Cyberposium 2000 - Convergence Main Panel

By Martha Lagace, Staff Writer, HBS Working Knowledge

Convergence. A few years ago, in the early days of the Web, it was used mainly to refer to the convergence of networks and technology platforms. More recently — especially in light of the AOL/Time Warner merger — it's been used to describe the coming together of content and commerce on the Web.

But as became clear in a panel discussion on the topic at Cyberposium 2000, "convergence" means much more than that.

"Convergence also provides a very convenient lens to look back a little bit and get some perspective on early views of what e-commerce was going to be all about," said panel moderator John Hagel, a principal in McKinsey & Company's Silicon Valley office and co-author of the bestsellers Net Gain and Net Worth.

"There was also the notion that ‘content would be king,'" added Hagel (HBS MBA '77). "Anyone who owned content assets was considered uniquely privileged in this Internet world, and would be capturing an unfair share of the value creation."

Today, he said, "if you look at what's happened so far, there are even higher levels of convergence occurring on at least six dimensions." These include:

1. Convergence across technology platforms. The network-of-networks concept is extending even further into a much broader range of access devices and increasing delivery systems, said Hagel, offering increased choice of bandwidth options to access the network.
2. Convergence of commerce and content. Said Hagel, "Increasingly, businesses that started with a pure content focus are scrambling to figure out ways to combine that content with commerce."
3. Convergence, concentration and consolidation within product categories: for example, within the categories of books, travel and financial services. "We're seeing value creation that is unparalleled," said Hagel.
4. Convergence across categories. Early leaders of one category are starting to broaden themselves into related categories, he said, and in this way to broaden their relationship with the customer.
5. Convergence between bricks and mortars and dot-coms. According to Hagel, "The debate used to be phrased as ‘Us versus Them and who's going to win?'" Now, companies integrate both possibilities.
6. Convergence across global markets. A whole set of entrepreneurs in North America thought they could wait before going international on the Internet, says Hagel. Now, they're realizing time is very short.

Joining Hagel on the panel were Sharleen Smith, Vice President in the Convergence Lab of Oxygen Media; Ron Sege (HBS MBA '83), Executive Vice President of Lycos; Steve Spinner (HBS MBA '96), Senior Vice President of NBCi; and Alison Berglund, Vice President of Marketing & Sales of the Boston-based grocery delivery service Home Runs.

All four offered examples of the ways convergence has played key roles in their businesses. Smith, of Oxygen, integrates traditional media in cable with a growing network of Web sites that target women. For Spinner of NBCi, convergence has meant pulling together the best parts of two other sites — the search and directory capabilities of snap.com, and the community, direct marketing and storage capabilities of zoom.com — to boost his company's Internet initiative. Home Runs, said Berglund, was born out of the convergence of a 118-year old brick-and-mortar grocery chain with the technology of the Web to actually change the way customers shop. At Lycos, said Sege, convergence is hard to define because "everything is converging with everything else." Ultimately, he said, it's the convergence of content, community and commerce that allows for the broadest possible online experience for customers.

"We're still at very early stages," Hagel allowed. Many end users are still new to the Internet, he said, adding that technology innovation as well as business model innovation going on now could upset the status quo.

"Ultimately the biggest wild card is public policy," said Hagel, "and how that will affect value creation on the Internet."

But Berglund saw an even bigger factor in the shape of convergence to come. "I really believe that the consumer is the ultimate decider of how things will converge," she said. "There are all kinds of great ideas in the world, and really the consumer is the ultimate decision maker of which of the great ideas will actually be the winner."

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