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A Model for Corporate Competitive AnalysisAn "Ideal Type" Model With 10 Components
For Use As A Standard For Comparison Positioning for top and bottom
line success Peter J. Jessen, 11/19/00 (Copy sent to MN legislature, House Speaker, Steve Sviggum and Senate President Roger Moe and others: Roy Terwilliger, Larry Fitzgerald, John Marty, David Jennings, Otis Courtney, Sarah Psick, Victor Moore, Tom Hanson) The "mantra" remains and continues: Evaluate in light of the 10 competitive analysiscomponents to best position for marketing, sales, and bottom line success. Regardless of industry, companies seek to create, develop, produce and distribute goods and services in such a manner that market share will be kept and increased, and profits and valuation will be added and increased. In today's so-called new economy (in which the "laws" of the "old" economy still hold), this must also include the utilization of the Internet both in-house and with customers, clients, vendors, and suppliers, using a combination of Internet, Intranet, and Extranet protocols on the World Wide Web. Needed is both steak (service, product) and sizzle (differentiates the steak favorably against the competion in the eyes of potential clients and customers). Key for any company is to free its customers/clients from distractions in order to enable them to achieve faster turnaround and killer content, and thus creating a value chain across all media of the client/customer, doing all of this at an affordable price below that of the competition. Key is the "definition of the situation."Who will be the WINNER?The one which"the definition of the situation" with actual and potential clients, customers and prospects through better positioning in the marketplace and differentiation from the competition in the marketplace. The key in terms of competitive analysis components is that only the concept is universal, not the content, which can vary from analysis topic to topic. Needed is having a beginning Competitive Analysis Component (CAC) list which can be revised, added to, and deleted from, which is then used to make the competitive analysis. Also key is to understand that the analysis is both in terms of the competition and in terms of ones own efficiency, productivitiy, and profitability. A competitive analysis framework can thus be used to achieve seven goals of defining the situation: 1. To have a standard for all company employees, top to bottom, to use to analyze any competitor and to analyze any internal shop within the company, as well as each person themselves, personally (TQM is both an organizational and individual measurement). 2. To analyze the "truth" about 3. To use the information from #s 1 and 2 to develop a strategic plan to win the competitive battle for position in the market place, a plan which will minimally include marketing and sales, delivery and service, and, if need be, corrective in-house measures needed in the management and administration of the various entities of the company. 4. To use the information from #s 1 and 2 and 3 to develop a first rate company web portal. 5. To facilitate a strategy to deliver "NOTICE" to the marketplace in behalf of the company. In the famous phrase of Peter Berger: "Reality is of course. Until further notice." 6. To further positive cash flow, profitability, growth, and openness to restructuring, working toward bottom line positives and off the "life support" of investment capital and debt. 7. To adapt the Competitive Analysis Components quickly (add, delete, revise), as changes in the market place, the organization, and the definitions of the situation dictate.
Introduction to the 10 Components 1. Focus is key. Distraction is the enemy of focus. An analysis standard for evaluating is needed in order to support decision making for the desired success that is at stake. 2. The iron ship Titanic represents how NOT to engage in competition. Believing it to be unsinkable, and impregnable, they felt they could control their surrounding environment. They were wrong. They lacked humility. Titanic has had two film versions. In the recent Titanic, starring Leonardo DiCaprio, two lookouts, distracted by the on-deck cavorting of young lovers, looked up too late. The greatest technological marvel of its time sunk within two hours of hitting the ice berg (dot. com's often get distracted by the cavorting of their technology and look up too late to avoid sinking). In the earlier, Clifton Webb film of Titanic, the ship was going too fast in fog (dot. coms failing to navigate by traditional business "rules" of the past 3,000 years will realize too late the need to occasionally reverse course or change directions). Regardless, each ends the same way. Ship and many passengers perish. Humility in construction and course would have saved them. 3. To be competitive in the Internet age, a company needs to "differentiate" itself from the competition "or die" because customers will go elsewhere (CAC#7). 4. To be competitive in the Internet age, a company needs to help its customers be competitive too. Or else the chance is that the customer will be lost, either because it sinks or because it turns to another Internet life raft. Seek to lift all customer boats (CAC #3). 5. To be competitive in the Internet age, a company like needs to have a criteria for constructing an "ideal type" with which to create a standard against which to evaluate its competition. 6. To be competitive in the Internet age, a company needs to be humble and have a vision, and not dismiss the competition as mere copy cats. The greatest distraction of any competitive analysis is to dismiss competitors as copy cats. Two of the greatest success stories of our time, IBM and Microsoft, were copy cats. Their ability to differentiate themselves from their competitors enabled them to move from sellers of inferior products to world class products. IBM moved ahead on the backs of "the BUNCH": Burroughs, Univac, NCR, Control Data, and Honeywell (who invented computers but were not competitive). Microsoft moved ahead on the back of Seattle Computing (from which it bought DOS for $50,000), IBM (we dont do toys), and the Apple architecture with which it built Windows. Tom Watson, Jr. and Bill Gates had greater and far more encompassing visions than their competitors; Apples co-founder and now school teacher Wozniacks "we won" (referring to Windows) is small comfort to Apples bottom line. IBM and Microsoft achieved their success on three pillars: price (cost), marketing (presence) and service (rapid). Quality came later. Remember: half of the Fortune 500 of the mid-1970s have disappeared. 7. To be competitive in the Internet age, a company like needs to view customers as sea going ships (or intergalactic space ships) which need navigation. See CAC #5. 8. The role of the "navigaTOR" in 21st century business, a company has to get the customer through the clutter of seemingly unending information and technological choices to that which will enable customers to sail as risk free as possible to their desired port of call through the clutter of fog and wind currents and waves and/or gravitational pulls (again, see CAC #5). 9. To be competitive in the Internet age, a company needs to also be a navigational portal (direction, interaction, marketing, sales). The winners of the competition of the Internet Age will be PORTALs that are navigational, not just informational. 10. To be competitive in the Internet age, a company needs to be known not just for its product and its quality, but also for its price point and service (see CAC #3). 11. To be competitive in the Internet age, a company needs to pay attention to event horizons, helping itself and its customers anticipate them and take the corresponding action, which is to either initiate them or avoid them, and always staying ahead of the curve, an example of which is the revolution in bandwidth redefining communications technology in the "telecosm", recognizing that communication is a problem solving discipline as well as being the ultimate exercise in power (more are discussed in CAC #4). 12. To be competitive in the Internet age, a company needs to exert its power through its communications, both in-house (responding to each others needs with speed and dedication) and to similarly respond to the needs of customers and suppliers (see CAC #9). 13. To be competitive in the Internet age, a company must have all involved in a working proficiency using the Internet in order to have better informed decisions up and down the line, from the CEO on down (see CAC #2). 14. To be competitive in the Internet age, a company must take advantage of both the physical and the virtual as well as the old and the new economies. Finding balance equals beating the competition, , using intranets, extranets and the Internet (see CAC #10). 15. To be competitive, follow the 10 Competitive Analysis Components (CACs). The winner in any business competition will be the company which: a. has a competitive standard for comparison (CAC #1);
