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.