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Now, increasingly, the focus is on enabling businesses to continuously gather information directly from customers, to "replace guessing about customer demand with knowing what customers want before products are made."

Customer frustration is almost built into the typical, old economy purchasing decision. Address that pain, solve that marketing conundrum, and you have a whole new way of empowering the customer, transacting business and increasing profitability through eliminating an entire series of wasted motions.

The Innovation of Michael Dell

Instead of manufacturing computers, advertising them, waiting to see what the customer wants, and blowing the rest out the door on deep discount, Dell started out building computers to order and selling them directly to the consumer, eliminating all the expense of advertising, inventory and missed projections. Then Dell took another leap forward: he reinvented the process by giving the consumer the power to configure his own computer, right down to the smallest detail, online.

According to Michael Dell, in a recent Fortune magazine article, "You go to a car dealer and you say, 'I want a red two-door.' He says, 'We don't have any red two-doors. We've got blue four-doors.' And the slick salesman all of a sudden has convinced you that it's time to buy a blue four-door. And you've got this guy making this big commission, selling you something you didn't want to buy. You're not totally happy. And the salesman goes back to the factory and says, 'Hey, the blue four-doors are really hot. Build some more.' This system is all screwed up."

Allowing people to specify exactly what features they want, whether it's in clothing, cars or computers, makes for a much more efficient and profitable process.

The Arrival of the ChoiceBoard

Authors Slywotsky and Morrison in "How Digital Is Your Business?" define a choiceboard as " an interactive online system that allows individual customers to design their own products and services from a menu of attributes, components, prices and delivery options. The customers selections send signals to the suppliers manufacturing system that set in motion the wheels of procurement, assembly and delivery."

Just as Dell's configurator allows the customer to design his own computer, other innovative merchants have put choice in the hands of the consumer. Charles Schwab's Mutual Fund Screener allows investors to build their own portfolios. Landsend.com, the number one apparel sales site on the Net, offers a "Personal Model" which allows potential customers to build a customized 3-D model, receive style tips and try on "virtual clothes" with the click of a mouse.

Customer Focused Digitalization

The Net first enabled instant communication and information transfer, then enabled businesses to create more efficient supply chains. Now, increasingly, the focus is on enabling businesses to continuously gather information directly from customers, to "replace guessing about customer demand with knowing what customers want before products are made." For those businesses who choose to fully leverage the Net and maximize the benefits of going digital, the more precise match between supply and demand can be a tremendous boost to profits.

By studying the innovators in this area--- Dell, Amazon.com, eBay ---Net businesses can redefine customer choice, create greater value for the customers and stockholders, greater profits for their companies, and, generally, a better relationship between a company and the client it serves.