16. This model combines practical real world situations, comments from business and academic experts, and selected case studies in support of the 10 Competitive Analysis Components which can help any company generate profits and increase market share. The use of this model will have a positive influence on a companys financial and investment strategies as it meets the challenges of competing and operating in a global market. 17. The universal constant in change. Being without social and technological interactive instincts, the world making human has created "instinct substitutes," of which the most important two are "roles" and "habits," both of which are learned. 18. We cannot avoid change. And we cannot avoid roles: we cannot live a role free existence. The greatest change in corporate America has been the change from the habit of appointing CEO's from within the ranks to appointing CEO's from the outside. Many "home grown" CEO's are locked into their corporate culture habits and roles and often swing between "no, because we have never done it that way before" to "yes, because we have always done it that way." To succeed in todays business environment, a company must also help its customers understand new habits and new roles to enable them to sail and not sink. 19. The Titanic that sunk was make of heavy iron, was slow in maneuvering, and could not reverse itself or turn on a dime. The Titanic that sails is light, flexible, and can change directions readily (an image taken from FutureWealth and discussed later in this model). What better poster child for this than Titanics director, Jim Cameron, who edited the final version of his blockbuster, $200 million movie, from his home studio, connected to his graphics, audio, computer generation shop, orchestra, dubbers, etc. , as he edited and sent back and forth the various parts and pieces until he had what he wanted. 21. To succeed, a company needs to position/differentiate itself such that this is clear in the eyes of the customer, prospect, and investor as well. 22. A navigational portal web site is viewed as one of "three most important things" a company can do to be competitive:
23. In order to make such an analysis, both data and criteria for interpreting the data is needed. Thus, the 10 components of an "ideal type" model are for use in interpreting not only information in the present, but also of any information in the future, both internally about self and externally about any competition, now and in the future. Competitive Analysis Component #1: "Have a Competitive Standard for Comparison" A. The Concept of an "Ideal Type" As Discussed by Max Weber, applied to the decision regarding any competition: compete, partner, or acquire. Max Weber, considered to be the giant among the non-Marxist founders of social science, coined the term "ideal type" in the first of his classic two volume set, Economy and Society, by which he meant an abstract or way of categorizing the essential characteristics of any social phenomenon, individual, or group in order to be able to meaningfully compare various patterns of human thought and behavior. But ideal types do not refer to a stereotype, as it is a factual statement rather than one that is unfairly positive or negative. In other words, it doesn't refer to "good" or best" but to categories (e. g. , "criminals" and "priests" can both be analyzed as ideal types: which is to say: what it is that each category represents). Thus an ideal type is a composite of real cases to reveal essential features. Thus, his classic ideal type description of bureaucracy is that it features a division of labor, a hierarchy, regulations, impersonality, record keeping, administrative staff, and a career structure (modern day social scientists add informal primary relationships that exist in all bureaucracies). Whether this is good or bad, positive or negative, usually depends on how the observer defines the situation in terms of their political or other beliefs. Regardless, this description still accurately describes what a bureaucracy is. All modern organizations are bureaucracies. Capitalist/democratic societies and their institutions reflect an ideal type called legal-rational authority, meaning that laws/rules/regulations are key, not rulers, such that officials of both the private and public sectors can exercise power only within legally or procedurally defined limits (along with traditions which develop over time and the charisma followers sometimes attribute to their leaders). Despite the trend to more "rational" (by which Max Weber meant the deliberate, matter-of-fact calculation of the most efficient means to accomplish any particular goal), many people actually continue to think in pre-modern traditional terms (what Weber would call sentiments and beliefs about the world that are passed from generation to generation), which strongly reflects on the past (thinking) and reflects the past (looks like). The key to Weber is that ideal types were carefully constructed in order to serve interpretation, in order to better typify what is being studied. In other words, ideal types have a specific cognitive purpose, in our case to conduct a competitive analysis, which are best conducted when the information/data provides empirical verification of the use of the concepts involved. What this means is that we are not seeking some universal laws of competition nor a set of causal relationships to credit or blame success or failure in marketing and sales (although this process could be used for the purpose of evaluating sales techniques and results), but rather statements of meaning to facilitate an accurate interpretation so that the analysis of to compete, to partner, or acquire can be made for accurately, as well as the strategies to use to follow whichever of these three are determined as the best course of action: compete, partner, or acquire. This is important for a simple reason (as seen in the book length essay of Peter Berger and Hansfried Kellner, Sociology Reinterpreted), which is that A "human phenomena don't speak for themselves; they must be interpreted." Recommended is the use of Weber's "ideal type" as a kind of model-building device to better interpret the data and information and complimentary action. This covers both objective and subjective analysis for, as Weber notes (p. 21) "In the great majority of cases actual action goes on in a state of inarticulate half-consciousness or actual unconsciousness of its subjective meaning. The actor is more likely to 'be aware' of it in a vague sense than he is to 'know' what he is doing or be explicitly self-conscious about it. In most cases his action is governed by impulse or habit." Thus, the competitive ideal type constructed and explained here should hold true in any competitive analysis, including an internal analysis, regardless of who the competitive analysis is made about vis a vis the company, and regardless of whether all desired information is obtained or not. One way of outlining an ideal type construct for use in analysis is to use the following components:
This is not an attempt to provide an "ivory tower" or "detached academic analysis." Rather it is to recognize the value of the anthropological term "culture shock" (the impact of a totally new culture upon a newcomer) and to extend it to all of our collective responses and approaches to the Internet and web based economies and web based business to business applications, all of which did not exist a mere decade ago. Such shock can induce disapproval, disgust, fear, or the inability to act. It can also induce excitement. This is not the place for those who prefer to believe business is still the way it was 20 years ago or who like the safety of the rules and ways of what Alfred Schutz (a NYC investment banker by day and a professor of social science by night) has called "the world-taken-for-granted." All is changing. Yet no matter how unpleasant it may seem, we are on the verge of great changes and great excitement. We can be swept along aimlessly or be swept away and sunk, or we can take charge and navigate the new direction in order to sustain the company, increase the company and survive the competitive wars and become stronger from the challenge and engagement with the competition. In this way, it will be easier to assess what is to hindering profit generation, what is decreasing market share, in order to assess what approach to take to boost revenues, cut expenses, and contribute to profitability, not losses. Competitive Analysis Component #2: where all involved in decision making, from the CEO on down, have become proficient at using/understanding the Internet. B. The Competitive Lessons of Business Week for Senior Managers CEO's (and everyone else): be Internet proficient or risk losing the business C. The Competitive Lessons of Business @ the Speed of Thought, in which Microsoft's chairman predicts that only managers who master the digital universe will gain competitive advantage. This is a caveat, just in case. Ive heard too many senior executives talk about the Internet who have never navigated it, used it, and yet espouse judgment on it (one pays a secretary to endlessly surf for him and report back). Every link in the chain is critical. To be competitive, any company needs to internalize the lessons of these BW articles and share their knowledge with their customers, suppliers and co-workers in order to win the Internet trifecta: company, customers, suppliers. BW articles of March 10, 1999 (Cover Story): "What Every CEO Needs to Know about Electronic Business: A Survival Guide." [ http://www. businessweek. com/1999/99_12/b3621002. htm ] Its also listed as a BW article of March 22, 1999 [ http://www. businessweek. com/1999/99_12/322ebiz. htm ] The article has this statement: "Here's the straight dope: There's no turning back from the Internet Age. And that doesn't mean E-mail or Web browsers or a Web site. It means transforming your company into a full-fledged E-business. It means reengineering and throwing out the old business models. Now. Or else you're roadkill." My summary: if CEO's [or any senior managers] delegate the Internet to others without any personal hands-on experience, they will not make the best decisions peculiar to their own organizations and industry, as this is too new an animal to leave to others for the long run. Failure to do so could lead to loss of business if