDDLEMAN MUST ADD VALUE
- TOUCH YOUR CUSTOMERS
- ADOPT THE WEB LIFESTYLE x CONTENTS CONTENTS ri
- CHANGE THE BOUNDARIES OF BUSINESS
- GET TO MARKET FIRST
- SPECIAL ENTERPRISES
- NO HEALTH CARE SYSTEM IS AN ISLAND
- TAKE GOVERNMENT TO THE PEOPLE
- MANAGE KNOWLEDGE TO IMPROVE STRATEGIC THOUGHT
- WHEN REFLEX IS A MATTER OF LIFE AND DEATH
- BAD NEWS MUST TRAVEL FAST
- CONVERT BAD NEWS To GOOD
- KNOW YOUR NUMBERS
- EXPECT THE UNEXPECTED
- SHIFT PEOPLE INTO THINKING WORK
- PREPARE FOR THE DIGITAL FUTURE
- RAISE YOUR CORPORATE IQ
- BIG WINS REQUIRE BIG RISKS
- INFORMATION TECHNOLOGY ENABLESRE-ENGINEERING
- TREAT IT AS A STRATEGIC RESOURCEBRING INSIGHT TO BUSINESS OPERATIONSDEVELOP PROCESSES THAT EMPOWER PEOPLEBUILD DIGITAL PROCESSES ON STANDARDSBRING INSIGHT TO BUSINESS OPERATIONS
DEVELOP PROCESSES THAT EMPOWER PEOPLE
INFORMATION TECHNOLOGY ENABLES RE-ENGINEERING
TREAT IT AS A STRATEGIC RESOURCE
INTRODUCTION
Business is going to change more in the next ten years than it has in
the last fifty.
As I was preparing my speech for our first CEO sum mit in the spring of
1997, I was pondering how the digital age will fundamentally alter
business. I wanted to go be yond a speech on dazzling technology
advances and ad dress questions that business leaders wrest le with all
the time. How can technology help you run your business bet terR How
will technology transform business@ How can technology help make you a
winner five or ten years from nowP If the 1980s were about quality and
the 1990s were about reengineering, then the 2000s will be about
velocity.
About how quickly the nature of business will change.
About how quickly business itself will be transacted. About how
information access will alter the lifestyle of consumers 410 and their
expectations of business. Quality improvements ,ABC and business
process improvements will occur far faster.
When the increase in velocity of business is great enough, the very
nature of business changes. A manufacturer or retailer that responds
to changes in sales in hours instead of weeks is no longer at heart a
product company, but a service company that has a product offering.
These changes will occur because of a disarmingly sim Ple idea: the
flow of digital information. We've been in the Information Age for
about thirty years, but because most of the information moving among
businesses has remained in paper form, the process of buyers finding
sellers remains unchanged. Most companies are using digital tools to
monitor their basic operations: to run their production systems;
invoices; to handle their accounting; to generate customer to do their
tax work. But these uses just automate old processes.
Very few companies are using digital technology for new processes that
radically improve how they function, that give them the full benefit of
all their employees' capabilities and that give them the speed of
response they will need to compete in the emerging high-speed business
world. Most companies don't realize that the tools to accomplish these
changes are now available to everyone.
Though at heart most business problems are information problems, almost
no one is using information well.
Too many senior managers seem to take the absence of timely information
as a given. People have lived for so long without information at their
fingertips that they don't realize what they're missing. One of the
goals in my speech to the CEOs was to raise their expectations. I
wanted them to be appalled by how little they got in the way of
actionable information from their current IT investments. I wanted
CEOs to demand a flow of information that would give them quick,
tangible knowledge about what was really happening with their
customers.
Even companies that have made significant investments in information
technology are not getting the results they could be. Wha ' t's
interesting is that the gap is not the result of a lack of technology
spending. In fact, most companies have invested in the basic building
blocks: PCs for productivity applications; networks and electronic mail
(e-mail) for communications; basic business applications.
The typical company has made 80 percent of the investment in the technology
that can give it a healthy flow of information yet is typically getting
only 20 percent of the benefits that are now possible. The gap between
what companies are spending and what they're getting ste ms from the
combination of not understanding what is possible and not seeing the
potential when you use technology to move the right information quickly
to everyone in the company.
