• Middleman functions between producers and consumers are being eliminated through digital networks. Middle businesses, functions, and peopie need to move up the food chain to create new value, or they face being disintermediated.
If your company has in its midst agents, wholesalers, distributors, retailers, brokers, or middle managers, it’s time to do some serious strategizing (or career planning if you are one of them). All these roles in the past have been in the business of executing transactions, brokering, or in general boosting the faint signals that passed for communications in a predigital economy. Disintermediation is changing the signal pattern. Musicians and their producers won’t need recording companies, retail outlets, or broadcasters when their music becomes a database entry on the Net. Food producers won’t need wholesalers or supermarkets when customers can replenish supplies weekly by accumulating entries in their shopping-list database and take delivery at home. Hotels won’t need travel agents to execute hooking transactions when everything can be done by would-be travelers “.helicoptering” in a geographical information system (GIS) over their destination city.
Take the case of consumer goods manufacturers being squeezed giant retailers like Wal-Mart demanding consignment sales and razoi margins. Manufacturers could use the new infrastructure to sell direct the network, thereby eliminating intermediary retail channels. An ek tool and small appliance company such as Black & Decker could provide video or interactive programs on, say, home renovations featuring the tools. Or they may develop a cooking series, this week discussing I cuisine that features their pasta maker, food processor, and micro oven. As such, they become infotainment companies providing cur (for a fee or not) on the Net. In the process, the large retailers become intermediated. People still like to go to the movies, but the home video market is now bigger than the Hollywood movie industry.