not out right failure of the business. The quoted article is written in memo form from an underling to the companys CEO. Note the names of both the sender and receiver preceding excerpts from this cover story. This is a perfect "add on" service to enable any company to be more competitive. To make its point, the article writer generates the memo from Paul Revere (sounding the alarm) to the CEO, J. R. Biggenslow (as opposed to quick and speedy in adaptation). I've put in hyphen sets to indicate parts that are skipped: Date: Mar. 10, 1999 Subject: E-business -- NOW! Priority: URGENT From: Paul Revere, director of business development To: J. R. Biggenslow, chief executive officer Organization: Mid-America Paper Corp. Jack, You don't know me very well, so I will warn you up front: This memo may come as a shock. After all, I joined Mid-America Paper just a few months ago, and I'm way down on the org chart. But it's my job to scout out new market opportunities-and I've found the only one that matters. This is a call to arms-straight, no chaser, no PowerPoint slides. --------Or else we're roadkill. Oh, I know you're thinking: Who is this clown? Sales are up profits have rebounded and we already have a Web site. But--not to put too fine a point on it--it stinks. ------So what's missing? The money, Jack--THE MONEY! You can't buy anything on the whole damned site. There aren't even links to the Web sites of Office Depot and Staples, our biggest customers. For Pete's sake, even the Netherlands' association of wooden-shoe makers just opened a global electronic-commerce site (www. woodenshoes. nl). Jack, E-commerce is where it's at. And with the exception of some creaky old Electronic Data Interchange links with pulp suppliers, it's where we're not. -----Problem is, our rivals are a lot closer to grabbing that business than we are. ----- The Internet is nothing less than a revolution in commerce. Think railroads. Automobiles. Computers. Each of them kicked off an explosion of new markets and new businesses. Today, these businesses account for most of the largest companies in the world--after giving a lot of companies that didn't get it an up-close-and-personal reading of Chapters 7 and 11. Don't you hate it? Just one of them can steal our customers while we're twiddling our thumbs. And that could happen faster than you can say ''dot com. '' On the Net, more than anywhere in the physical world, the first mover grabs the lion's share. Moreover, the Net is quickly breaking down industry boundaries, creating new competitors that spread like flu viruses. Media companies once dismissed Yahoo! as a silly search engine. Intuit wasn't on banks' radar screens until it had already morphed from a software to an online financial-services company. Yes, the Net has changed the rules. For good. If we're to thrive, or even survive, we must live, eat, and breathe the Net. Starting yesterday. How? Forgive my audacity, but I've come up with a survival guide, a list of our top 10 must-do action items. I'm also attaching a magazine article on each point. [Note: see Component #7 for the 10 points].
Competitive Analysis Component #3: "Beat PRICE POINT to avoid Internet black hole": protect both customer and self by showing both how to use price point strategies (the price point being the cost of delivering information ) to avoid the oblivion of the Internet Black Hole. C. The competitive lessons of FutureWealth: Investing in the Second Great Wave of Technology (by Francis McInerney & Sean White, St. Martins Press, 2000): Helping customers and self from from being sucked into the Internet's Black Hole keeps the corporate Titanic from sinking into oblivion and instead shows how to make the corporate Titanic Sail, with Price Point! D. The competitive lessons of Telecosm: How Infinite Bandwidth Will Revolutionize Our World (by George Gilder, The Free Press, 2000): The computer age is over; infinite bandwidth will revolutionize our world, and the Age of Telecosm = an age enabled and defined by new communications technology. In terms of FutureWealth: Investing in the Second Great Wave of Technology, the message is that cheap information carried by cheap communications has given us our long boom, and that those who understand and act accordingly will survive, and those who don't won't, as no corner of the globe is insulated. The handling of event horizons (what's coming that you may or may not be able to predict, and discussed in greater detail in CAC #4 below), will either save you from getting sucked in or not, so exploit it to survive (see their chapter 14). Their chapters on "The Living Room Revolution" and "Kid Power" are also instructive for the discussion on the pervasiveness of information as well as the wide spectrum of users (Gen Yers to Gen Xers to Baby Boomers). In thinking of navigators and success in competition, think of the Titanic the movie. The first title for this paper was originally The Titanic Choice: Set Sail or Set Sink. After reading the chapter "Fiber Optics: The Titanic Sails" in FutureWealth, another title suggested itself: Iron Titanic Sinks, Fiber Optic Titanic Sails. And after reading that Jim Cameron edited the film completely from his home studio, using links to his graphics, computer generation shop, orchestra, dubbers, and other providing video and audio input, it became obvious that Titanic as a process was the perfect name to use. FutureWealth states that only those with navigational portals will survive and make money. This suggests yet another title: "Through the Looking Glass Portal Into the Telecosm: The Role of Portal Navigation in The Sinking or Sailing of Any Titanic Company." On their North Rivers Ventures web page [ http://www. northriver. com/letterindex/index. html ], the authors of FutureWealth, McInerney and White, write at entry #9804 that: The Titanic Sails: The world communications network--much of it brand new and seemingly indestructible--is steaming straight toward a price collapse of Titanic proportions. This collapse will drive a complete reordering of the communications business. Investors need to place their bets with care. Today, communications demand is constrained by high prices. In the United States, long distance prices have indeed fallen--by half since AT&T's divestiture of the local exchange companies fifteen years ago--to an average of about 13¢ per minute for an interstate call. But a phone call is still just 64 kb/s, the same as it has been for 100 years. As a result, over the past decade, total U. S. long distance company (IXC) switched traffic (measured in minutes) grew by less than 10% per year. Since the late 1980s, AT&T's network volume has increased by less than 7% per year. This is why AT&T is having such problems, and why their investments have drawn them closer to the Internet black hole, because their debt strategy doesnt let them drop price, and the newcomer competition, not saddled with debt, under cut them in price, with their risking getting sucked in (it almost happened to IBM in the 1980s). We wait with anticipation to see how they handle it. On the same web site, McInerney and White say of their book FutureWealth: Investing in the Second Great Wave of Technology, that: The American economy is being turned upside down in one of the most tumultuous revolutions in world history. The result: the United States is putting more distance between itself and other economies than any one had imagined possible. Seventy percent of the world's top 50 companies by market capitalization are American. Annual growth in the U. S. GNP is the size of large countries; the Dow has gone through the roof, reaching unthinkable heights; the nation has seen a burst of exuberant growth that few would have expected during the collapse of confidence following the war in Vietnam a generation ago. FutureWealth is about the sources of this extraordinary prosperity and what it means for investors. The strategy in terms of being competitive thus means staying ahead of the information cost curve in order to stay profitable and build shareholder value. The costs are plummeting. The language of "black hole" has been picked up, as seen in the WSJ article of 10/13/00, p. C1, with the heading "Telecom Sector Has Become a Black Hole for Investors," and subhead "Plunge is Likely to Hurt Financings and Mergers, and Test Coming IPOs. Of course it is used here as "bottomless pit" whereas in FutureWealth, there are strategies for overcoming the pull. In terms of Telecosm: How Infinite Bandwidth Will Revolutionize Our World, Gilder again applies his crystal ball (recall that in his earlier books he foresaw the power of fiber and wireless optics, the decline of the telephone regime, and the explosion of handheld computers, among other trends). We again encounter the word titanic, as one reviewer writes "it is the one book you need to make sense of the titanic changes underway in our lives." Gilder says "the computer age is over" because computers will "empty out" with their components migrating to the net. Competitive Analysis Component #4: stay ahead of "the event horizons" E. The Competitive Lessons of Studying event horizons re Future Events Initiating, Anticipating, Avoiding Future Events, For Self, Customers, Suppliers, and Prospects. Examples from: (1) C-Span (Reagan and Gore), (2) FutureWealth, (3) 2025: Scenarios of US and Global Society Reshaped by Science and Technology (4) Great Expectations: America and the Baby Boom Generation, and (5) World Class: Thriving Locally in the Global Economy (6) Nobel Laureate in Physics, Sheldon Lee Glashow, on staying open minded The Twin Cities are particularly is aware of what happens when event horizons are missed or mis-handled, as represented by the failure of the "BUNCH", two