A Business Innovation and Sustainability Blog

“Software is an idea; hamburger is a cow.”

-Peter Coy, Business Week

It’s important to recognize what you’re in the business of – selling things or selling information, (likely you’re in the business of both). Sometimes it’s easy to determine, but other times it may not be so intuitive.

Many years ago, Encyclopedia Britannica was forced to the realization that it was in the business of information, not books. It wasn’t so clear to them then.

Traditionally, the economics of information and the economics of things were bundled¹. Today, it can be much the same. But more certain is that we’re all in the information business; Industries are information intensive.

Today, it’s incredibly important that you consider and understand how the separation of things and information will inform your business model, business and organizational strategy and marketing.

The economics of things and the economics of information are quite different. I think the story of Encyclopedia Britannica is a good reminder.

The economics of things vs. information¹.

Things	Information
Wear out	Doesn’t wear out, can become obsolete or untrue
Are replicated at the expense of the manufacturer	Is replicated at almost zero cost without limit
Exist in a tangible location	Does not physically exist
When sold, possession changes hands	When sold, seller may still possess and sell again
Price based on production costs	Price based on value to customer

Reference:

1. Pearlson, Keri and Saunders, Carol. 2010. Managing and Using Information Systems; A Strategic Approach (4^th Edition).