The integration of information systems into traditional business processes is vital for survival in a global economy. To keep enterprises globally competitive the technologies must be embedded, globally connected, and simultaneously accommodate virtual and physical systems. For these new systems to operate at optimal levels, "smart structures" that support virtual and physical systems must have infrastructures that are robust enough to simulate a broadband nervous system. Enterprises supported by these structures will be ideally positioned to operate in the new global economy.
One of the largest benefits of these new "smart structures" is their ability to provide capabilities that assist in decision making. When decisions are made under conditions of risk, information about the future consequences becomes very valuable. The more accurate the information, the better the assessment of results. The point where there is enough information to know exactly what the result will be, is called a state of " perfect information". "Perfect Information" provides a clear strategic advantage. The faster the data is collected and the better it is understood, the closer the data is to " perfect information" and the closer the firm is to operating in a no risk situation.
A good example of the impact of improved information is in the art of marketing. Over two decades ago advertisers began to break the US into 200 media markets. Zip codes were grouped into areas served by the local television and radio stations. By examining the demographics of these areas, an advertiser could design product campaigns to appeal to specific values of the residents of these markets. Organizations like McDonalds and WalMart used this information to make decisions about new business locations.
About 10 years ago, a decade of data collection allowed the 200 markets to be subdivided into new Zip code clusters based on lifestyle demographics. 40 lifestyle clusters each with about 2% of the population were devised and ranked by economic factors. This model allowed a cross correlation across geographic boundaries based on economic profiles rather than media market. If a product tested successfully in one cluster, it could be predicted with high levels of certainty that it would do well in other similar clusters in different parts of the country.
In the last 20 years the US has dealt with defense downsizing and the Internet revolution. US Enterprises today operate in a new economic six dimensional space (John Seely Brown). As an example of how this can transform an industry, lets examine the operational model for the owner of regional theater chain.
Demassification: The original number of 40 lifestyle clusters has grown to 62 (55% increase). Each cluster now represents just over 1% of the US population. Lifestyle issues are in a constant state of flux. Today less than 25% of US households have children. This is a shocking statement to people that grew up in the baby boom. Theaters that expect young audiences to keep supporting them are in for some hard times. Every local theater is immersed in a local lifestyle cluster. The demographic of each theater needs to be understood and a GIS database needs to be created to allow trends to be isolated and shared between similar theaters.
Decentralization: One movie does not fit all. It is obvious that these new neighborhoods need movies that cater to their interests. Hollywood is struggling to find movies that appeal to everyone. As the shrinking box office figures indicate, this is no longer possible. There is new opportunity for theater owners with similar demographics to fund projects that would play well in their specific areas. This decentralized decision making will do a better job of matching projects to customers. The high transaction costs of real estate intensive major studios is forcing the majority of the entertainment projects to look outside the traditional system in more cost effective locations. The move away from high transaction costs are driving everything. This is demonstrated by the acquisition of Time/Warner by AOL.
Denationalization: Since 1970 the immigrant population living in the US has grown by 26 million. The schools in New York, Chicago and Los Angeles have students that speak over 100 different native languages.
Despacialization: Theaters can now become involved in merchandising. Point of sale manufacturing can be conducted in the nearest local communities. The master designs and tooling is done at time of production. Manufacturing capacity is purchased locally and theater employees can be used to perform on site assembly operations during theater slack hours.
Disintermediation: (Eliminate the middle man) New digital techniques have now lowered the cost of producing films dramatically. It is now possible to set up production factories stocked with high quality low cost technology. The large studio "bank" and its expensive overhead is no longer necessary. It is estimated that 100,000 scripts exist in the Hollywood community. It is also estimated that 15,000 people (above the line talent) are unemployed at any one time. Theater chains can fund the creation of a "cybrarium" where the scripts can be deposited and talent can be registered. Requirements from local theaters can be input into the system and suggested projects can be created by knowledge mining software. These projects can be proposed. If funded, project management software can allow the project to be tracked from start to finish. This would allow accurate management of release dates.
Disaggregation. (Status drive everything). Computer utilization did not become mainstream until a computer was a status symbol. Within each of the lifestyles is a set of status symbols. Concession stands should include high status local food and beverages. The status of these items can be increased by product placement in media projects. The theater needs to be differentiated by the highest quality viewing experience. Digital projectors, digital sound, comfortable seats, valet parking, luxury boxes, nice clean fancy bathrooms, project premiers and guest appearances by the stars. Anything to make it a status experience to come to your theater.
GIS database to profile each theater. Local demographics can be used to project discretionary income and economic trends. Recommendations about continuing operation, closing or relocating can be determined for each theater.
Establish a communications network that provides real-time data on theater operations.
Establish a digital distribution system for media productions
Create a "Cybrarium" to facilitate project creation and financing.
Create a Digital Production prototype facility that can be scaled to meet the demands of the content requirements of the theater chain. The prototype will be designed to increase quality and to shorten production schedules (3 to 6 moths). Large scale operation is capable of releasing a production per day.
Clean up old film libraries and bring them on line in a database that supports multiple pay per view formats.