of which are from the Twin Cities: Burroughs, Univac, NCR, Control Data, and Honeywell, as they were unable to stay clear of the Event Horizons that caused them to slip into a price-performance Black Hole. The notion that GE can save Honeywell from its price-performance Black Hole (let alone merge two very different cultures, one future facing/future embracing, the other not) will unintentionally pull them both close to the Black Hole in terms of their share value (Time Warner may have put a floor under AOL and GE may put a floor under Honeywell, but the price will be steep; but then the actions of United Technologies were, I believe, interpreted in a counter-intuitive way such that the merger will wind up battering the share value of GE). The term event horizon is used in different ways by different users. Regardless, mishandling them can blow a company out of the water and sink it. This is the use in FutureWealth, where the advice is to avoid disastrous event horizons. However, there are two other uses, initiating an event horizon (which can be associated with the communications policy discussed below of Ronald Reagan's administration), and anticipating the effects of events coming over the horizon (more closely associated with Al Gore's policy approach, as also discussed below). Gore said he helped invent the Internet. Of course he didnt in any way. But he did, with a majority of the legislators, vote for the funding (the Interned development was funded by the government for 25 years before business could figure out how to use it, and then that came not from established companies but so-called slacker Generation Xers or worse, depending on your perspective: "dorm room entrepreneurs"). FutureWealth is clear about our need not to forget the fact that the government fully subsidized the Internet for 25 years prior to it "taking off" as a commerce vehicle. This follows the pattern of government subsidies for major business activities, such as the land given to the rail roads (and the land given to homesteaders along the rail road right of ways), the airport and port authorities building ports and airports for shippers and airlines, not to mention the highways for truckers and automobiles, the depreciation allowance for oil or price supports for agriculture. Government is not the enemy. Indeed, government should be viewed as a potential huge customer, not an impediment to business. Given the fact that the Federal Government has the largest computer farm (NSC) and enormous bureaucracies attempting to collect and edit and deal with data from all of the country and world, the Federal Government, and all of the products, services, and supplies it needs, it should be high on the marketing target list of any company. In the 1970s, I used to participate in the "Ad Hoc Committee on Futures Research," which consisted of volunteers, most of whom came from the government, with some of us from the private sector and otheres from academia (over time I was from all three). One, with his own think tank, Joe Coates, who also did a lot at the time with the now defunct congressional office for technology assessment, wrote 2025: Scenarios of US and Global Society Reshaped by Science and Technology, Oakhill Press, 1996. In the chapter on "Work and Play in the 21st Century: An Impending Crisis," the trend in downsizing suggests that it will lead more and more to less and less permanency in the job market, creating what he calls "contingent workers," a figure to grow from 30% of the workforce in 1995 to 50% by 2000. This is another understandable, deliberate corporate strategy for cost containment, driven by the traditional 37-38 percent benefits package (proving again the old economic axiom that there is no free lunch. Contingent workers enable company workers to work from home in way impossible before (see above re Jim Cameron editing Titanic entirely from his home studio). This means a distributed work force of those not in the traditional work place (telecommuters, at home, etc), which gets them off expensive office work floors and gives them the flexibility they are looking for. Now 3. 5% of the work force, it is predicted to grow to 20% by 2005, and potentially 40% by 2020. Info tech makes this possible. A good supplement to Coates is the list of 10 trends in the 10 part special of PC Magazine, beginning with the June 22, 1999 issue, in which PC Magazines experts identify and explain trends that will, in their view, most significantly affect the course of 21st-century computing, which can be read at http://www. zdnet. com/pcmag/features/future/index. html . All of these will impact significantly on the potentially exciting future that awaits any company in the new millennium that we are just beginning, trends that we can only begin to imagine today. The ten trends are:
In his book Great Expectations: America and the Baby Boom Generation (Coward, McCann & Geoghegan, 1980), Jones succeeds gracefully in his historical and analytical look at America and our Baby Boom Generation. With uncanny insight and ability he leads us on a journey into our past and our future, and gives the defining image of the pig and the python (some today use the image of basketball in a garden hose, taking credit rather than recognize and give credit to Jones). Simply put, think of the time 1946-2026, as a time line. Think of the line being a python. Think of the baby boomers as a pig passing through the python. Born in a 15 year span between 1946 and 1961, they represent 1/3 of the population. Statistically, they should represent 15%. Truly they exploded on the scene. From dramatically increasing baby food and diaper sales in the 1940s, they now have pushed up the dramatic sales of all things medical, from pharmaceuticals to devices to operations to medical services, all with one thing in common: huge amounts of data. I recently went in for a check up on my knee. They only took cash or checks. No debit card. No charge cards. They were not wired. The wall was loaded, ceiling to floor, side to side, with files of medical records. Regulations require physicians to physically write in their notes on all visits. Think of the market when they can do so with a hand held device and all of those records begin the journey to being digitized. Here is another huge market, the medical market, an idea lost in all of the commotion of HMO pricing. Yet if they digitized, they would dramatically reduce medical expenses, most of which are administrative. Any forward looking company which follows the outline of this model is on the cusp of benefiting from four principles of economics that it is positioned to take advantage of: (1) huge expanding market, (2) unique service accessible world wide, (3) timing (baby boomers aging), and (4) the employment of others (J. Paul Gettys statement that he would rather have 1% of 100 mens wages that 100% of one mans) around the world, especially in the cost cutting process of "out-sourcing." Rosabeth Moss Kanters book, World Class: Thriving Locally in the Global Economy (Simon and Schuster, 1995), is important because of the subtitle: companies are now attempting to thrive in local economies around the globe. American companies are front and center of what Kanter calls the development of a "world commercial class" (p. 29), which can be seen in the emerging business alliances and partnerships around the world. Kanter discovered that new companies were often surpassing their peers because they linked their forces together in international networks. They are controversial as the tendency is to meet the priorities of the network and not the local priorities (those running offices around the world who dont understand the need to serve the networks priorities can rarely deliver a profit to the company). Although some may call such companies "destroyers of walls" she prefers the phrase "builder of bridges" (p. 327). This can be seen in how the destruction of the Berlin Wall in 1989 "signaled that the global economy was about to reach nearly everywhere." She discusses her "ideal types" of what a "world class company" is, and even has an acronym: B-I-W standards, "best-in-the-world). She writes about the power of networks (pp. 331 ff) and the skills needed for collaborative advantage (pp. 334ff). Needless to say, I am impressed by her action agenda to follow to achieve leadership and excellence. Her agenda not only compliments the competitive analysis components presented in this model, they also outline actions that ensure that any company following them would stay ahead of the event horizons, so that it can avoid those that can harm and embrace those which can help and build profitability and positive cash flow. Her action agenda consists of:
Finally, this section on "event horizons" concludes with caveats from the Nobel Laureate and physicist, Sheldon Lee Glashow, from his essay "The Death of Science!?," from the proceedings of the 25th Nobel Conference, Gustavus Adolphus College, in the book The End of Science? Attack and Defense, published by Gustavus Adolphus College, 1992. He talks of the importance of culture and of the fact that science and technology are not the same. Although "Science impels Technology," it is also true that "Science is culture dependent because Technology fuels the progress of Science, and Technology is hostage to social perversion" (p. 26) He speaks in telling terms why the West holds sway today, and how just as easily it could let it pass. This also informs modes of response and approach to those in other cultures (p. 26, emphasis added): Arabic astronomy, chemistry and mathematics once were unrivalled. Early in this millennium, Taqlid, the doctrine that no truth exists beyond that revealed in the Koran, was instituted in the Islamic world. Scholars were banished. The only remaining trace of their Science is in our language, in words from Alkali to Zenith. The Chinese too had their fling with Science. They invented gunpowder, the compass, and were the greatest navigators on earth until they decided, in the 15th century, that nothing beyond their Celestial Empire was worthy of discovery. They burnt their great ships just before Columbus set forth with his tiny flotilla to discover a New World. Hence, our sense of openness and humility will determine how we approach and accept new ideas and new technologies, especially those affecting our own company and our own fortunes. The following is just a suggested list of event horizons that will affect the future of any company in the near future, but listed in no particular order:
