Unbundling Leads to Specialized Businesses
For the go-it-alone business, the third aspect of specialization is particularly important. As the Internet becomes an increasing part of our lives, we can anticipate an increasing emergence of businesses performing highly specialized services. This growth in specialized services, like those provided by Everette Phillips’s China Manufacturing Network, will create an increasing array of opportunities for go-it-alone entrepreneurs. As interaction costs go down, activities that were formerly part of one company are unbundled, to be handled by specialized firms that perform an activity and seamlessly integrate it into a web of activities faster or cheaper than when the activity is handled in-house.
Both Mr. Trademark and Speed Anywhere demonstrate this phenomenon. But they’re not the only ones.
Case Study: The Investment Management Business
The typical investment management business is composed of several partners and their support staff. The staff members are people with various skill specialties. Increasingly, this traditional model is being supplanted by a model of specialized businesses located across the country that provide customized support to the individual investment adviser.
Eric Goldstone, a highly successful go-it-alone investment adviser, located in Clinton Corners, N.Y., believes that independent investment managers must possess two core skills: “A systematic approach to investing that reflects your underlying methodology, and the ability to educate clients so that they understand your approach and have confidence in it.” Where these core skills are not involved, investment advisers can now decide which functions they want to keep in-house and which functions they want to outsource.
