The Click Company

Adapt to the Digital Medium or Die

The Click Company
First Edition 2010

Copyright © 2010 Coffee Bean Technology

6601 Owens Drive

Pleasanton, CA 94588

All Rights Reserved. This book may not be reproduced in any form
without permission.

ISBN 978-0-9826645-0-6 (First edition, paperback)

Printed in the USA

Illustrations and book design: Adriana Ayala

Copy editing: Louise Halsey

 The Digital Medium and You

Rarely has a technology had such a transformational

effect on business as the digital medium has. It is naive to
think that it is passive and that you are in control. Its use is
shaping minds, changing our behavior and affecting our
attitude as customers and professionals. This booklet is a
wake-up call to analyze the impact of this new medium on
your business.

3
4
”Technology has a subtle way of changing people.
People change business.”

5
6
 “Today anyone can address the world with a computer.”
Jerry Walker, Californian Cowboy

Table of Contents
Preface 9

Introduction – Why Should I Read This Booklet? 11

The Concept of Medium 15

A New Mind Takes Shape 19

The Print Medium and Its Effects 23

The Digital Medium and Its Effects 27

The Classical Company 31

The Click Company 37

Why Should I Become a Click Company? 43

Business Effects of the Digital Medium 47

Conclusion 55

7
8
“Control over change would seem to consist in moving not with it but ahead
RILW$QWLFLSDWLRQJLYHVWKHSRZHUWRGHÁHFWWKHFRQWURORIIRUFHµ
Marshall McLuhan

Preface

Before starting Coffee Bean Technology, I was one of the

founders of Cyclades Corporation - a technology company
based in the Silicon Valley. Cyclades eventually became
successful, with a global presence and 85% of Fortune 100
companies as our customers; our journey ended in 2006
when the company was acquired by a larger entity.
When I investigate the causes of Cyclades’ success I always
reach the same conclusion: our very early alignment with and
adoption of Linux technology. While we embraced and lived
the emergence of the Open Source Software movement,
I have always been intrigued with the social implications
of the phenomenon and felt that I did not understand it
completely.
Prior to our relationship with Linux, Cyclades was paddling
upstream, and it was a tortuous journey; suddenly we caught
WKHZDYHDQGIURPWKDWSRLQWRQZHZHUHVXUÀQJDQGUHDFKLQJ
success. We were engaged with the open source community
where thousands of programmers worldwide have invested
and continue to invest their time writing source code, which
is available for free on the Internet. Why does it happen?
9
:RXOG WKLV SKHQRPHQRQ RFFXU RXWVLGH WKH ÀHOG RI
technology?
What follows is the result of my investigation on the impact of
the digital medium (including the Internet, mobile computing,
video games, social media, etc.) on business. This medium
has initially affected technology, music and the publishing
industries, but has now matured and impacts any business,
independent of its size and sector.
My goal is to understand why the digital medium has such
a transformative power: it changes our behavior and that
affects our attitude as customers and professionals; it changes
business models; it propels innovation and competition.
Why does it make some companies winners and others
losers?
My search for answers took me to the great work of Marshall
McLuhan, a philosopher and media theorist, and his book
Understanding Media where I have found a framework to
analyze the digital medium. McLuhan’s ideas have strongly
LQÁXHQFHGWKLVERRNOHWZKLFKLVDQLQLWLDOH[SORUDWLRQRIWKH
topic and far from complete. I hope it inspires you to analyze
the impact of the digital medium on your business.

John Lima
CEO and Founder
Coffee Bean Technology

10
 “It is not necessary to change. Survival is not mandatory.”
W. Edwards Deming

Introduction –
Why Should I Read This Booklet?

:KHQWKHUDLOZD\VZHUHÀUVWEXLOWWKH\GLGPRUHWKDQVLPSO\
expand commerce and the movement of goods; they
affected everything from the type of jobs available, to the
physical layout of our cities, to the dissemination of ideas, to
the lifestyle of people in both remote areas and large cities.
Similarly, the Internet has impacted our lives far beyond its
ability to provide instantaneous access to information. It
changes our interactions with others as well as the creation
and transfer of knowledge. It is shaping the thinking and
behavior of generations of workers and consumers with
social networking, search engines and blogs becoming part
of our everyday life.
Focusing solely on the movement of goods or information
LVWRLJQRUHWKHPRVWVLJQLÀFDQWHIIHFWRIQHZWHFKQRORJLHV
As McLuhan said, “The medium is the message.” The major
impact of the Internet is not its ability to make data available
instantly but how the adoption of new technology changes
the way we think.
New organizations, better adapted to the new reality, are
challenging traditional companies. Several examples have

11
emerged: free online, collaborative encyclopedias
vs. printed authoritative encyclopedias, informational
blogs vs. printed newspapers, downloadable music and
software vs. shrink-wrapped CDs and software, virtual
retailers vs. brick-and-mortar retailers, online travel sites
vs. local travel agencies. This new reality has taken
hold and will soon appear at the company near you.

