Can You Compete On Internet Time?

Book: Competing on Internet Time: Lessons from Netscape and its Battle with Microsoft
Authors: Michael A. Cusumano and David B. Yoffie
Publisher: Free Press
Price: $26

The epic battle between Netscape and Microsoft means different things to different people. In Washington, it's a legal laboratory for the future of antitrust policy. On the Net, it's the world's most closely watched cybersoap. But for Michael A. Cusumano and David B. Yoffie, the coauthors of "Competing on Internet Time," it's a case study on the future of business -- a battle that's produced lots of great software, more than a few fortunes, and plenty of rich clues about the logic of competition in the new economy.

The book explores the successes and setbacks of Netscape, the Web's first real company -- and it explains how Microsoft, a once-invulnerable giant, lost ground to the fast-moving upstart and then battled back. The book itself is almost as surprising as Netscape's out-of-nowhere rise to power. It's a rarity: a serious book by serious professors that is timely, engaging, and fun to read. (The book is so serious that it is playing a role in the Justice Department's antitrust suit against Microsoft: The company has subpoenaed the authors' research notes and interview tapes.)

What's not surprising is that the book is smart. Cusumano, a professor at MIT's Sloan School of Management, knows how Microsoft competes: He's a coauthor of "Microsoft Secrets: How the World's Most Powerful Software Company Creates Technology, Shapes Markets, and Manages People" (Free Press, 1995). Yoffie, a professor at Harvard Business School, is a member of the board at Intel and the editor of "Competing in the Age of Digital Convergence" (Harvard Business School Press, 1997).

Cusumano and Yoffie build their book around reflections by more than 40 Netscape executives, managers, and engineers. There's Marc Andreessen, of course, the boy wonder behind Mosaic, the first Web browser for the masses. There's Jim Barksdale, the no-nonsense executive who held top jobs at FedEx and McCaw Cellular before he became the startup's designated adult. And there are coders and testers -- people whom you don't see on "Moneyline" but who do real work.

Cusumano and Yoffie used their access to those people to probe some basic questions: How does Netscape set strategy and manage product development? How does its approach compare with the "Microsoft Way"? And what do these issues have to do with the rest of us? Here are some of the authors' answers.

Your company may be small, but it's a big world out there.

Early on, Netscape was a master at compensating for its lack of internal resources by tapping external resources. Its original decision to give away its Web browser turned millions of Net users into a "virtual testing organization."

Andreessen is emphatic about the advantages of that model: "Kick the product out the door as quickly as possible," he argues. Why is faster better? The sooner software is out the door -- and on the Web -- the sooner Netscape's developers can start processing the feedback. Netscape's engineers say that they usually identify a program's major bugs within six hours of its release -- compared with the six-week beta cycle that is typical of packaged software.

Size matters -- but not the way you think it does.

The big strategic insight in the book is what Cusumano and Yoffie call "judo strategy." It's suicide to go head-to-head against a big company, because a smaller company can't compete on clout. But if you can create a field on which speed and flexibility count -- then you can turn your opponent's size into a point of vulnerability.

That's why Netscape was able to mount itits inial challenge to Microsoft, whose source of strength was (and is) its dominance of the desktop. Microsoft's commitment to Windows allowed Netscape to position Navigator as a "cross-platform" alternative. And since Microsoft's business model relied on coaxing users into regular upgrades of Windows, the company had no incentive to develop its browser for older versions of its operating system. Netscape was in the odd but profitable position of doing better than Microsoft at serving the majority of Microsoft's customers -- because those customers were still running Windows 3.1 or DOS. Over time, of course, the corporate heavyweight learned some judo as well -- and Netscape learned some rough lessons about sustaining a counterattack.

Internet time doesn't last forever.

Lots of companies have lots to learn from the rise of Netscape -- no matter how its battle with Microsoft ends. But Cusumano and Yoffie remind us that we don't live on "Internet time" all the time. Faster may be better for a while. But ultimately, better is better still.

Microsoft's Steve Ballmer says that his company spends 75% of its time on testing, and that it usually employs one quality-assurance person for every developer on its staff. "At some point," Cusumano and Yoffie argue, "companies must invest as much in improving product architectures, testing, and process control as they do in generating new features, sales, and additions to the product portfolio."

That's the point at which a startup grows up -- when it figures out whether it can maintain the can-do spirit that gave it birth, while also instilling enough discipline to meet the expectations of its market.