Richness and Reach

Digital Disruption and Technology Strategy

Amit Jain
Associate Professor
ISEM; Department of Strategy and Policy
amit_jain@nus.edu.sg
Today
1. Recap: Accor Hotels
• Was Accor Hotels digital strategy effective to counter AirBnB

1. Disruptive Innovation vs Value Innovation

2. Richness and Reach

• Case: Netflix

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Richness and Reach

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Richness vs Reach
• Basic law of economics
• When information is embedded in physical models of delivery, there is a universal tradeoff
between its richness and its reach

• The tradeoff is fairly simple

• Richness: the “quality” of information, as defined by the user: e.g. accuracy, bandwidth,
customization, interactivity, relevance, security…

• Reach: the number of people who participate in the sharing of that information.

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Rich information can be shared with fewer people
• Until recently we could share extremely rich information with a small number
of people, and less rich information with a larger number of people

• Communicating rich information required proximity (physical location), and dedicated

channels retail stores, salesforce

• Communicating information to a large audience required (reach) compromises in the quality

of information

• Unbundle information from its physical carrier, then the richness/reach

tradeoff will blow up.

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Some examples
1. Newspapers
• (High reach, low richness): Reach a wide range of possible customers with limited static content

2. A salesman
• (High richness, low reach): Giving his pitch offers the highest level of personalization, dialogue,
empathy, but only one customer at a time.

3. Kan-ban
• (High richness, low reach): Toyota and Wal-Mart have narrowed their reach by moving to fewer
and larger long-term supplier contracts to allow a richer coordination of marketing and
logistics.– Built sophisticated Electronics Data Exchange (EDI) with their suppliers.

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TRADEOFF: Impossible to share very rich information with a large reach

Richness

CDs/ DVDs
Music/Films

Traditional
tradeoff
Newspapers

Reach

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Digital networks are disrupting the richness/reach tradeoff
• Digital networks are now making it possible for a very large number of people to
exchange relatively rich information

• The richness-reach tradeoff is being displaced, but not eliminated.

• Richness and reach. Once information can travel by itself, it may become
possible to have richness AND reach.

• Examples?

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Result
New levels of richness
and reach attainable
Richness
CDs/ DVDs
Music/Films
Streaming media
Spotify, Netflix

Traditional
tradeoff

Reach

2000. Evans and Wurster, Blown to Bits, p. 31

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Examples?

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Don’t take the value-cost tradeoff for granted

HIGH Spotify

DIFFERENTIATION
BUYER VALUE

Traditional music

LOW COST
LOW

HIGH RELATIVE COST LOW

Based on Chan Kim & Renee Mauborgne – Blue Ocean Shift

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Class Attendance System
• https://inetapps.nus.edu.sg/ctr/Home

• Scan the code which appears with your phone for the obligatory zoning attendance
Netflix: Group 1

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Wrap-up
• Richness & Reach: Tradeoff in richness and reach is the informational foundation
on which relationships, consumer franchises, vertical integration, horizontal
integration, and asymmetries of information are largely based
• Shifting the tradeoff between richness and reach (e.g. the internet) melts the
informational glue that bonds business relationships
• Netflix, Spotify, AirBnB

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