The effects of the adoption of digital technology in companies

have been predicted for some time, from McLuhan work
in the 1960’s to the “Cluetrain Mainfesto” in the 1990’s
to “Enterprise 2.0” movement in the 2000’s. Technology
changes people. People change business.
Changes gain critical mass now, as a new generation of
workers and consumers who grew with the Digital Medium
take decision-making positions as managers and consumers.
If we see that, we can better understand how newspapers
are being forced to change business model, why Google
has taken the initial lead Yahoo! had on Internet presence,
and how each and every business (including yours) need to
adapt or be challenged by new players.
Our goal here is to study this shift and provide an analytical
framework to understand how companies must evolve to tap
into human potential in the 21st century and be successful
interacting with the new generation of consumers and
business customers.
:H FDOO DQ RUJDQL]DWLRQ RSHUDWLQJ XQGHU WKH LQÁXHQFH RI
the print medium a “Classical Company.” The Classical
Company is hierarchical, linear and functionally segmented,
and views customers and the market as external entities.
The Classical Company will not survive in the increasingly
competitive marketplace.
The organization that WILL survive is called the “Click
Company,” so named because it has adapted the digital
medium to fully leverage the impact of new technology. The

12
Click Company enables and encourages its employees and
customers to co-create its value.
We will then apply our framework for analysis and build
the bridge between old and new, suggesting the direction
business leaders and organizations can take to evolve and
adapt to the new reality.
There is some irony in writing a printed book about the shift
that, we argue, is taking us irreversibly towards a new digital
medium, but change starts with awareness. One could say we
should have moved away from classical business language
and adopted ”Click-language” as well, but we are writing it
for the business leader trying to cope with changes.
:HKRSHLWLQVSLUHV\RXWRWDNHWKHÀUVWVWHSDQGZHLQYLWH\RX
to join us in this journey towards the future.

Marcio Saito

President
Coffee Bean Technology

13
14
 “In a culture like ours, long accustomed to splitting and dividing all things
as a means of control, it is sometimes a bit of shock to be reminded that, in
operational and practical fact, the medium is the message. This is merely to
say that the personal and social consequences of any medium – that is, of
any extension of ourselves – result from the new scale that is introduced into
our affairs by each extension of ourselves, or by any new technology.“
Marshall McLuhan (Understanding Media, 1964)

The Concept of Medium

Most of us think of media as communication: press, radio and

television. McLuhan thought of a medium or technology as
an extension of our bodies, senses and minds.
7RLOOXVWUDWHWKLVSRLQWFRQVLGHUWKHXVHRIÀUHDUPV2EYLRXVO\
DQDVVDXOWULÁHLVQRWE\LWVHOIJRRGRUEDG,WLVIDLUWRDUJXHWKDW
the person holding the gun is the one who chooses how to
use it and therefore is solely responsible for the consequences
of its use. Knowing someone should tell us what that person is
capable of doing with a gun.
But the argument is more complex than that. Anyone who
has held a gun in her hands remembers the feeling of doing
LWIRUWKHÀUVWWLPH7KHUHLVDUXVKRIDGUHQDOLQHDQGDVWURQJ
sensation of power.
Guns are effective extensions of our hands, which enable
us to protect, save, intimidate, kill or hurt others without
engaging in direct physical aggression. Seeing them just as
SDVVLYHWRROVLVLJQRULQJWKHLUSRZHUWRLQÁXHQFHWKHKXPDQ

15
psyche. Similarly, the power to affect the user applies to new
technologies and media.
The use of the digital medium employed by the Internet is
QRWRQO\FKDQJLQJRXUKDELWVDQGEHKDYLRURQDVXSHUÀFLDO
level, but it is changing our thinking by shifting the balance
EHWZHHQ LQWHUDFWLRQ DQG UHÁHFWLRQ DQG DIIHFWLQJ KRZ
humans interact with each other. Because the medium
affects each of our senses and how we use them, it has a
profound effect in our minds.
“The effects of technology do not occur at the level of
opinions or concepts, but alter sense ratios or patterns of
perception steadily and without any assistance. The serious
artist is the only person able to encounter technology with
impunity, just because he is an expert aware of the changes
in sense perception.”(Marshall McLuhan, Understanding
Media, 1964)
It has become commonplace to state that the Internet is
changing our lives. But the real change has not yet happened,
as societal changes happen slowly and adaptation takes
time. We have so far used the Internet primarily as a new
container holding old content. Most web pages today are
static, mere electronic replacements of the printed page.
The true nature of the digital medium and the associated
social, participative and collaborative behavior it triggers is
just starting to emerge.
Our focus here is the effect of the shift in the human mind
IURP D PRGHO LQÁXHQFHG E\ WKH print medium to a model
GHÀQHGE\WKHdigital medium. But, before we go into that,
here is how the American anthropologist Edmund Carpenter
GHVFULEHVRXUVKLIWIURPWKHSUHYLRXVWULEDOFXOWXUHGHÀQHGE\
RUDOFRPPXQLFDWLRQWRDVHJPHQWHGVRFLHW\GHÀQHGE\WKH
print medium:
“Tribal men everywhere regard themselves as integral
parts of nature. They belong to a seamless web of
kinship & responsibility. They merge the individual
16
 with the whole society. They’re involved with life: they
experience a participation mystique. This experience
is one in which people are eager to merge with
cosmic powers.
The print medium made us isolated, linear, uniform,
homogenous, sequential, hierarchical, specialist and
visually-oriented.
Beginning with the phonetic alphabet & the Greeks,
there came a habit of detachment & noninvolvement,
a kind of uncooperative gesture toward the universe.
From this refusal to be involved in the world he lived
in, literate man derived detachment & objectivity.
He became alienated from his environment, even
from his body. He believed there was elegance in
detachment. He valued the isolated, delimited self,
especially the mind. He became an island, complete
unto himself.
Today we are entering a relatively dim, resonating
tribal world in which the electronic extensions of
everybody’s nerves involve him deeply in all other
lives. Where writing & printing technology tore man
out of the group, creating the great misery of psychic
alienation, suddenly & without warning the electronic
media hasten him back into the embrace of the
group. Electricity binds the entire human community
into a single tribe, with much resulting erosion of
individualism.” (Edmund Carpenter, They Became
What They Beheld, 1970)
The saga of humanity is to reach further by being more
HIÀFLHQWDQGHIIHFWLYH7RVRPHH[WHQWthe history of humanity
is the history of technology as we see our evolution imprinted
in technology. New technology creates a new medium and
as we experiment with it, it affects our life pattern and we
VWDUWFKDQJLQJZLWKLW7KHFKDQJHVLQSDWWHUQVDUHUHÁHFWHG
in our psyche. A new medium is inherently related to the

