Much has been written in recent months about the lessons to be learned from the precipitous decline in the fortunes of many dot-coms. A great portion of the debate has focused on whom to blame for the fallout – inexperienced would- be billionaires who ran the companies, greedy venture capitalists out to make triple-digit returns in weeks or even Alan Greenspan and his management of the overall economy. Rather than focus on the negative, in this month's column, I am going to look at some of the positive effects resulting from the burst of technological exuberance that most commentators agree started with Netscape's IPO in August 1995. The next five years saw the NASDAQ climb from 1,000 to over 5,000 and then more than halve in value in less than twelve months. It has been an interesting ride; and while there has been no shortage of dumb but well- funded ideas, there have also been some significant learnings.

Computer technology has been a major part of commercial life for almost forty years. However, it is only with the emergence of the Internet as a viable (ubiquitous, cheap, fast) medium for communication, collaboration and commerce that the real mass-market potential is finally being realized. From e-mail to instant messaging to collaborative design and electronic marketplaces, it is clear that a new alternative to traditional face-to-face, paper and telephone communication methods now exists. One of the consequences of the emergence and growth of the Internet has been the increasing attention now paid to the human- machine interface or the overall user experience.

Since the first character-based terminals appeared on desktops, it has been the norm to expect that computers will be difficult to use. Since those early terminals appeared, there have really only been two major advances in interface design: the introduction of the graphical user interface and the mouse almost simultaneously in the early 1980s. However, there is no doubt that the 400 million Internet users worldwide are increasingly intolerant of complexity. Abandoned shopping carts and searches are testament to the critical importance of "user experience" in sustaining a successful Web presence. This means more than simply a pretty Web page. It involves the organization and integration of all aspects of a person's interaction with an entity from initial exploration of the Web site, through order processing, billing, fulfillment and customer service. Further growth will be increasingly dependent upon the ability to deliver a consistent experience across all dimensions. Wireless applications represent a topical example of where this will be crucial.

The translation of a consistent user experience across multiple mediums is now a major focus. In much the same way as people get their news from multiple sources (e.g., newspapers, CNN, network news and casual conversation), organizations that wish to leverage the Web understand the need to cater across multiple channels. Electronics retailer Best Buy has gone so far as to base much of its recent television advertising on the fact that if you order online, you can return the goods to any store without difficulty. This is a somewhat strange value proposition for a retailer to tout the ability to take back things you did not really want to buy! Notwithstanding the wisdom of the message, this is a clear demonstration of the potential for multichannel integration to enhance customer service and hence competitiveness. It is also rather ironic because just a few years ago, some commentators predicted the demise of such retailers as buyers abandoned physical stores and migrated to Web sites such as Buy.com for all purchases.

The death of intermediaries was one of the most frequent predictions during the first wave of business-to-business (B2B) and business-to-consumer (B2C) commerce. However, this prediction didn't account for a crucial fact. The reason intermediaries existed in the first place was because of their ability to add value. Most intermediaries accomplish this by offering a capability or skill that is not readily available elsewhere. What has become clear is that the Internet will not eliminate intermediaries but rather redefine their roles. Those that adapt have the opportunity to prosper. Both Yahoo! and eBay have prospered relative to many by developing distinctive capabilities and executing very well as intermediaries. The same will be true for those electronic B2B marketplaces that survive and prosper. Those that grasp this basic principle and execute it effectively will have the best chance at succeeding.

The bottom line of business success remains the ability to deliver something of value at a price people will pay which, in turn, delivers an acceptable return. When the dust finally settles and someone performs a final accounting of the overall return on investment from the first wave of the Internet economy, it will probably show a significant positive return overall. While the turmoil resulting from dot-com business failures is undoubtedly significant and painful for many, the long-term value created is likely to far exceed any losses incurred in the initial explosion of investment and inventiveness. The dot-com bubble is likely to result in the creation of a major new industry of significant economic value.

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