CHANGING TECHNOLOGY AND EXPECTATIONS
The job that most companies are doing with information today would have
been fine several years ago. Getting rich information was
prohibitively expensive, and the tools for analyzing and disseminating
it weren't available in the 1980s and even the early 1990s. But here
on the edge of the twenty-first century, the tools and connectivity of
the digital age now give us a way to easily obtain, share, and act on
information in new and remarkable ways.
For the first time, all kinds of infbrmation-numbers@ text, sound,
video-can be put into a digital form that any computer c n store,
file:///C|/Documents%20and%20Settings/Admini...SINESS%20AT%20THE%20SPEED%20OF%20THOUGHT.TXT (6 of 392)12/28/2005 5:28:51 PMfile:///C|/Documents%20and%20Settings/Administrator/Deskto...0BILL%20-%20BUSINESS%20AT%20THE%20SPEED%20OF%20THOUGHT.TXT
process, and forward. For the first time standard hardware combined
with a standard software platform has created economies of scale that
make powerful computing solutions available inexpensively to co mpanies
of all sizes. And the "personal" in personal computer means that
individual knowledge workers have a powerful tool for analyzing and
using the information delivered by these solutions. The microprocessor
revolution not only is giving PCs an exponential rise in power, but is
on the verge of creating a whole new generation of Personal digital
companions-handhelds, Auto PCs, smart cards, and others on the way-that
will make the use of digital information pervasive. A key to this
pervasiveness is the improvement in Internet technologies that are
giving us worldwide connectivity.
In the digital age, "connectivity" takes on a broader meaning than
simply putting two or more people in touch.
The Internet creates a new universal space for information sharing,
collaboration, and commerce. It provides a new medium that takes the
immediacy and spontaneity of technologies such as the TV and the phone
and combines them with the depth and breadth inherent in paper
communications. In addition, the ability to find information and match
people with common interests is completely new.
These emerging hardware, software, and communications standards will
reshape business and consumer behavior. Within a decade most people
will regularly use PCs at work and at home, they'll use e-mail
routinely, they'll be connected to the Internet, they'll carry digital
devices containing their personal and business information. New
consumer devices will emerge that handle almost every kind of data-text
numbers voice, photos, videos-in digital 7 form. I use the phrases
"Web workstyle" and "Web lifestyle" to emphasize the impact of
employees and consumers taking advantage of these digital
connections.
Today, we're usually linked to information only when we are a t our
desks@ connected to the Internet by a physical wire. In the future,
portable digital devices will keep us constantly in . touch with other
systems and other people. And everyday devices such as water and
electrical meters, security systems, and automobiles will be connected
as well, reporting on their usage and status. Each of these
applications of digital information is approaching an inflection
point-the moment at which change in consumer use becomes sudden and
massive. Together they will radically transform our lifestyles and the
file:///C|/Documents%20and%20Settings/Admini...SINESS%20AT%20THE%20SPEED%20OF%20THOUGHT.TXT (7 of 392)12/28/2005 5:28:51 PMfile:///C|/Documents%20and%20Settings/Administrator/Deskto...0BILL%20-%20BUSINESS%20AT%20THE%20SPEED%20OF%20THOUGHT.TXT
world of business.
Already, the Web workstyle is changing business processes at Microsoft
and other companies. Replacing paper processes with collaborative
digital processes has cut weeks out of our budgeting and other
operational processes.
Groups of people are using electronic tools to act together almost as
fast as a single person could act, but with the insights of the entire
team. Highly motivated teams are getting the benefit of everyone's
thinking. With faster access to information about our sales, our
partner activities, and, most important, our customers, we are able to
react faster to problems and opportunities. Other pioneering companies
going digital are achieving similar breakthroughs.
We have infused our organization with a new level of electronic-based
intelligence. I'm not talking about anything metaphysical or about
some weird cyborg episode out of Star Trek. But it is something new
and important.
To function in the digital age, we have developed a new digital
infrastructure. It's like the human nervous system.
The b iological nervous system triggers your reflexes so that you can
react quickly to danger or need. It gives you the information you need
as you ponder issues and make choices. You're alert to the most
important things, and your nervo us system blocks out the information
that isn't important to you. Companies need to have that same kind of
nervous system-the ability to run smoothly and efficiently, to respond
quickly to emergencies and opportunities5to quickly get valuable
information to the people'in the company who need it 7 the ability to
quickly make decisions and interact with customers.