17
changes it brings about.

It is time to look at the digital medium beyond its mere usage

and explore its effects on behavior and mind formation. It is
time to stop looking in the rearview mirror and focus on the
present and what lies ahead.

18
 “They became what they beheld.”
Edmund Carpenter

A New Mind Takes Shape

I recall the early Internet days when my business partner asked

me why I was so argumentative in my e-mails (more than I
was when we were using the fax machine to communicate
RYHUGLVWDQFH+LVTXHVWLRQVWUXFNPHDV,FRXOGQRWÀQGDQ
adequate answer.
I now understand that the e-mail medium is closer to oral
communication than to the print medium. When writing letters
we have the time to elaborate our ideas and separate them
from our emotions. For e-mails the situation is rather different;
it is quasi-instantaneous and has real-time characteristics –
something similar to oral communication – it can convey our
emotions.
This episode illustrates how a new technology/medium affects
our behavior and our mind. When we deeply investigate what
LQÁXHQFHVWKHPLQGZHHQFRXQWHUWKHUHDOPVRISKLORVRSK\
ideology, psychology, religion, education, etc. However,
WHFKQRORJ\·V LQÁXHQFH RQ RXU EHKDYLRU DQG PLQG ² ZKLFK
accounts for radical mind transformation – is consistently
underestimated. Technology has the power to slowly and
without resistance transform us, and ultimately it models the
mind.

19
%HFDXVHWKHXVHRIWKHGLJLWDOPHGLXPGUDPDWLFDOO\LQÁXHQFHV
the way we do business today and society as a whole, let us
look at its effects on the development of the human mind in
comparison to the use of oral and print media.

20
21
22
 “Cogito ergo sum.”
René Descartes (Principles of Philosophy, 1644)

The Print Medium and Its Effects

When humans lived in small tribal communities, knowledge

transfer and aggregation required the direct and rich
interaction among individuals. The introduction of the written
language and then the print medium were advances that
helped to build modern civilization but, at the same time,
had the powerful effect of segmenting knowledge and
isolating us from each other.
The print medium and less evolved broadcast media are well
suited for unidirectional transmission of knowledge and are
relatively limited in medium access. The dominant use of print
and broadcast media for communication naturally imposes
DKLHUDUFK\ZKHUHDVHOHFWVHWRIH[SHUWVLQDVSHFLÀFÀHOG
communicates to a broader audience that is less informed
and has no opportunity to question or actively participate.
That simple concept affects our lives in ways that are more
profound than we realize. Let us look at a few examples.
When we read the newspaper, we rely on an editor to review
all news articles gathered during the day by professional
reporters and select the pieces judged to be the most
relevant to the average member of the reading audience.
The newspaper is delivered to us the next morning under
the assumption that the content is both comprehensive and

23
relevant to us so that it can support the formation of our
perspective of the world.
In most companies today, we rely on top-level managers to
GHÀQHWKHFRUSRUDWHPLVVLRQDQGJRDOVDQGWUDQVODWHWKHP
into smaller components, which are then delegated to the
next layer in a hierarchy of functionally segmented groups
of people. If the process of decomposition of tasks and
distribution across the organizational chart is perfect and
everyone does “their job,” the company achieves its goals.
When we elect a representative to defend our interests in an
association or political body, we are relying on the delegate
to correctly synthesize the overall will of the constituency and
to represent their interests in collective decisions. The actual
result is often alternating shifts between intrinsically biased
positions from one election cycle to another.
What do newspapers, classical companies and government
bodies have in common? They all require us to give up control
and autonomy and trust the hierarchy, delegating judgment
up the chain to an expert, manager or representative in
charge of aggregating collective interest or knowledge and
expressing into the system.
7KDWWUDGHRIILVDQHIÀFLHQWZD\RIFRSLQJZLWKWKHLQWULQVLF
limitations of a system modeled after communication
ZLWKLQ WKH SULQW PHGLXP ZKHUH WKHUH LV QR HIÀFLHQW ZD\ WR
aggregate and express collective knowledge in real time.
The use of printed medium supports: hierarchical structures,
segmentation and fragmentation of knowledge, linear
and sequential processes, specialization and isolation of
individuals. Those effects are incorporated in our psyche and
are manifested in our behavior.
Later in this document, we will analyze how the use of the
print medium affects the business environment of classical
companies.