Competitive Analysis Component #5: it is best to be a navigator through which to guide the customer through the uncharted waters of the future, with the best way of doing so on the Internet by being a web portal or gateway, which also means F. The competitive lessons of "Blown to Bits": Customer allegiance is to the NAVIGATOR The Navigator's key tool: serving as a web PORTAL "How to Fly" and be profitable: The Customer (Titanic) enabled to SAIL through the information clutter to their goal Blown to Bits: How the New Economics of Information Transforms Strategy (by Philip Evans and Thomas S. Wurster, Harvard Business School Press, 2000). An equally appropriate subtitle would be How the Internet "changes everything" by "blowing unadapting organizations to bits." Evans and Wurster introduce us to the concepts of
One of their key concepts is that the ones who will make money on the Internet are those who have a true portal, not just a web site. The Internet allows navigation to be cheap, and derives its power "by affiliating as closely as possible with the interests of the consumer." By providing richness of content (providing however much information is deemed necessary), reach (many users in any city or state world-wide), and affiliation (the desire of the user and prospect to use the companys web portal, any company can become the navigator for those creating information and those using the information created by others. Thus, compete on association, with a company serving as the navigator for those seeking positive information regarding their kinds of products and services (another form of richness of content), they can help them cut through the fog by providing links to every conceivable related and relevant topic relevant to their product and/or service (another form of reach). Include a "Navigator's Corner" in the upper right corner, where twice or three times a week a new related site is highlighted, with a "Navigators Corner Archive" link to an internal archive of past sites. The "model" used here is that of www. ceoexpress. com Competitive Analysis Component #6: "Navigate as a Web Portal/Gateway" G. The Competitive Lessons of www. ceoexpress. com: "Gateway to the Internet" Regarding showing customers how to integrate the physical and the virtual A "Gateway" Combining both regular Internet and Wireless in the Physical/virtual mix. Example: www. ceoexpress : A business mega-web portal comprised of 5 topic-specific web portals. And dont forget what Blown to Bits says: the money will be made by navigational portals. One of the added values a company can offer its customers is helping them merge their physical plants with their virtual plants of and their virtual information "aqueducts", which Pomerleau and McGuire call "A Strategy for Business Success." This argument is spelled out in "Merging Physical Plants and Virtual Plants: A Strategy for Business Success" (co-written by Patricia Pomerleau, the founder of www. ceoexpress. com and which can be read in its entirety at www. ceoexpress. com/html/member/virtual. htm Any company, through its portal, can bring together the world of its customers with the world of their clients and vendors, in order to enable them to involve themselves individually and corporately in collaborating in bringing solutions to their tasks. The Internet is a tool which will enable any company to more easily function to blend and utilize the best that can be brought to bear many corporate information flow functions. As Pomerleau and McGuire point out in their white paper, "Merging Physical Plants and Virtual Plants: A Strategy for Business Success," the pre-Internet world of form and space/place is now gone, replaced by what the Internet brings to bear: "a complex virtual environment that exists parallel to the familiar physical environment with its own architectural possibilities." As they then ask, "How can we best use the unique opportunities of this new environment?" Part of the answer to this question is to persuade clients and their vendors/colleagues/customers to collaborate with them in this shared virtual plant offered through their web portal. This "value added" aspect needs to be clear in the marketing/sales of products and services. Pomerleau and McGuire state the dramatic change this way: "Leaders across fields, as architects of the models in which they work, must define their vision and intent in reference to the Internet. They must grasp the scope of the online environment and . . . undertake the reinvention of the institutional models through which their vision is to be realized." No longer just real (tangible) and not quite possible of being just virtual (intangible), we now live in a "real/virtual" world. The Internet will foster explosive growth in business-to-business interaction. A company with an excellent web portal will be a perfect demonstration ground for customers in their interaction within the virtual world of of the company and the real world of their customers and vendors. By effectively and extensively utilizing the Internet, they can contribute significantly to its effective and extensive use as a vast network of people to not only demonstrate the latest trends in development, but also the latest in trends and development of the Internet itself in making these happen. Another way of providing this value added service is to walk customers/prospects through the questions raised by Pomerleau, CEO/Editor of on her www. ceoexpress. com web site a good place to take a prospect in order to discuss the questions and obtain a better sense for their information needs. These questions are located on the www. ceoexpress. com web page, which is an excellent place to take a prospect (http://www. ceoexpress. com/html/member/tenquestions. htm lists their ten questions:
An example of a company attempting to do both virtual and real storage, although mostly real, is TAB, www. tab. com a small company that is attempting to provide both the physical and virtual to enable "Merging The Worlds of Paper and Digital Documents," although its specialty is on the physical side of filing and processing hard copy files of the information. In their words: Hard copies. Images. Electronic documents. In todays fluid business environment, theyre all critical elements of a successful organization. TAB provides access to critical information contained within documents, to improve operational efficiency, customer service and increase competitive advantage. Organize. Control. Find. TAB leverages its knowledge of paper-based systems with expertise in emerging document management technologies. And, of course, in terms of the real and the virtual, the notion of the "wireless world" is suggestive. A good example is the Wireless ATM Debate [ www. wirelesspronews. com/html. html ] We read at this site: Wireless ATM implementations have been discussed since wireless ATM equipment first appeared in 1994. The subject is surfacing increasingly as third-generation (3G) research and development projects move forward, and as broadband multipoint fixed services develop in scattered markets throughout North America. A debate is brewing on the future of wireless networks, and ATM has become an integral topic of discussion. See also www. wirelessreview. com Another example of moving people into the wireless world is the effort by Patricia Pomerleau of Ceoexpress. She has one of the best if not the best web portal opening page (I make it mine). And there are five versions: Access is either wired or wireless. The www. ceoexpress. com web page says this about the five versions, followed by the sites statement about wireless, taken from this web page: http://www. ceoexpress. com/html/member/expexpressnet. htm :
Express Network LawyerExpress MDExpress JournalistExpress WiredCEO Intranets/Extranets Through the Express Network, CEOExpress Company has applied its expert editing of e-content to additional professional groups, including physicians, lawyers and journalists. Each Express site has been carefully developed by a peer editor -a working professional in the field -- and is maintained meticulously by CEOExpress Company Internet librarians or "cybrarians." The goal of each Express site is to help its busy users save time and stay smarter. As information has proliferated, technology has become more complex, and jobs have grown more competitive and time consuming, professionals have increasingly sought ways to make their lives easier. Each Express site offers an ideal way to do just that. Our users tell us that the best part about the various Express sites is that weve done all the work for them. Weve created the ultimate page of resources that they would have created for themselves, if only they had the time and knowledge of the Internet. Furthermore, our users like that each site makes it possible to further customize their personal desktops as their needs evolve over time. And the content is always current and fresh. Recently, CEOExpress Company introduced a wireless website for business executives called WiredCEO. Through WiredCEO, CEOExpress has applied the same methodologies for gathering, filtering and organizing electronic content for niche professional audiences to the wireless realm. Over the coming months, CEOExpress Company will introduce comparable wireless sites for the other professional audiences. Another service http://www. ceoexpress. com offers is that of company intranets and extranets. This might be something that any company might want to imitate or partner with CEOexpress to provide it for their customers. The www. ceoexpress. com web page, http://www. ceoexpress. com/html/member/inexintraextra. htm, states that (emphasis added): Intranet and Website Products from CEOExpress