As I was considering these issues and putting the final touches on my
speech for the CEO summit, a new concept popped into my head: "the
digital nervous system." A digital nervous system is the corporate,
digital equivalent of the ted flow of human nervous system, providing a
well-integra information to the right part of the organization at the
right time. A digital nervous system consists of the digital processes
that enable a company to perceive and react to its environment to sense
competitor challenges and customer needs and to or I anize timely
responses. A digital nervous 5 9 system requires's combination of
hardware and software;.
it's distinguished from a mere network of computers by the accuracy,
immediacy, and richness of the information it brings to knowledge
workers and the insight and collaburation made possible by the
information.
I made the digital nervous system the theme of my talk.
My goal was to excite the CEOs about the potential of technology to
drive the flow of information and help them run their businesses
better. To let them see that if they did a good job on information
flow, individual business solutions would come more easily. And
because a digital nervous system benefits every department and
individual in the company, I wanted to make them see that only they,
the CEOs could step up to the change in mindset and culture necessary
to reorient a company s behavior around digital information flow and
the Web workstyle. Stepping up to such a decision meant that they had
to become comfortable enough with digital technology to understand how
it could fundamentally change their business processes.
Afterward a lot of the CEOs asked me for more infored to mation on the
digital nervous system. As I've continu flesh out my ideas and to
speak on the topic, many other CEOs, business managers, and information
technology professionals have approached me for details. Thousands of
customers come to our campus every year to see our internal business
solutions, and they've asked for more in formation about why and how
we've built our digital nervous system and about how they could do the
same. This book is my response to those requests.
INTRODUCTION
I've written this book for CEOs, other organizational leaders and
managers at all levels. I describe ho w a digital nervous system can
transform businesses and make public entities more responsive by
energizing the three major elements of any business: customer/partner
relationships, employees, and process. I've organized the book around
the three corporate functions that embody these three elements:
commerce, knowledge management, and business operations. I begin with
commerce because the Web lifestyle is changing everything about
commerce, and these changes will drive companies to restructure their
knowledge management and business operations in order to keep up.
Other sections cover the importance of information flow and special
enterprises that offer general lessons to other organizations. Since
the goal of a digital nervous system is to stimulate a concerted
response by employees to develop and implement a business strategy, you
will see repeatedly that a tight digital feedback loop enables a
company to adapt quickly and constantly to change. This is a
fundamental benefit to a company embracing the Web w9rkstyle.
Business @ the Speed of Thought is not a technical book. It explains
the business reasons for and practical uses of digital processes that
solve real business problems. One CEO who'read a late draft of the
manuscript said the examples served as a template for helping him
understand how to use a digital nervous system at his company. He was
kind enough to say, "I was making one list of comments to give to you,
and another list of things to take back to implement in my company." I
hope other business readers discover the same "how to" value. For the
more technically inclined, a companion Web site at
www.Speed-ofThought.com provides more background information on some of
the examples, techniques for evaluating the capabilities of existing
information systems, and an architectural approach and development
methodologies for building a digital nervous system. The book site
also has links to other Web sites I reference along the way
INTRODUCTION
Business is going to change more in the next ten years than it has in
the last fifty.
As I was preparing my speech for our first CEO sum mit in the spring of
1997, I was pondering how the digital age will fundamentally alter
business. I wanted to go be yond a speech on dazzling technology
advances and ad dress questions that business leaders wrest le with all
the time. How can technology help you run your business bet terR How
will technology transform business@ How can technology help make you a
winner five or ten years from nowP If the 1980s were about quality and
the 1990s were about reengineering, then the 2000s will be about
velocity.
About how quickly the nature of business will change.
About how quickly business itself will be transacted. About how
information access will alter the lifestyle of consumers 410 and their
expectations of business. Quality improvements ,ABC and business
process improvements will occur far faster.
When the increase in velocity of business is great enough, the very
nature of business changes. A manufacturer or retailer that responds
to changes in sales in hours instead of weeks is no longer at heart a
product company, but a service company that has a product offering.
These changes will occur because of a disarmingly sim Ple idea: the
flow of digital information. We've been in the Information Age for
about thirty years, but because most of the information moving among
businesses has remained in paper form, the process of buyers finding
sellers remains unchanged. Most companies are using digital tools to
monitor their basic operations: to run their production systems;
invoices; to handle their accounting; to generate customer to do their
tax work. But these uses just automate old processes.