24
25
26
 ”Like it or not, we now belong to a clickocracy.”
Jose Antonio Vargas, (Washington Post April 2008)

The Digital Medium and Its Effects

McLuhan differentiated between the printed medium

modeled after the printed language and the digital medium,
which included forms of digital technology that were in
early stages of development in the 1960s and 1970s (realized
today by the Internet and the different means of interacting
with it).
When a new communication medium emerges, it tends to
be populated with content from the old medium. A quick
examination of how the Internet has been used reveals lots
of websites with static text content reminiscent of brochures
and other printed material, instances where social media
WRROVDUHVHHQMXVWDVQHZFKDQQHOVWRLQÁXHQFHFXVWRPHUVLQ
the classical marketing models, and CEO’s blogs are nothing
PRUH WKDQ VHTXHQWLDO PHPRV EURDGFDVWLQJ WKHLU LQÀQLWH
wisdom.
But when the digital medium is fully adopted, it will
eventually become an extension of our minds. It will
fundamentally change behavior, with its effect on society
becoming more apparent. Already its ubiquitous use
enables real-time, continuous multi-peer communication,
which is shaping the minds of new generations.

27
The transition from jobs to roles

With information and access broadly available, the digital

medium empowers people to take on different roles beyond
their education - and they do. In 2007, Business Week
reported that middle-class Japanese homemakers were
engaged in trading currency between doing their domestic
chores, generating volumes of transactions capable of
moving currency markets and blindsiding professional
traders.

With the adoption of the digital medium, individuals can no

ORQJHUEHSODFHGLQZHOOGHÀQHGDQGVHOIFRQWDLQHGER[HV
They do not have static jobs; they take on different roles that
change as the context changes.

The death of the specialist

In most areas of human endeavor only a small proportion

of the knowledge is held by experts, those specialized
individuals who spend a great deal of time aggregating
DQGLQWHUSUHWLQJLQIRUPDWLRQLQDVSHFLÀFÀHOG%XWEHFDXVH
the print medium is not suitable to the aggregation and
expression of community knowledge, the word of the expert
was the word of knowledge.
However, with the adoption of the digital medium, which
allows effective capture and aggregation of information,
the synthesis and expression of collective knowledge no
longer requires delegation of judgment to “experts,” and the
force behind highly hierarchical structures and knowledge
specialization ceases to exist. For example, volunteer
contributors collaborate in creating online reference
materials that challenge traditional encyclopedias
written by experts who have spent their entire careers
DFTXLULQJNQRZOHGJHZLWKLQWKHLUUHVSHFWLYHÀHOGV

28
Personal identity in a collective context

The individual in the digital era gains more independence,

but it is not a self-centered individualism. It is personal
identity in a collective context, using collaboration to solve
problems and taking cues from the social environment to
drive behavior.
The effects of this interdependent personal identity are
DSSDUHQWÀUVWLQDUHDVPRVWVHQVLWLYHWRUHDOWLPHPXOWLSHHU
interaction but eventually will appear in every aspect of
our society because the digital medium has re-shaped our
thinking forcing us to change how we work and live; once we
incorporate the effects of the new medium into our behavior
we unconsciously drive change.

29
30
 ”I have my sales quota and you have your budget.
I’m the seller and you’re the buyer.”

The Classical Company

The Classical Company has its roots in the print medium.

,W KDV DOUHDG\ EHHQ LQÁXHQFHG E\ WKH GLJLWDO PHGLXP LW
uses software to run the business, the Internet as a point of
interaction, cell phones and mobile technologies), but its
culture is still segmented, centralized and hierarchical.
The Classical Company follows the “we design, we sell and
you buy” business model. It operates under the assumption
that customers and employees can be kept isolated and
uninformed and from this belief attempts to control them.
Processes are sequential and rely on specialists. Consider the
example of a classical music publishing company.
For decades, the music recording industry has taken full
advantage of the classical business model. They control the
VXSSO\FKDLQPXVLFLDQVSHUIRUPHUVXVHWKHLULQÁXHQFHDQG
FRQWURORYHUWKHGHOLYHU\FKDQQHOVWRLQÁXHQFHWKHLUFXVWRPHUV
(the consumers), and package a bundled product (CDs)
WKDWPD[LPL]HVSURÀWVDQGUHYHQXHVDQGWRDODUJHGHJUHH
SULRULWL]HV WKH QHHGV RI DQ HIÀFLHQW EXVLQHVV PRGHO UDWKHU
than the customer desires.
The diagram below illustrates their business model:

