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Economic value and speed will shape Internet's future

The accelerating pace of information transfer -- thanks to the Internet and information technologies -- is speeding up business competition, but it can also facilitate innovation and collaboration, MIT faculty and researchers said at a conference titled "The Third Wave: Industry Opportunities for the Internet-Enabled Future."

The November 8-9 conference was co-sponsored on campus by the Center for Technology, Policy, and Industrial Development (CTPID) and the Industrial Liaison Program.

Disruptions face the auto industry, said Charles Fine, the Chrysler Leaders for Manufacturing Professor of Management. "The expectations of customers are no longer set by the auto companies," said Professor Fine, director of the International Motor Vehicle Program in the CTPID. The Dell Direct model of configuring a computer online, buying it and expecting delivery days later is raising expectations for much more complex products like automobiles.

Competition to be the first to meet these expectations is fierce. To succeed, automakers must invent new e-business models including using information technologies to restructure their supply chains so they can actually locate or produce thousands of parts, set a price and predict a delivery date in seconds. The advent of "smart cars," which incorporate rapidly changing safety, navigation and productivity technologies, further challenges this historically slow-changing industry. In this speedy world, "all competitive advantage is temporary," Professor Fine said.

The Internet itself, predicated as the third wave of industrial transformation in the last 100 years (after mass production and lean production), remains a work in progress, said David D. Clark, senior research scientist at the Laboratory for Computer Science and director of CTPID's Internet and Telecoms Convergence Consortium. Industry leaders and policy-makers who base new actions on today's technology may fail.

"The Internet is not a technology, not an application -- it's a framework," Dr. Clark noted. The heart of this framework, the Internet protocol, is an infrastructure that can run on anything and allows anything to run on it. Economic considerations -- how people can make money on the Internet -- will shape the future of the Internet as surely as technological advances, he said.

Both business and government organizations are trying to grasp the changing shape of Internet opportunities, in part, through partnerships with institutions like MIT. And the Institute has been shifting its own priorities to respond to this need.

"MIT is about fundamental change," said Daniel Roos, associate dean for the Engineering Systems Division, during a panel on 21st-century industry-government-academia partnerships. He pointed to MIT's 20-year evolution from developing engineering science to applying these advances to issues facing industry and society. Understanding change from both a practical and academic perspective is critical to the Institute's mission, he said. MIT is responding to new needs for such research by establishing large-scale, long-term industrial partnerships, such as the Ford/MIT collaboration.

The Institute is also globalizing its intellectual capital through strategic partnerships with the world's best universities, such as the new Cambridge University partnership, and reshaping institutional structures through innovations like the Engineering Systems Division, Dr. Roos said.

Internet speed can accelerate how such partnerships work, said Earll Murman, professor of aeronautics and astronautics and co-director of CTPID's Lean Aerospace Initiative (LAI). "The research-to-implementation cycle moves much faster because of the Internet," he said. In his talk on "Network-Enabled Improvement Communities," he reported that LAI teams can now get faster feedback from government and industry sponsors. In a recent team meeting, for example, sponsors reported on the implementation of ideas first presented only a few months earlier.

While Internet business innovations speed along, MIT researchers are building a picture of what actually succeeds online. Glen Urban, the David Austin Professor of Marketing and co-director of the Center for eBusiness@MIT, offered his list of what's working. Among the winners are large-volume sites such America Online; transaction-fee sites like eBay; reverse auction sites like Ford's supplier bidding; Clicks and Mortar, where established businesses build online components; and fresh industry approaches like online trading. Ultimately, however, online businesses must pay attention to business fundamentals and create value.

Professor Urban's current research focuses on the critical role that trust plays in Internet business models. "Trust is difficult to earn and easy to lose, but the survivors will be the ones that build trust. Business will never be the same," he said. "It will be better."

Conference proceedings will be available on the CTPID web site in January at

A version of this article appeared in MIT Tech Talk on November 15, 2000.

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