CEOExpress has unlocked the secret of attracting and maintaining loyal users on the Web. Now this power can be yours. Our Private label Intranet and Public Website products are an easy-to-implement, economical way to provide a content-rich, customized site for your audience. We apply the same intelligent selection, editing and organizing of content found on our flagship sites to your unique needs. For Organizations over 100 employees, we offer custom content services to enrich your internal or external websites. For Organizations under 100 employees, we offer a fast, easy turnkey solution. You can have a rich, reliable website or intranet running in a few days, with no Web expertise required. To learn more about how we can make your site a success, e-mail us. In terms of wireless, WiredCEO is an innovative desktop and wireless website in one, offering the best e-content for business executives. Links featured on this desktop will appear on your wireless phone. By clicking on any of the "e's" on this desktop page you can turn off links and add your personal favorites. Changes will be uploaded automatically to your wireless phone. CEOexpress wiredceoeditor has this to say (http://www. wiredceo. com/html/help. asp#whatis ) about why the wireless Web can be valuable (emphasis added): What is the Wireless Web? The wireless Web is the Internet at your fingertips Ë literally. With the use of a wireless-enabled phone or personal digital assistant (PDA), users can access much of the same information that is available on the desktop version of the Internet. The wireless Web provides the connectivity of your desktop when you are on the go. News and other useful information can be immediately accessed any time, anywhere. According to Jupiter Communications, users of browser-enabled mobile phones will soar from 1. 1 million in 1999 to 79. 4 million in 2003, while Internet-capable PDA users are expected to increase from 5. 2 million to 12 million in the same period. In fact, many international users will likely own an Internet-ready PDA or mobile phone before they own a PC. How does the Wireless Web work? Part of what's making the wireless Web revolution possible is the Wireless Application Protocol (WAP), which is the standard created for enabling wireless devices to access the Web. Established websites such as Amazon. com and Bloomberg. com have used the WAP standard to enable their Web sites for wireless, essentially creating a new website with pared-down content and graphics suitable for viewing on a small screen. According to some analysts, 95 percent of today's wireless device producers are following the WAP standards. Those that dont follow the WAP standards, such as the Palm computing company, have created their own standards for translating HTML (the standard coding language currently used on the Internet) for wireless access. Today's wireless data transmission rates range from 9. 6 to 14. 4Kbps, which is considered very slow by Internet standards, particularly when trying to access lengthy e-mail messages or attachments, or downloading graphics. In order to address this problem, there is a huge international effort to improve bandwidth and speed from a variety of vendors. These new technologies will increase data transmission speeds in excess of 384 Kbps, making it a much more useful technology for every day use. How can I use the wireless Web? Wireless Web services include games, mobile banking, airline ticket booking, e-mail, restaurant menus, directions, and similar kinds of Internet information. In fact, the new service is so popular that over the last year it has added 3 million subscribers, all of whom have access to more than 4,000 wireless-enabled Web sites--and both subscribers and wireless-enabled Web sites are growing. Most people today use the Wireless Web to retrieve real-time information such as news, sports scores, stock quotes or email. A boon to wireless communication occurred in May 2000, when the U. S. military stopped scrambling the signal from its global positioning system, allowing private citizens and companies to take advantage of satellite technology that can pinpoint precisely where a person is located. Most devices have yet to take advantage of this new capability, but some can find where a user is located (if the user desires) and provide location-specific content. For example, users with this capability can request information on the latest movies and get back reviews of movies playing at local theatres. It wont be long before all the wireless providers will offer this technology. So, how can you use the wireless Web? The answer is: Today you can use it for quick access to a multitude of facts and to keep in touch with business associates, friends and family via email. Tomorrow it may be your main form of communication and information access. Don't you want to be ahead of the curve? What is WiredCEO WiredCEO is a service provided by http://www. ceoexpress. com to provide users easy access to the wireless world via their desktop computers. Registered users of CEOExpress can quickly and easily create their own wireless personal page via their desktop computer simply by signing in to www. wiredceo. com with their username and password, and selecting the links they want to "push" to their wireless phone. The great advantage of WiredCEO is that the site enables you to do all the work on your desktop that would be extremely difficult from your wireless phone because of their small screens and keypads. Rather than trying to learn and dial in complicated URLs, all you have to do is indicate on the WiredCEO desktop site which links youd like to access on your wireless device just by selecting them with a mouse. Like its sister site, CEOExpress, WiredCEO presents the best of the best links from the wireless world and allows you to customize a personal page with your favorite resources right from your desktop computer. Once youve selected all the links youd like to appear on your wireless phone or other personal digital assistant (PDA), there are just a few simple steps to follow to make them appear on the screen of your PDA. For further detail on this process, please see How Do I Customize WiredCEO?. Note: This site works best with wireless phones. Palm and other hand-held devices have different instructions. (Click here to read the Palm message). The technology that allows Web information to be "morphed" from your computer to other PDAs is evolving rapidly, so you will soon be able to use WiredCEO in conjunction with all types of PDAs. Why do I need WiredCEO to access wireless links? Wireless links are different from conventional sites in that they follow a different protocol, called wireless application protocol, or WAP. These wireless URLs are cumbersome to type into your phone. WiredCEO provides a way to view specially selected links on your desktop computer, and choose those that you want to view on your phone. WiredCEO works similarly to CEOExpress in that it presents only the best of the best wireless links in a highly organized format, and allows you to customize a personal page with your favorite resources. WiredCEO enables you to do all the work on your desktop computer that would be extremely difficult from your wireless phone because of its small screen and keypad. Rather than trying to learn and dial in complicated URLs, all you have to do is indicate on the WiredCEO desktop site which links youd like to access on your wireless device just by selecting them with a mouse. Select links that will provide you with news, weather, sports scores, stock quotes, and more. Note: Unlike CEOExpress, the links on your WiredCEO desktop site are not "clickable" from a desktop computer because they are written in wireless protocol. You will not be able to view the links from your desktop computer before sending them to your phone. Returning to FutureWealth, we read this about portals (p. 279): "there will be millions of video Web sites to choose from. This is where portals come in: helping viewers navigate through unlimited choices, and consolidating audiences for advertisers." FutureWealth calls (p. 278) set-top boxes valuable real estate. The more "plots" the better. They note two key questions (pp. 276-8 of FutureWealth): (1) how will people find what they want and how will they pay for it? (portal for the first half, price competition will drive the second). (2) What will make companies a winner in an Internet-TV world? Answer again is portals. And with the majority of homes to have broadband access to the Internet for their TVs, PCs, and a variety of other devices, FutureWealth (p 280) sees "The next generation of Internet portalsand Internet billionaireswill be at their service." Hence, p. 278: "The set-top box is valuable real estate." I would suggest that the purple box is as well. And this is where portals come in: helping viewers navigate through unlimited choices, and consolidating audiences for advertisers.