31
32
The thinking behind a Classical Company goes like this. We
have experts that really understand the market and, after
VRPHGDWDFROOHFWLRQDQGUHVHDUFKFDQGHÀQHDQGGHYHORS
a viable product based on market requirements. Once the
product is developed, we produce marketing messages and
manipulate target customers’ desires to create demand for
our products. We sell the products and make money.
The classical model worked well for the recording industry
XQWLO WKH ÀUVW SRSXODU SHHUWRSHHU 03 PXVLF ÀOHVKDULQJ
system became popular in the late 1990s. The result was a
system whose popularity generated an enormous selection
RI PXVLF WR GRZQORDG :LWK WKH ÀOHV REWDLQHG WKURXJK
Napster, people frequently made their own compilations
without generating revenues for the recording industry or
royalties for the copyright holders.
By 2001, there were over 25 million Napster users worldwide.
7KH UHFRUGLQJ LQGXVWU\ FODLPHG WKDW LOOHJDO ÀOH VKDULQJ ZDV
KXUWLQJVDOHVZKLOHRWKHUVFODLPHGWKDWÀOHVKDULQJDFWXDOO\
stimulated the consumption of music and the problem was
not about online distribution, but rather the structure of the
industry.
Legal challenges by the Recording Industry Association of
America (RIAA) eventually brought Napster down. Napster
shut down its entire network in July 2001.
0RUHWKDQPDNLQJSHHUWRSHHUÀOHVKDULQJSRSXODU1DSVWHU
H[SRVHGVHULRXVÁDZVLQWKHPXVLFLQGXVWU\·VEXVLQHVVPRGHOV
7KHUH ZDV XQVDWLVÀHG GHPDQG IRU PXVLF IURP FRQVXPHUV
and a lack of access to the market by new, unknown
musicians. Only the companies between the creators and
WKHFRQVXPHUVPD[LPL]HGWKHLUEHQHÀWV
As we will analyze later, that situation was sustainable in the
past only because the limitations imposed by a business
model based on unidirectional communication.
The new vision exposed by Napster was based not only on

33
the users’ freedom to select the music they wanted, but
also the users’ ability to interact directly with musicians to
participate in the process of creation and promotion.
While the recording industry could stop Napster, it could not
sue and shut down the 25 million people participating in
ÀOHVKDULQJ6RFKDQJHZDVXQDYRLGDEOH:KHUHWKHUHZDV
1DSVWHUQRZWKHUHDUHRWKHUÀOHVKDULQJVLWHVDQGQHZOHJDO
music distribution business models emerging, forcing the
industry to evolve and change.

34
35
36
 ´*LYHDSHUVRQDÀVKDQG\RXIHHGWKHPIRUDGD\WHDFKWKDWSHUVRQWRXVH
the Internet and they won’t bother you for weeks.”

The Click Company

We are now witnessing changes caused by the digital

medium and how these changes are affecting customers
and employees. These changes are forcing business and its
leadership to adjust and fundamentally change how they
engage with individual stakeholders to create value.
The world has changed. Customers talk to their peers, so
you better not try to excessively segment them (as airlines
have done with ticket prices and are now backtracking,
for example). They can easily compare and often know
your products and the competition better than you do,
so you better leverage their knowledge rather than try to
teach them about your product. They can see through the
intentions in marketing, so you better send messages that
resonate with them rather than try to manipulate them into
liking your company.
Customers demand participation. If you let them co-create
YDOXH E\ DOORZLQJ WKHLU GLUHFW LQÁXHQFH LQ \RXU SURGXFW·V
roadmap, they will become your true advocates.
The same applies to employees. If providing transparency
ZDVGLIÀFXOWLQWKHSDVWDQGVHJPHQWDWLRQDQGVSHFLDOL]DWLRQ
ZDVDQHIÀFLHQWZD\WRGLYLGHFRPSDQ\REMHFWLYHVDPRQJ
specialized groups, unleashing their creativity so that they
37
can create real value depends on leveraging the digital
medium to provide them with the holistic view they need
to understand the business. With the proper communication
infrastructure in place, there is no need for multiple layers
RI ÀOWHULQJ VSHFLDOL]DWLRQ DQG DQDO\VLVV\QWKHVLV WR OHW D
large number of people collaborate to reach complex
objectives.
7KH WUDGHRII EHWZHHQ VSHFLDOL]DWLRQ DQG HIÀFLHQF\ ZLOO
become obsolete. The focus of businesses will shift from
HIÀFLHQF\WRWKHDELOLW\WRXQGHUVWDQGWKHPDUNHWDQGUHDFW
in real time. That is only possible in an environment where
transparency, openness and individual empowerment are
part of the company culture.
Employees demand participation. If you communicate
transparently and provide business visibility, they will “do their
jobs” while enjoying a sense of purpose and satisfaction, and
also collaborate, create value and contribute for collective
success.
We call the company that has adapted to this new customer
and workforce the “Click Company.” The Click Company
communicates both internally and externally, and structures
itself using a model based on the digital medium. This
PRGHOJRHVEH\RQGWKHVXSHUÀFLDODGRSWLRQRIGLJLWDOWRROV
(such as collaboration and communication software), and
encompasses a change in values, culture and business
models.
Consider the same example of the recording industry we
examined before. The diagram below illustrates what the
equivalent Click Company business model would look like.
The business model of a Click Company is centered on
customer experience, not the company itself. The research/
design/manufacture/market/sell cycle happens in real time
and in parallel, not sequentially. Market input is not synthesized
though customer surveys, but through direct engagement
of customers in the design process. Marketing messages are
38
intended to resonate with, not to manipulate customers.
The customer is in the driver’s seat and is the source of the
business knowledge and value for the Click Company.
Let us further compare the Classical Company and the Click
Company.

39
40
41
42
 “If it works, it’s obsolete.”

Why Should I Become a Click Company?