Very few companies are using digital technology for new processes that
radically improve how they function, that give them the full benefit of
all their employees' capabilities and that give them the speed of
response they will need to compete in the emerging high-speed business
world. Most companies don't realize that the tools to accomplish these
changes are now available to everyone.
Though at heart most business problems are information problems, almost
no one is using information well.
Too many senior managers seem to take the absence of timely information
as a given. People have lived for so long without information at their
fingertips that they don't realize what they're missing. One of the
goals in my speech to the CEOs was to raise their expectations. I
wanted them to be appalled by how little they got in the way of
actionable information from their current IT investments. I wanted
CEOs to demand a flow of information that would give them quick,
tangible knowledge about what was really happening with their
customers.
Even companies that have made significant investments in information
technology are not getting the results they could be. Wha ' t's
interesting is that the gap is not the result of a lack of technology
spending. In fact, most companies have invested in the basic building
blocks: PCs for productivity applications; networks and electronic mail
(e-mail) for communications; basic business applications.
The typical company has made 80 percent of the investment in the technology
that can give it a healthy flow of information yet is typically getting
only 20 percent of the benefits that are now possible. The gap between
what companies are spending and what they're getting ste ms from the
combination of not understanding what is possible and not seeing the
potential when you use technology to move the right information quickly
to everyone in the company.
CHANGING TECHNOLOGY AND EXPECTATIONS
The job that most companies are doing with information today would have
been fine several years ago. Getting rich information was
prohibitively expensive, and the tools for analyzing and disseminating
it weren't available in the 1980s and even the early 1990s. But here
on the edge of the twenty-first century, the tools and connectivity of
the digital age now give us a way to easily obtain, share, and act on
information in new and remarkable ways.
For the first time, all kinds of infbrmation-numbers@ text, sound,
video-can be put into a digital form that any computer c n store,
file:///C|/Documents%20and%20Settings/Admini...SINESS%20AT%20THE%20SPEED%20OF%20THOUGHT.TXT (6 of 392)12/28/2005 5:28:51 PMfile:///C|/Documents%20and%20Settings/Administrator/Deskto...0BILL%20-%20BUSINESS%20AT%20THE%20SPEED%20OF%20THOUGHT.TXT
process, and forward. For the first time standard hardware combined
with a standard software platform has created economies of scale that
make powerful computing solutions available inexpensively to co mpanies
of all sizes. And the "personal" in personal computer means that
individual knowledge workers have a powerful tool for analyzing and
using the information delivered by these solutions. The microprocessor
revolution not only is giving PCs an exponential rise in power, but is
on the verge of creating a whole new generation of Personal digital
companions-handhelds, Auto PCs, smart cards, and others on the way-that
will make the use of digital information pervasive. A key to this
pervasiveness is the improvement in Internet technologies that are
giving us worldwide connectivity.
In the digital age, "connectivity" takes on a broader meaning than
simply putting two or more people in touch.
The Internet creates a new universal space for information sharing,
collaboration, and commerce. It provides a new medium that takes the
immediacy and spontaneity of technologies such as the TV and the phone
and combines them with the depth and breadth inherent in paper
communications. In addition, the ability to find information and match
people with common interests is completely new.
These emerging hardware, software, and communications standards will
reshape business and consumer behavior. Within a decade most people
will regularly use PCs at work and at home, they'll use e-mail
routinely, they'll be connected to the Internet, they'll carry digital
devices containing their personal and business information. New
consumer devices will emerge that handle almost every kind of data-text
numbers voice, photos, videos-in digital 7 form. I use the phrases
"Web workstyle" and "Web lifestyle" to emphasize the impact of
employees and consumers taking advantage of these digital
connections.
Today, we're usually linked to information only when we are a t our
desks@ connected to the Internet by a physical wire. In the future,
portable digital devices will keep us constantly in . touch with other
systems and other people. And everyday devices such as water and
electrical meters, security systems, and automobiles will be connected
as well, reporting on their usage and status. Each of these
applications of digital information is approaching an inflection
point-the moment at which change in consumer use becomes sudden and
massive. Together they will radically transform our lifestyles and the
file:///C|/Documents%20and%20Settings/Admini...SINESS%20AT%20THE%20SPEED%20OF%20THOUGHT.TXT (7 of 392)12/28/2005 5:28:51 PMfile:///C|/Documents%20and%20Settings/Administrator/Deskto...0BILL%20-%20BUSINESS%20AT%20THE%20SPEED%20OF%20THOUGHT.TXT
world of business.