Competitive Analysis Component #7: "differentiate or die" (be able to distinguish yourself from the competition)
H. The competitive lessons of Differentiate or Die: Survival in Our Era of Killer Competition Market product's uniquely valuable qualities first, overall quality second Refers to marketing/sales/PR brochures and materials and public statements
Jack Trout, who wrote Differentiate or Die (John Wiley & Sons, Inc. , 2000), is the ad guy who gave us the term positioning in Positioning: The Battle for Your Mind, discusses "The Tyranny of Choice," in which people are overwhelmed by choice. This is a perfect metaphor for our continued discussion of the need for a navigator. And indeed, there is a whole "choice" industry comprised of restaurant guides, movie guides, healthcare report cards, consumer reports magazine, all designed to give advice. Even sports athletes get into the act, as do other celebrities, who attempt to rescue the consumer from the tyranny of choice by suggesting that they tyranny ends merely by buying the product they are promoting. And although the choices are not that difficult in some areas, such as the change in choice from 1970 to late 1990s (p. 6) of vehicle models (140 to 260), or Frito-lay chip varieties (from 10 to 78), or breakfast cereals (from 160 to 340), the big swing is in computers: software titles from 0 to 250,000 and web sites from 0 to 4,757,894 and growing. How to choose? Get a navigator. A serious company has to get the word out that it is the navigator of choice that can end the tyranny and deliver workflow utopia. Trout urges a return to what was called the USP: the unique selling position (p. 11). Trout also points out that differentiation takes place in the mind (p. 73), hence the emphasis in this model on "the definition of the situation." Finally, paraphrasing Peter Drucker, Trout defines the foundation of effective leadership as "thinking through the organizations difference, defining it and establishing it, clearly and visibly" (p. 212). Note also the competitive lessons of Net Gain: Expanding Markets Through Virtual Communities, in which John Hagel III and Arthur G. Armstrong (Harvard Business School Press, 1997) make the case that business success in the very near future will depend on using the Internet to build not just relationships, but communities. They also discuss how noncommercial Web communities could use content, chat, and bulletin boards to promote e-commerce. The competitive lessons of Hosting Web Communities: Building Relationships, Increasing Customer Loyalty, and Maintaining A Competitive Edge, in which Cliff Figallo (John Wiley & Sons, 1998) shows the advantages businesses can gain from creating or supporting online communities, plus what types of expectations are unrealistic (boost sales) and which are realistic (offer major corporate advantages in the same way that good public relations or other indirect marketing activities do), which, again, is what is advocated here for any company wanting to be more competitive and gain more business. Competitive Analysis Component #8: "serve the customer" I. The competitive lessons of the cluetrain manifesto: the end of business as usual is that the power of the web lies not in tech but in how people interact with business. In a nutshell, cluetrain manifesto (rick levine, christopher locke, doc searls, david weinberger, Perseus Books, 2000) signals and explores a sea change already nearing flood tide in today's wired world. As a result, "markets are getting smarter faster than most companies. Companies that aren't listeningare missing a dire warning. Companies that aren't engaging in them are missing an unprecedented opportunity." Chapter 5, "The Hyperlinked Organization." states that a company is best able to serve the customer in general and, in particular, better able to communicate with the customer and better able to enable the customer to customize as they go, rather than try for a one size fits all approach. They urge companies to help customers provide "local" service even if located out of state/country. The book states its case in 95 theses (so how could I, a Lutheran, not like a book that begins with 95 theses?). Their book is another way to say: dont forget the high touch that needs to go with the high tech to be successful. They point out that through the Internet, people are discovering new ways to share relevant knowledge with blinding speed. As a result, markets are getting smarter faster than most companies. As the book jacket states, the cluetrain manifesto illustrates how the Internet has radically reframed the "immutable laws" of businessand what business needs to know to weather the seismic aftershocks. Thesis 90: "Even at its worst, our newfound conversation is more interesting than most trade shows, more entertaining than any TV sitcom, and certainly more true-to-life than the corporate web sites weve been seeing" (p. xviii). Competitive Analysis Component #9: "achieve power through communications" to understanding that communications is the key to exercising the power necessary to achieve competitive success J. The lessons of A Briefings for Leaders: Communication as the Ultimate Exercise Power Communications as a problem solving discipline No Teflon, even for the formidable The key theme not just communication as the ultimate exercise of power, it is also about communications as a problem solving discipline. The book (by Robert J. Dilenschneider, HarperBusiness, 1992), is a primer for managers on the essentials of leadership through communications, which is essential, for, as Dilenschneider points out, there is no Teflon, even for the formidable. Many miss the reality of "Communications as a problem solving discipline." In economic terms, it is estimated that the right communications plan will result in (1) the savings of hundreds of thousands of dollars through the use of the Internet, (2) generate hundreds of thousands dollars more of free, positive publicity about the company, as well as have a positive impact on internal relations. This is why a true navigational portal is important. Differentiation is still critical. The qualities that make a company unique must not get lost in a sea of words, words which would be more effective if highlighted in some way. The effectiveness as marketing and sales tools would be better served if the substance of each page was diagramed as well as stated in just words. Competitive Analysis Component #10: K. The Competitive Lessons of Old Economy/New Economy Business (with the examples of GE &Wal-Mart) AT&T and BT trying to operate in the new economy with too many old economy habits and old economy technology and wires. As FutureWealth points out, debt is the rat in the wood shed. They are both vulnerable, as we can see as AT&T breaks itself up again. BT may need to do the same. GE achieved its extraordinary success over the past 20 years under Jack Welch because it met the "event horizon" challenges head on and transitioned with the changes from the old to the new economy. Its key is its "long history of organizational and managerial innovation: it was among the first to decentralize along business unit lines, embrace disciplined strategic planning, delayer its hierarchical organization, and commit itself to becoming Webified from stern to stern. Like the Internet, GE is diverse, global, flat, meritocratic and non-hierarchical." ("Heir to Greatness," Wall Street Journal, September 15, 2000, p. A38). At the time of that article GE look as if it had achieved the "marriage" necessary uniting the old economy virtues of scale, efficiency and quality with the new economy ethos of rule busting and business building. Wal-Mart is arguably the largest Internet company. Everything is done over the Internet. Cash register sales tally in both Wal-Mart HQ and in