As a business leader, you may be asking the very relevant

question: why should I promote the transition? We are
H[SHULHQFLQJSURÀWDQGJURZWKZK\FKDQJH"
The answer is very simple: because your customers are
changing. The digital medium is shaping them and they are
moving towards the characteristics of the Click Company.
,I\RXLJQRUHWKLVIDFW\RXUSURÀWVDQGJURZWKZLOOHYHQWXDOO\
suffer.
Why has the Classical Company been successful for so
many years? The classical model works because customers
have not had access to information and options outside the
Classical Company model.
&ODVVLFDO&RPSDQLHVKDYHLQYHVWHGLQHIÀFLHQF\WRJDLQPRUH
SURÀWV &XVWRPHUV ZHUH XQGHU FRQWURO WKHUH ZHUH EDWWOHV
DPRQJ FRPSHWLWRUV IRU SURÀW JURZWK DQG PDUNHW VKDUH ,Q
summary, the model was stable and the competitive forces
in balance.
The digital medium and the Internet have created conditions
for new competitors to bring new products to the market and
have also empowered customers to access information and
interact with peers, exchanging knowledge and experiences.
Customers have now a holistic view of their needs and

43
realize that a company’s product is only a small part of the
experience that they are creating for themselves.
The classical model is collapsing due to innovation from
outside its model. Your competition is not the other Classical
Companies in your market. The real competition is the Click
Company that sooner or later will disrupt and dominate your
market.
Quoting from a late 2007 article in Business Week:
“The driving forces of innovation and globalization are
pushing companies to revamp their managerial ranks
and hire people with new skills. Surprised by the rise
of consumer power, companies are seeking people
who can connect with customer cultures online and
overseas. And in an era of constant change, they
want people who are comfortable with complexity
and uncertainty. Schools that teach design thinking,
with its emphasis on maximizing possibilities rather
WKDQ PDQDJLQJ IRU HIÀFLHQF\ DUH LQ KLJK GHPDQGµ
(“Design Programs Are Shaping a New Generation
of Creative Managers,” Business Week, October 4,
2007).
This idea correlates with the characteristics of the Click
Company listed above. Let us spend some time analyzing
it:
“The driving forces of innovation and globalization
are pushing companies to revamp their managerial
ranks and hire people with new skills…”
Both consumers and the workforce are changing, shaped by
the digital medium. Leaders need to have the skills to inspire
and engage people with an attitude of open communication
rather than leadership by access and segmentation of
information.
“Surprised by the rise of consumer power…”
The digital medium has shifted power from the company to
44
customers; customers are empowered by unlimited access
to information. They can exchange experiences with their
peers and learn how to customize their unique experience.
“…companies are seeking people who can connect
with customer cultures online and overseas.”
The digital medium breaks the geographical ties and instantly
connects everybody on the planet; we are now living in a
”global village.” Companies do not need to be big to be
global.
“And in an era of constant change, they want
people who are comfortable with complexity and
uncertainty.”
The digital medium is instantaneous and distributed;
companies are in need of people that are adjusted to the new
medium. The digital medium has dramatically empowered
customers and competitors resulting in a shift in competitive
DGYDQWDJHIURPHIÀFLHQF\WRLQQRYDWLRQ%HLQJDEOHWROLYH
with constant change is a requirement for success.

45
46
 Business Effects of the Digital Medium

Business simulation
´5DSLGO\ZHDSSURDFKWKHÀQDOSKDVHRIH[WHQVLRQVRIPDQ
– the technological simulation of consciousness, when the
creative process will be collectively corporately extended
to the whole of human society, much as we have already
extended our senses and our nerves to the various media.”
Marshall McLuhan (Understanding Media, 1964)
Our relationship with technology started long ago when we
invented artifacts to extend our reach; initially these tools
were used for hunting and then for agriculture. The day came
when we invented sophisticated machines that embodied
processes; as an example, the dishwasher includes a four
steps process: water injection, soap, rinse and dry. Originally
these processes were stored in mechanical systems that later
evolved to computer systems based on microcontrollers and
memories.
Computer technology started replacing mechanical
devices, such as digital clocks replacing analog clocks. Soon
this technology delivered the capability to simulate other
systems, and in some cases software has become the virtual
replacements of some device. For example, smart phones
are replacing cameras, watches, compasses, calculators,
maps and so on.
Gadget simulation is very tangible and visible, the question

47
now is: can your entire business be simulated by the digital
medium and its technologies? Absolutely. This is what online
retailers have done to the process of buying books (and
more recently, reading books), for example. Travel agencies
are another example where the entire business is simulated
and presented as an online experience. Simulation is a
very disruptive technology that can make entire businesses
obsolete.
Customer participation vs. customer centric
“Without customers, there is no need for your job.”
Participation is the most important effect of the digital medium;
it fuels the success of all the collaborative communities and
associated companies emerging on the Internet.
8QGHUWKHLQÁXHQFHRIWKLVPHGLXPRUGLQDU\SHRSOHOLNH\RXU
customers and employees) have changed their behavior to
become more participative, connected and informed. They
invest a considerable amount of time and energy in sharing
their knowledge and experience in areas ranging from how
to bake a cake to how to heal from a disease. Over 60% of the
information available on the Internet is not commercial but is
content created and used by ordinary people; the Internet
provides the opportunity for us to express our passions.
But the effect of the digital medium does not stop at
individuals; it will also turn the corporate world upside down.
,W ZLOO WHDU GRZQ RIÀFH ZDOOV DQG RSHQ PHHWLQJ URRPV ,W
makes secrecy counterproductive. The power in controlling
and segmenting information is gone; information is now
available to everybody.
What about the customers? They are using the digital
medium to explore new options to solve their problems,
perhaps even replacing your products. They are building a
trusted network with peers; you need to be transparent and
authentic to be part of that forum. Do you think customers,
particularly business customers, are unaware of the intention

