Best In Brief

MIT Sloan Management Review: Middlemen for a modern age

Angela AndalAncion, Philip A. Cartwright and George S. Yip

Douglas West
University of Westminster

There are companies and products such as books and airlines that can benefit greatly from new information technology (NIT), whereas sectors such as cars and clothing do not. A great deal depends on the kinds of business transformations enabled by NIT investments. Determining the best 'mediation' strategy is the first step in the process of optimising NIT.

Using the classic 'disintermediation' strategy, a company might cut away layers of middlemen (such as distributors) that separate it from customers. A good example of disintermediation is easyJet, which was able to deal direct with customers. The first NIT step was the driver of 'electronic deliverability', when easyJet converted physical activities like internet sales and ticketless travel into digital processes. The company added 'information intensity' to reduce as many internal physical processes as possible, such as using its website for job applications and screening. Another driver, reducing 'search costs', was enabled by the website remembering essential customer data and providing expanded tracking details for registered members. The airline uses a 'realtime interface' so that customers can compare costperseat with other airlines on a 24/7 basis.