Web erodes information advantages, financial markets are next

After talking about this same topic last night, Umair from HBS posts about the impending doom of traditional business strategies focused on informational based competitive advantages. I could not agree more. Frankly, if your IP can be digitized, you are stuck out of luck for a business model. From Umair:

Here’s a quick example. Where orthodox strategy advises hiding information and making things less liquid, what does edge strategy advise? Exactly the opposite: release information bottlenecks and make things more liquid.

This just in, a Google Chat from Tomur Ho regarding my FF from 30 seconds ago... And yes, Tomur is just kidding about the client interactions. Hysterical.

Tomur: Have you read the black swan?

 me: no

 Tomur: Touches on some topics that you've noted in your comments.

 me: join FF

 Tomur: : FF?

 me: ill give it a read

thanks for the tip

 Tomur:  Basically covers event prediction, the discernment of information and how the "experts" are largely in it for self preservation.

 me: exactly

professional bodies are simply cartels

 Tomur: That nobody knows and that you're better off going against the grain.

 me: whats interesting from a psych standpoint is that spoken language

, french , english

is potentially a method of self defense

its inherently adversarial

me: so "not speaking" someones language, or chaning your own, is inherently offensive

protectionary, etc.
Tomur: Yeah.  I do it all the time during client interactions

 Sent at 12:47 PM on Friday

Amazing. We'll here's the body of my comments on HBS blog.

My how thoughts ripple across the world, I jsut had this conversation with my flatmate last night, a recruiter for financial advisers.

I completely agree.

The eminent democratization via internet enabled technologies will diminish historic "information advantages" that so called "professionals" have in fields such as real estate, finance, etc. Is an expert (some 25 year old b-school graduate who is trained to type in your details into a packaged, autonomous BPM software tool for income tax accounting, investment portfolio advice or an MLS listing at a F500 firm for generating automated results) truly acting in your best interest by applying their expertise, or simply a job waiting to disappear?

Web sites like www.redfin.com, online tax software,etc. obviously know the answer. No one will ever care as much about your interests, than yourself. Cut out the middleman, and only seek the advice of higher level experts when necessary - who themselves actually provide true value.

Who knows, perhaps the same could be said of the cartels of medical practitioners, lawyers, etc. Ever wonder why they use obtuse language the lay cannot commonly understand? How else would they persist their "information advantage" if anyone off the street could speak their language?

Finally, as we see the information advantage in investing erode thanks to increasingly ubiquitous access to information by the masses, one can only begin to realise that, along these lines of thinking, that the only way to significantly beat the market is to have information you are not "allowed" to have, as per insider trading.

It's interesting to see what other advantages have been eroded by the internet, such as the existing patterns based on time-shifting, digital distribution vs. physical (Music industry), etc.

Great post.