the particular factory of the product sold. Wal-Mart has goods delivered straight from the manufacturer, eliminating the need for warehouses, fleets of trucks, or even storage space in its stores. What is new about the new economy is that "U. S. companies are engineering the substitution of information for other resources at breathtaking speed" (FutureWealth, p. 9). The Gen Xers took advantage of what the pre-baby boomers had but didnt know what to do with. As FutureWealth points out (p. 9), "The [three] key agents of change were put in place a generation ago: (1) a powerful set of industrial reforms unleashed by President Carter; (2) the Employment Retirement Income Security Act (ERISA) signed into law by President Nixon in 1974, and (3) the Internet, which "started out as a Cold War innovation designed to protect the U. S. military data network in the event of nuclear attack. The key to competitive survival is to "execute lessons of BOTH old AND new economies", which means not missing the lessons of the "old economy" while making the shift to the "new economy," as seen in the GE and Wal-Mart models, to become as knowledgeable of its role in the business of tomorrow as it was in its role in the business of yesterday. For an excellent discussion of how the old and new economies are doing, see the Forbes web site in which Forbes tracks a remarkable year for both Old and New Economy companies. As the site notes, "1999 was a banner year for both Old and New Economy companies. According to composite figures for the 892 companies listed here, sales haven't been this brisk in more than ten years, and profit growth hasn't been better since 1994." This was 1999. The numbers will show a shake out for 2000. But the end of 2000 will be remarkable for the winner. Continuing from an article in Component #2, "What Every CEO Needs to Know about Electronic Business: A Survival Guide," Business Week, March 10, 1999 Cover Story. [ http://www. businessweek. com/1999/99_12/b3621002. htm ] we read the following about what to do in the new economy: 1. Reengineer Your Company Get ready for another round of reengineering. Brace yourself--this one's on steroids. The Internet lets us communicate instantly with every supplier, partner, and customer--and, in many cases, lets them communicate with each other. 2. Throw Out The Old Business Model Ask yourself a very basic question: Just who are we in the Internet Age? As we face more global competition online and have to cut our prices, we need to reexamine our business model. Maybe we should take a cue from MicroAge Inc. , the PC distributor. Realizing the Net would make it easier for resellers to bypass distributors, it started transforming itself in 1995 into a service company, helping corporations with installation and training. Get this--now it even offers data on rival distributors' inventory in case MicroAge's fulfillment arm is out of stock on something--a way to earn customers' loyalty. Nothing's too strange to consider. 3. The Buyer Always Wins Understand that the buyer runs the show on the Net. Up to now, buyers faced big obstacles to getting the best prices and service--limited time and data to compare vendors' products and the cost of dealing with far-flung suppliers. No more. The anytime-anywhere Net knocks down those barriers. It's spawning middlemen galore to give buyers more information. 4. Hold Your Customer's Hand Roll out the red carpet--or whatever the cyber-quivalent is. Have you bought a book at Amazon. com? Try it--they've reinvented customer service. Don't be surprised if our rivals start copying Amazon's methods. 5. Go Ahead, Farm Out Those Jobs Cancel that vacation--we've got to move fast! None of our usual round of studies and meetings. And we have no time to do everything ourselves--nor any need to. The instant communications power of the Net shatters the physical-world need to do product development, manufacturing, distribution, marketing, and customer management all in-house. 6. No Web Site Is An Island We should not treat cyberspace as a separate universe. Look at Charles Schwab. By leveraging its brand name online and using its offices as a place to introduce clients to Web access, it has managed to stay far ahead of upstarts like E*Trade Group. Likewise, Day-Timers recently launched a free Web calendar to compete with a raft of online upstarts while also promoting its traditional paper and software schedulers. As we go online, our brand name and purchasing power can work to our advantage. 7. Create An Online Sense Of Community Think global. People all over the world are congregating into virtual communities on the Web, and we want to be part of that. as these communities embrace E-biz, we need to help our retailers [customers] plug into them--perhaps by offering them bundles of services such as chat and free E-mail. 8. Follow The Money Now that the Silicon Valley venture capitalists are scouring the country for new industries to wire up. Had we subscribed to one of the services that track venture-capital investments, . 9. A Web Of Nerds? Don't Believe It We need to persuade everyone at Mid-America Paper that the Web is not Nerdville anymore. It's becoming part of everyday life. By 2003, International Data estimates 510 million people will be online worldwide. (By the way, why on earth do only half our employees have browser access? No wonder we're behind. Some 159 million people worldwide are now online!) 10. Log On, Boss Get wired--or we'll get whacked. you've got to get closer to the Net than reading the E-mail your secretary prints out. You're not aloneonly 25% of CEOs in a recent PricewaterhouseCoopers survey regularly log on to the Net. But you've got to get your fingers on that keyboard every day. Surf the Web. Talk to the nerds in the systems department. You'll see what I mean. This is something you can't delegate. Jack, I know this must feel like a slap in the face. But if we don't get E-bized, we'll soon be pulp--and I'll be out of a job anyway. Another entry into the discussion of the two, is seen in the Business 2. 0 piece, which discusses how rules of the game are changing. Read the top 10 driving principles of the new economy at http://www. business2. com/content/magazine/indepth/2000/03/01/11757 The ten, on which this site has an essay on each, are: (1) matter, (2) space, (3) time, (4) people, (5) growth, (6) value, (7) efficiency, 8) markets, (9) transactions, (10) impulse. And so, what about Europe? FutureWealth points out that "the United Kingdom is becoming the information entrepot of Europe" (p. 309). And here is a key point: The consequences of the United Kingdoms policy for the continentals is incalculable. Riding its low-cost information strategy, Britain is emerging as the dominant force in services in the union. It could easily wind up controlling EU banking, advertising, accounting, and insurance markets by early in the next century. Britain keeps itself less regulated than its neighbors and is thus better adapted to exploiting the markets of the next century" (p. 309). And Asia? Again, FutureWealth (pp. 13-14): "Asian countries are staggering under the twin burdens of political and corporate ineptitude, and they desperately need to reform both." And how do they rank? Singapore, South Korea and Taiwan are and will fare better than China or Japan, as the latter continues its "long recession" (p. 314). In BW, 9-25-00, p. 184, the article "Mitsubishi: Failed Vision," notes the country "just can't seem to tolerate radical change" as "the emphasis is on consensus and saving face." These have not worked well in either old or new economy. The biggest question mark and greatest challenge is China: "the falling cost of information shifts power inexorably to individuals and away from the state." |
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