Already, the Web workstyle is changing business processes at Microsoft
and other companies. Replacing paper processes with collaborative
digital processes has cut weeks out of our budgeting and other
operational processes.
Groups of people are using electronic tools to act together almost as
fast as a single person could act, but with the insights of the entire
team. Highly motivated teams are getting the benefit of everyone's
thinking. With faster access to information about our sales, our
partner activities, and, most important, our customers, we are able to
react faster to problems and opportunities. Other pioneering companies
going digital are achieving similar breakthroughs.
We have infused our organization with a new level of electronic-based
intelligence. I'm not talking about anything metaphysical or about
some weird cyborg episode out of Star Trek. But it is something new
and important.
To function in the digital age, we have developed a new digital
infrastructure. It's like the human nervous system.
The b iological nervous system triggers your reflexes so that you can
react quickly to danger or need. It gives you the information you need
as you ponder issues and make choices. You're alert to the most
important things, and your nervo us system blocks out the information
that isn't important to you. Companies need to have that same kind of
nervous system-the ability to run smoothly and efficiently, to respond
quickly to emergencies and opportunities5to quickly get valuable
information to the people'in the company who need it 7 the ability to
quickly make decisions and interact with customers.
As I was considering these issues and putting the final touches on my
speech for the CEO summit, a new concept popped into my head: "the
digital nervous system." A digital nervous system is the corporate,
digital equivalent of the ted flow of human nervous system, providing a
well-integra information to the right part of the organization at the
right time. A digital nervous system consists of the digital processes
that enable a company to perceive and react to its environment to sense
competitor challenges and customer needs and to or I anize timely
responses. A digital nervous 5 9 system requires's combination of
hardware and software;.
it's distinguished from a mere network of computers by the accuracy,
immediacy, and richness of the information it brings to knowledge
workers and the insight and collaburation made possible by the
information.
I made the digital nervous system the theme of my talk.
My goal was to excite the CEOs about the potential of technology to
drive the flow of information and help them run their businesses
better. To let them see that if they did a good job on information
flow, individual business solutions would come more easily. And
because a digital nervous system benefits every department and
individual in the company, I wanted to make them see that only they,
the CEOs could step up to the change in mindset and culture necessary
to reorient a company s behavior around digital information flow and
the Web workstyle. Stepping up to such a decision meant that they had
to become comfortable enough with digital technology to understand how
it could fundamentally change their business processes.
Afterward a lot of the CEOs asked me for more infored to mation on the
digital nervous system. As I've continu flesh out my ideas and to
speak on the topic, many other CEOs, business managers, and information
technology professionals have approached me for details. Thousands of
customers come to our campus every year to see our internal business
solutions, and they've asked for more in formation about why and how
we've built our digital nervous system and about how they could do the
same. This book is my response to those requests.
INTRODUCTION
I've written this book for CEOs, other organizational leaders and
managers at all levels. I describe ho w a digital nervous system can
transform businesses and make public entities more responsive by
energizing the three major elements of any business: customer/partner
relationships, employees, and process. I've organized the book around
the three corporate functions that embody these three elements:
commerce, knowledge management, and business operations. I begin with
commerce because the Web lifestyle is changing everything about
commerce, and these changes will drive companies to restructure their
knowledge management and business operations in order to keep up.
Other sections cover the importance of information flow and special
enterprises that offer general lessons to other organizations. Since
the goal of a digital nervous system is to stimulate a concerted
response by employees to develop and implement a business strategy, you
will see repeatedly that a tight digital feedback loop enables a
company to adapt quickly and constantly to change. This is a
fundamental benefit to a company embracing the Web w9rkstyle.
Business @ the Speed of Thought is not a technical book. It explains
the business reasons for and practical uses of digital processes that
solve real business problems. One CEO who'read a late draft of the
manuscript said the examples served as a template for helping him
understand how to use a digital nervous system at his company. He was
kind enough to say, "I was making one list of comments to give to you,
and another list of things to take back to implement in my company." I
hope other business readers discover the same "how to" value. For the
more technically inclined, a companion Web site at
www.Speed-ofThought.com provides more background information on some of
the examples, techniques for evaluating the capabilities of existing
information systems, and an architectural approach and development
methodologies for building a digital nervous system. The book site
also has links to other Web sites I reference along the way
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