Customer Reviews

Net Gain: Expanding Markets Through Virtual Communities

5 star:		(28)
4 star:		(16)
3 star:		(5)
2 star:		(7)
1 star:		(5)

 

 

Notwithstanding the many new books on on-line communities, I still keep this book on my bookshelf as a useful reminder of the conceptual framework around which many new businesses - failed or otherwise - were subseqently developed.

It has been nearly six years since I attended a seminar organized by the consulting company McKinsey at which the two authors (both McKinsey consultants)presented their book and what seemed, at that time, to be its somewhat radical proposition about profitably developing self-organizing on-line communities around the passionate interests of their memberships.

As I become more familiar with Amazon and how it is organizing the community through which you are reading this and other reviews, I am reminded about the fundamental concepts that Hagel and Armstrong laid out in their book regarding the economics of virtual communities. Amazon attracts member-generated content which is a key part of its business model which uses the passionate interests of its own customer base to increase its business value. Many doubted the vailidity of this proposition when this book came out, but the evidence does appear to increasingly support it.

Arguably, many might now say that this book is dated, on-line businesses having mushroomed and failed since this book appeared, yielding new lessons that this book could not have foreseen. Many of its claims now seem overhyped.

While this and other criticims may all be well and true, I suspect that this book will come to be regarded in future business histories of the on-line business as one of the seminal pieces of strategic business thinking in the late 1990s. I shall keep it for posterity, if not profitability. In any case, there must now be enough second-hand copies for you not to have to make the investment at the full original cost!

Hagel has co-authored two especially important books (with Arthur G. Armstrong III and Marc Singer, respectively), the other being Net Worth "which builds on a number of the themes originally developed" in this volume. As Hagel and Armstrong point out, Net.Gain "systematically [analyzes] the economic drivers for value creation that exist on networks. It [uses] one particular business model -- the virtual community -- to illustrate the unique capabilities of digital networks and how these might be harnessed to create a substantial business with very attractive economics." The material is carefully organized within three Parts: The Real Value of Virtual Communities, Building a Virtual Community, and Positioning to Win the Broader Game. Hagel and Armstrong also provide a "Management Agenda", followed by excellent suggestions for further reading.

In the Preface, Hagel and Armstrong acknowledge three inevitable limitations in writing Net.Gain: "The first arises from the profound uncertainties associated with evolving electronic networks and the myriad business models emerging in the primordial brew known as cycberspace....Second, the need to be concise has led us to make some generalizations about the likely evolution of virtual communities and the key principles for success....Third, we do not expect virtual communities to be the only 'form of life' on public networks. Indeed, many other commercial and non-commercial formats (including dictionaries, market spaces, 'web'zines,' corporate sites and game areas) will thrive on these networks as well." Working within these limitations, Hagel and Armstrong succeed admirably when describing the power and potential of the virtual community concept. Also, when explaining (a) how to target the kind of community to start-up; (b) the principles of a successful entry strategy, emphasizing the need to generate, engage, and lock in traffic over time; (c) characteristics of community organizations; and (d) criteria by which to select the right technology. Then in Part Three, Hagel and Armstrong shift their attention to explaining the fundamental ways in which the emergence and spread of virtual communities will alter traditional business.

My strong recommendation is that this book be read first, then Net Worth. My further recommendation is that both books be used to formulate the agenda for a workshop or what is generally referred to as an "executive retreat" (preferably for two days and located offsite) with all participants required to read both books in advance. In their Epilogue, Hagel and Armstrong suggest that "the most radical potential impact of the virtual community may well be its impact on the way individuals manage their lives and companies manage themselves. Communities will serve to connect, much like the postage system and telephone before them. But they will go several steps further than the telephone or fax, as they help the individual to seek out and find. Souls in search of relationship, colleagues in search of teamwork,, customers in search of products, suppliers in search of markets: the virtual community might have a place for them after all." Those who share my high regard for Hagel's two books (co-authored with Armstrong and Singer, respectively) are urged to check out Peter Senge's The Fifth Discipline as well as O'Dell and Grayson's If Only We Knew What We Know. Both can also help with the planning and implementing of the off-site workshop recommended earlier.

Excellent ideas on Internet marketing and business strategies but did not need to write a book, ten pages would have been enough. Read a well condensed summary is less time consuming for the same amount of great information provided by the author.

This book was probably five stars when it was published - in 1997. However, too much has changed since then, obviously through no fault of the authors. I knew I was in trouble when the authors raved about Motley Fool and asked "can online trading be far behind?" Save your money.

This is a great book for anyone who plans to go into business in the Internet, or works at a high-tech company. It emphasyses the importance of working for the web community and knowing what they want and need.

I can't believe that HBS would publish the likes of this druck! Both Net Gain and Hagel's previous books were full of holes and based on ridiculous assumptions. A first year MBA who has taken strategy 101 could tear these books apart. Not surprising that the authors are McKinsey consultants. I have had such consultants as classmates and it frightens me that they are heralded as the harbingers of ANY economy. Yikes!

This is a very serious handbook for how to create communities of interest, provide value that keeps the members there, and establish a foundation for growing exponentially from day one.

Hagel et al would have better served their audience by getting out into the online world and seeing how it actually operates. It's one thing to read newspaper and magazine clippings and deduce a trend; it's another to experience the trend firsthand. Hagel et al definitely do NOT get online communities. Hiding behind a big consultancy's shingle does not confer understanding, empathy, or effective strategies for action -- that much is clear.

I found this book very insightful and I would recommend it to you

If you want to know how to create a virtual community this book cannot lack in your shelf. This is the first book that deals with the matter in a way it really ripens. The authors defend the thesis that you need to do three things: To generate the traffic, to concentrate the traffic and later to maintain the traffic of visits to your community. This book is for who is really working with a digital business or wants to set up one. Besides discussing each one of these steps, it finishes with a list of what to do for the management of a project. A must read!