Philip Evans on Lowering Transaction Costs

Dan Farber is blogging some of the talks from Supernova 2005 over at Between the Lines. He just posted an article on Philip Evan's talk about the key to lowering transaction costs. Evans is the author, along with Thomas Wurster, of Blown to Bits: How the New Economics of Information Transforms Strategy. When Evans talks about transaction costs, he means something different than what you might first think of: "First, it's the time and effort expended to reach an agreement, and secondly, it's the difference between the value to the parties of the actual agreement reached and the value of an optimal or rational agreement." Evans gives four principals for lowering transaction costs, including the use of simple, pervasive technology and making information more granular. Both of these favor technologies like wikis and blogs over PowerPoint.

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