48
of your marketing messages?
For many years, companies have claimed to be customer
centric, implying that customers are their focus and the
center of their strategy. However, the Classical Company
customer does not feel at the center because they see that
the focus of the company’s unilateral approach is to increase
UHYHQXHVDQGPD[LPL]HSURÀW7KLVLVDUHVXOWRIWKH&ODVVLFDO
Company’s model “we design, we sell and you buy,” which
ultimately attempts to lead and control the customers.
Such a view contrasts with the sense of freedom,
empowerment and participation that people are
experiencing as a consequence of the digital medium
adoption. The medium has created an open environment
of genuine participation that integrates customers and
employees who share knowledge in social networks or other
web initiatives.
Click Companies directly (i.e., not through an analytical
expert interpreting market requirements) engage the
customers in marketing processes to co-create the products
that will meet their expectations. They are re-designing the
sales process to bring about customer alignment. We are
watching a shift from a customer-centric focus, which was
company-driven, to customer participation; this change is
KHUHWRVWD\DVLWUHÁHFWVDFKDQJHLQRXUEHKDYLRUFDXVHG
by the digital medium.
,W LV LPSRVVLEOH WR ÀJKW EHKDYLRUDO FKDQJH VR EXVLQHVV
leaders have no option but to adapt. To embrace customer
SDUWLFLSDWLRQLVWKHÀUVWVWHSLQDOLJQLQJ\RXUEXVLQHVVZLWKWKH
digital medium and moving towards the Click Company
model.
Real time’s business impact
“The world is changing very fast. Big will not beat small
anymore. It will be the fast beating the slow.” Rupert
Murdoch

49
Picture the 19th century when we lived in the pre-electric
and pre-digital age. From books and newspapers we learned
of remote lands we could only dream of visiting. Maps,
encyclopedias and geography books illustrated a clear
sense of space and distance within our planet. Although we
had much information about the world, it seemed big and
far away.
The early ancestors of the digital medium – electricity, the
telegraph, radio, TV – shrunk the world. Important events
were broadcasted around the world. Today with the Internet,
news and information travel at light speed collapsing our
previous notion of time and space; our planet is contracted
and we have instantaneous access to information.
But the digital medium does more than broadcast events to
a passive global audience. It provides real-time participation
and has substantially accelerated the real-time factor in our
life experience. The personal computer, the Internet, mobile
communications and computing, databases, all form a
massive network that extends our memory, our senses and
even our mind.
When we transition from our personal experience to business,
we realize that the corporate world has not entirely adjusted
itself to the digital medium. Business does not respond in
real time, its culture and people operate in a sequential,
hierarchical and fragmented world. The operation of a
&ODVVLFDO &RPSDQ\ LV HPERGLHG LQ VHTXHQWLDO ZRUNÁRZV
spanning functionally fragmented groups. Forcing business
analysts to produce new reports at the end of every business
day does not make your business operate in real time. That
system is obsolete.
The Click Company operates in true real time, where
processes are continuous and parallel, and information
ÁRZVGLUHFWO\IURPZKHUHLWLVSURGXFHGWRZKHUHLWLVQHHGHG
without multiple analysis/synthesis steps. Hierarchical levels
doing the “editing” of the information and introducing

50
delays need to be replaced by systems that can leverage
the synergy between the people who really understand the
problem being solved.
Sales and marketing in the Click Era
“To sell more and the sky is the limit” has long been hardwired
in the minds of sales and marketing people. In fact, the motto
is powerful enough to drive Wall Street to condemn CEOs
who fail to increase sales quarter after quarter. Devotion to
this principle has led sales and marketing professionals to
operate in a frame of fragmentation and isolation where
there is no responsibility or concern for the effect of the
product on its customers or on the environment beyond the
sale.
As long as you sell more, you are a hero. An advertisement
motivates us to eat all we can – the best value to for our
money – while the next promises a magical medicine to
heal us from our overconsumption. We do not repair our
belongings; we simply trash them. A decent new bike priced
at US$ 50.00 erodes any incentive to repair what is in the
garage.
Two forces are challenging the business motto perpetuo.
7KH ÀUVW GULYHU IRU FKDQJH LV WKH ecological consciousness
that compels business to be self-sustainable and to consider
the environmental impact of products. The second force
is the new customer’s mind-setVKDSHGE\WKHLQÁXHQFHRI
the digital medium. Consider their experience on the web
where they interact in social networks, blogosphere, user’s
groups and specialized communities to share their problems
with peers and to seek solutions.
Today’s consumers are building trusted networks where
people genuinely collaborate without the intention to sell to
each other. The convergence of the two trends: ecological
consciousness and new customer behavior points to the next
stage of capitalism.

