Incrementalism

News.com reports that Bill Gates believes the promises of the dotcom era will be fulfilled. I tend to agree with the concept on its face. Witness, for example, the recent development in the online grocery business. While WebVan blew up in a multi-billion-dollar disaster, the market is now growing, with traditional grocery chains adding this new feature to their product offering. In New York, it is not uncommon to see FreshDirect trucks make delivery to many buildings. Kozmo, another dotcom disaster, was set-up to rent videos and DVDs. While they did not survive the crash, Netflix did and now has a thriving business doing roughly the same thing. Broadband offerings were much vaunted in the late 90s but little came of them. Now, however, with the rise in broadband connections (either through DSL or cable), we are starting to see some basic services offering things like online broadcast (Real Networks has over one million customers, and is sitting in a niche currently eyed by AOL, Microsoft, and Yahoo) and movie downloads cropping up.

The key is in the incremental approach taken to developing those services. The first thing is that the larger companies largely sat the initial rush out and learned from mistakes made by dotcoms. From there, they have figured what the pitfalls are and can now roll out services that customers will want. This incremental approach really represents a new set of opportunities for people willing to go back and see what goods and services developed unsuccessfully during the dotcom rush have potentials. Once you’ve identified an opportunity, examine where the previous business went wrong, learn from their mistakes, and start rolling new services out quietly. After initial tests, expand. Of course, as always, keep an eye on the bottom line and you will be a winner.

It sounds really dumb but that’s where the dotcom revolution went wrong. The hubris of the late 90s was eventually the undoing of many companies. Now that the easy money has shaken out of the field, people taking a slow, careful approach are reaping some of the benefits.

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