The Internet is revolutionizing the world much like Gutenberg's printing press and Henry Ford's Model-T did. As General Electric's CEO, Jack Welch, told Business Week in June 1999, "I don't think there's been anything more important or more widespread in all my years at GE. Where does the Internet rank in priority? It's number one, two, three and four."
Nearly every CEO is now facing the threat of new competitors gunning for their most profitable segments of business. They're also feeling pressure from board members who are demanding Web-enabled business strategies.
For most companies, e-business is no longer a source of possible competitive advantage. It is now an absolute necessity, akin to a retail bank without ATM machines or an airline without a frequent-flyer program. This change is good news for technology suppliers; however, the situation also prompts many questions: How will customers want to use Web-enabled tools? What will competitors do online? What's the impact on what we're doing today? How much should we invest? Can we make money?
Today's e-business best practices answer these questions. Customers are primarily focused on getting a better deal. For instance, 40 percent of all new car buyers consult the Internet before making a purchase, creating increased transparency in pricing. We're also seeing customers utilizing the Internet for convenience. The ability to have 24x7 service from the comfort of your own home puts the customer in charge.
An interesting but related change in consumer choice is the end-user's ability to circumvent even the best-planned product launch strategy. Witness the number of "Harry Potter" fans who avoided the wait for the publication's U.S. release by turning to Amazon.com's online store that serves the United Kingdom. The power of technology to demolish overnight even the most formidable barriers to market entry is clearly redefining the competitive landscape. Soon we'll be looking at a different world, one where banks no longer need numerous branches, manufacturers no longer rely on local distributors and rock stars no longer depend on radio.
According to Hackett Bench-marking Solutions, the best practices research arm of answerthink, the critical elements of "e-success" now emerging are:
It's the customer! Getting closer to customers is by far the primary reason leading companies cite for investing in e-business. Cost reduction and improved information flow lag far behind.
Community, content and commerce. Web leaders understand the need to address the three Cs of e- success: 1) Offer access to an online community that's bound by some shared interest; 2) Deliver useful, relevant, timely and accurate content; 3) Offer a commercial proposition that is economically attractive to the customer.
The need for speed. Time to market rules. Traditional waterfall system development and deployment models are obsolete. Ninety-day cycles are the norm, but the aim is 30 days.
Understand limitations. The Internet doesn't work miracles. For instance, selling variable annuities to 84- year-olds over the Web is clearly a flawed tactic. The Web doesn't fix the wrong product being sold to the wrong customer.
Flawless execution. Promise only that which can be delivered. Align e-channel and core operating processes. Getting it right the first time is even more critical in the online world since so many choices are but a mouse click away. Loyalty is established early in an Internet relationship and difficult to change once damaged.
Ultimately, a CEO always looks for financial return. The Internet has little economic value if it doesn't enhance the size, quality or sustainability of earnings. Therefore, the business case needs to focus on how your Internet strategy adds value through either the acquisition or retention of profitable business with improvements in service, product quality, price or cost advantage.
The Internet is clearly a fundamental driver of change. Like the printing press and the Model-T, e-business offers a low-cost, universal process where previously only high-cost localized solutions existed. Its arrival possibly marks the ultimate fulfillment of the promise of computer technology. However, it does not necessarily make all that went before it obsolete. The printing press didn't kill writing; it changed writing's purpose and function. Television didn't eliminate radio; it changed radio's programming. Catalogs didn't do away with department stores; they changed the product mix in stores. Last, cars and trucks didn't destroy trains; they altered what each transported.
However, heed the warning that if you don't adapt to the arrival of e-business, your business will ultimately die. Railways eliminated canals. Cars killed the stagecoach. The telegraph wiped out the Pony Express. All of these were fatalities because they failed to acknowledge signs of change.
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