51
Such a scenario creates a great opportunity for sales
and marketing people to join prospects and customers in
conversations to understand the customer’s business. By
participating in such a dialog you may gather information
DERXW\RXUFXVWRPHUVWKDWPD\EHXVHGLQSURGXFWGHÀQLWLRQ
or messaging and positioning, or even sales and marketing
strategies. It is important not to treat these interactions
involving customers and peers as “sales leads.” Keep in mind
that customers are now free and well-informed, and now
more than ever have options beyond your product.
Think about your experience as an online consumer
comparing products (including products sold by competitors),
reading peer reviews (including negative ones) and
deciding what to buy instead of being convinced to buy
what is available in a traditional store. The same experience
has to translate to the business-to-business world. Is it possible
to make your customers feel the same way? Of course it is,
and this shift in the marketplace in inevitable. You can hope
it takes a long time or you can prepare for it and lead the
change.
Strategic initiatives in the Click Era
The classical approach to developing a business strategy
or to solve complex business problem is familiar to anyone
LQ PDQDJHPHQW GHÀQH D PLVVLRQ DQG D YLVLRQ DUWLFXODWH
strategic goals, and decompose those goals into functional
components recursively until you can assign individual tasks.
Manage people towards those individual objectives. If
everyone does “their job,” the synthesis of the personal
performance is the achievement of the organizational
JRDOV7KDWDQDO\WLFPHWKRGDOORZVIRUJUHDWHIÀFLHQF\DQG
supports automation, optimization and accountability.
%XW SHUFHLYHG HIÀFLHQF\ KDV VHYHUDO KLGGHQ FRVWV )LUVW
because the analytical process is not perfect, the sum of
individual performance often does not make for collective
VXFFHVV:KHQZHGHFRPSRVHSUREOHPVDORQJSUHGHÀQHG
52
functional lines or team skill sets, gaps and miscommunication
affect the integration of the results.
Second, the segmentation intrinsically dismisses synergy in
the interaction among people. If specialization contributes
WR HIÀFLHQF\ LW FRQVWUDLQV SHRSOH WR FRQWULEXWLRQV LQ WKHLU
YHU\ VSHFLÀF GRPDLQ DUHDV 5DWKHU WKDQ UHO\ RQ FROOHFWLYH
wisdom, the classical approach is very dependent on the
wisdom of management.
Third, a functional organization is not good at perceiving and
reacting to changes in the external context.
To minimize that last problem, companies usually have a
small group of people outside the normal operation focused
on the external context (often in roles carrying labels like
“Business Development“ or “Strategy”). Because they are not
integrated into the normal processes, they operate through
“strategic initiatives,” which are designed to drive change
and are often threatening to the mainstream organization.
In a Click Company, every member of the employee
community is more aware of the overall goal than focused
on individual success. Decisions are less centralized and the
boundaries between roles in the organization are less strict.
'HFHQWUDOL]DWLRQFUHDWHVDSRWHQWLDOORVVRIWKHHIÀFLHQF\RI
specialization but, on the other hand, allows for collaboration
and participation. The barriers to align people towards an
objective are declining because the digital medium allows
more effectively communication, both to inspire people
towards a global complex goal and to truly capture the
community knowledge and the synergy from interaction
among people.
:KHQZHUHDFKWKHWXUQLQJSRLQWZKHUHWKHEHQHÀWVRIIVHWV
WKH FRVW WKH WLGH UHYHUVHV LQ WKDW VSHFLÀF PDUNHW VHJPHQW
and Click Companies challenge Classical Companies.
In a Click Company, ”strategy” is not a stand-alone entity
ÀJKWLQJWKHVWDWXVTXR6WUDWHJ\EHFRPHVOHVVFHQWUDOL]HG

53
an integral part of the company operation. We trade
HIÀFLHQF\ IRU DJLOLW\ 7UXO\ FROODERUDWLYH V\VWHPV LPSOLFLWO\
embed the strategic process. The role of the leadership
or the “strategists” shifts from formulating strategies to be
followed towards inspiring people to envision and pursue
collective goals.

54
 Conclusion

In the second half of the 19th century, as the Industrial

Revolution was unfolding, factories used belts and
mechanical systems to distribute power from a large central
steam engine.
:KHQWKHHOHFWULFPRWRUZDVLQYHQWHGWKHÀUVWDSSURDFKZDV
to simply use it to replace the central steam engine, which
did not produce great advantages. It took several decades
to realize that the electric medium could be effectively used
to distribute power. Small electric motors were designed and
successfully applied at the exact location where mechanical
power was needed.
Application of electric motors eventually revolutionized
industry. Industrial processes were no longer limited by power
transmission using shaft, belts, compressed air or hydraulic
pressure and the physical layout of the factories could be
optimized for manufacturing rather than for distribution of
mechanical power.
The root of the 19th century problem was to approach a
new medium - the electric medium - with the mind-set of
the previous medium - the mechanical medium. It was
necessary to fully understand the new medium’s effects
and its potentialities to successful adopt it. But when that
awareness arrived, changes accelerated.
Today we are faced with similar challenges when dealing
with the digital medium —we’re attempting to use it with the

55
mind-set of the print medium. The websites of the 1990s were
a repository of marketing brochures – the user experience
was to read a book on the web, it was linear and sequential.
Only now, the digital medium is expressing its authentic
personality though social networks, micro-blogs, social
gaming, etc.
To be successful, companies will need to understand the
digital medium’s effects on people and then apply it
effectively to their businesses. Most will not do it successfully
and will be replaced by Click Companies. We hope we
have inspired you to take the steps in that journey and apply
the Click Company model to your business to discover new
threats and opportunities.
In conclusion, we would like to pose that “the intention
GHWHUPLQHVWKHDFWLRQVµDQGVXJJHVW\RXUHÁHFWRQWKHLGHDV
presented here and plan how to align your business with
the digital medium. This medium will impact your business
regardless its size and sector.

“What is next?”

56
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