Chairman Bill's Guide To The E Business Age


Using a Digital Nervous System

By Bill Gates

Warner Books 470pp $30

Four years ago, Microsoft Chairman William H. Gates III published The Road Ahead, a book that sold well but ended up as a major embarrassment. Fabled for his knack for peering into the future, Gates had missed the importance of the Internet. Today, the billionaire software mogul seems determined not to let anything like that happen again. In his new book, Business @ the Speed of Thought: Using a Digital Nervous System, there's no crystal-ball gazing. Instead, he delivers pointers on how companies can use the information technologies--including the Web--to make their organizations smarter, quicker, and more efficient.

In spite of its shortcomings as a visionary exercise, The Road Ahead was an engaging read for a wide audience. It was jam-packed with predictions about how the latest gizmos would transform people's lives. And voyeurs of the rich and famous got a multimedia guided tour of Gates's $50 million house.

This new book is different--the recent Time magazine cover excerpt notwithstanding. The general reader will find Business @ the Speed of Thought about as interesting as stripping wallpaper. But for CEOs and other executives, it is a clear, richly detailed guide to the fast-emerging E-business Age.

The book's timing is just about perfect. A huge online holiday-shopping season made believers of mainstream retailers. And companies such as Cisco Systems Inc. and General Electric Co. have created vast electronic networks linking their internal operations with those of suppliers--reaping substantial savings of time and inventory costs. They show the way for others. But doing business on the Web is no cinch. Companies that don't act quickly--or that flub it--are in danger of being turned into somebody else's lunch.

To help CEOs navigate these uncharted waters, Gates proposes a 12-step program for building what he calls a digital nervous system. His thesis: Digital information should play the same role in an organization that the central nervous system does in the human body. Computers connected to each other via corporate networks and the Internet can become the synapses that translate business information into action.

Gates suggests using software tools to create cross-departmental teams that share expertise and build on each other's ideas. He promotes a so-called digital feedback loop for speeding information from consumers back to the people who design products. And he recommends using electronic delivery of sales and service to eliminate the middleman from customer transactions.

A lot of his advice is common sense. Use E-mail to make news travel fast? We hardly need Gates to tell us that. But the strength of this book lies in Gates's detailed descriptions of innovative uses of technologies by pioneers such as Merrill Lynch, Coca-Cola, RJR Nabisco, and even the U.S. Air Force.

Merrill Lynch decided to free its brokers from time-consuming information searches so they could concentrate on advising customers--thus capitalizing on Merrill's main advantage over online trading sites. The result: The company's Trusted Global Advisor system. It gives 14,000 brokers around the world an easy-to-use tool for analyzing the up-to-the-minute performance of each customer's portfolio--including news and stock-ticker feeds. The brokers can run what-if scenarios to determine whether changing the types of investments might meet a client's long-term goals better. Next, the company created Merrill Lynch Online, a version of the technology that lets customers compare notes with their advisers.

For the U.S. Air Force, a new PC-based system called Falcon View cuts the time it takes to plan a sortie from 7 hours to 20 minutes. Instead of having to search through file cabinets to find paper maps, photocopy them, and then calculate distances with a protractor, pilots can now tap into up-to-date, highly accurate digital maps and satellite photographs of the flight route and target area. That makes for more effective bombing runs. During operations in Bosnia, a pilot using Falcon View was able to spot a key bridge that had for days eluded pilots who were using the old manual system. The Air Force destroyed the bridge that afternoon.

While Gates ranges far in search of examples, much of his material comes from Microsoft Corp. itself. For instance, salespeople can use its InfoDesk Web site to put customers' technology questions to engineers. When a question is submitted, the system E-mails the appropriate product manager. And if the manager doesn't respond within 48 hours, an E-mail goes to his boss.

Although Microsoft seems to have a finely tuned digital nervous system, the company has not yet figured out how to take advantage of the Web to forge a more direct bond with customers. Microsoft is in a bind: Over the years, it has perfected the art of recruiting retailers to sell its wares--partly with the promise that it won't compete with them. Now it risks alienating these loyal partners if it goes direct. Gates doesn't mention this dilemma in his book. He's also silent on Microsoft's antitrust troubles--and on threats from such rivals as Sun Microsystems Inc. and America Online Inc.

So don't buy this book for insight into where Gates and Microsoft are headed. But it's a smart investment if you're struggling to figure out how your own company can avoid being left behind in the E-business gold rush.

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