ebusiness

eBusiness

Take what follows with a grain of salt. Most was written 1998-9, before the dot.com crash.

The Information Age is maturing, the Knowledge Age is upon us, and e-Business is supplanting e-Commerce. "The Internet is not only creating a new industry in itself but changing the competitive landscape of every industry in the world," says Ben Rosen.

e-commerce =	Harnessing the power of the Internet to streamline a traditional business, e.g. Amazon as e-commerce bookshop, Beyond.com as e-commerce software store. "paving the cowpaths."
e-business =	Initiating a fundamentally a new business which would have been impossible without the power of the Internet, e.g. eBay. "inventing new business models."

[The web generation takes for] granted that global ubiquity is free, that customers will tell them what's on their mind, that the attention of people can be packaged and sold, that diverse information can be linked together, that a capability can be embedded in software and acquired by someone with whom there can be a valuable exchange, that the speed of learning what's happening in the market is more important than keeping competitors from learning the same thing simultaneously. . .

. . .no one can afford to wait. The new models will be discovered by those who are working at the frontier to understand what each incremental step makes possible. Established businesses already labor under the burden of a set of assumptions that no longer hold; they must begin experimenting lest someone free of this burden gets there first.

Christopher Meyer,
Ernst & Young Center for Business Innovation

Speed is the defining metric of e-business. Your people must operate at Internet Time or you are cooked.

"Upstarts with a T1 line and buckets of cash are humbling companies that once seemed impregnable."

Busienss Week, The Internet Age, October 4, 1999

Clayton Christensen in HBR 3/00: Managers fail to rate organizational capability as well as individual capability. Disruptive change comes along so unusually that it doesn't fit the company's established values. What's been of value in the past, say upholding margin standards, is dysfunctional for the future, for instance getting into a new market early-on.

New Rules for the New Economy
Profit Patterns from Mercer Management
Personalization & Accelerating 1:1

Information Rules

The Chasm Group
The Doblin Group

Stan Davis (on E&Y's Business Innovation site):

The shift in importance from financial measurements that focus on the past to ones that focus on the future, from tangibles to intangibles, from earned to unearned, from saving to investing, from core to derivative, from institutions to individuals, are also global developments, with global implications. So too are the simultaneous quests for income security and wealth.

Competing on Internet Time

eBusiness is evolving so rapidly that we're not even going to try to stay current here. Check the latest at:

God hands Moses the business plan for the next 3000 years, and Moses replies, "Where's the revenue?"

If you don't see e-business coming at you, perhaps you are suffering from corporate dyslexia: The inability to see the handwriting on the wall.

"However much hype you 've heard about the web -- the best thing since sliced bread or the printing press or sex or fire -- whatever you've heard is simply not enough to describe what's going on."

--Bob Metcalfe, inventor of Ethernet

Assess whether you're an e-business player:

Blur

Hyperware's Audit

How your relationship with customers will change:

Cluetrain Mainfesto

A Guide to Succeeding in the Internet Economy, a very thorough prescription from Patricia Seybold Group

"An organization's ability to learn and translate that learning into action is the ultimate competitive advantage."

--Jack Welch, GE

from Unleashing the Killer App
by Larry Downes and Chunka Mui:

	Strategic Planning	Digital Strategy
Nature	Static	Dynamic
Environment	Physical	Virtual
Discipline	Analytical	Intuitive
Time Frame	3-5 years	12-18 months
Pressure Point	5 forces	new forces
Technique	Leverage value chain	Destroy value chain
Participants	Strategists, sr mgt	Everyone (including business partners)
Tech's Role	Enabler	Disrupter
Output	Plan	Killer Apps

CyberAtlas "the reference desk of web marketing"

Forget products.
Forget services.

They're converging. Blur talks about "a meltdown of all traditional boundaries... In the BLUR world, products and services are merging. Buyers sell and sellers buy. Neat value chains are messy economic webs. Homes are offices. No longer is there a clear line between structure and process, owning and using, knowing and learning, real and virtual. Less and less separates employee and employer. In the world of capital, itself as much a liability as an asset--value moves so fast you can't tell stock from flow. On every front, opposites are blurring."

Davis calls product-service hybrids "offers." He writes that vendors who sell unconnected, stand-alone products "will be viewed as no better than snake oil salesmen..." The "offer" seeks to create a lifelong relationship. Davis presents these "Management Mindsets" for products, services, and the offer hybrids.

	Product	Service	Hybrid
Time Horizon	Time of sale	Period of contract	Life of Customer Need
Buyer "Care Abouts"	Price, Delivery, Convenience	Ongoing support	Upgradeability
Dominant Cost Focus	Direct Costs	Period Costs	Design Costs
Source of Value	Manufacturing process	Training, Maintenance	Platform
Design	Fixed, uniform	Customized	Learning (i.e. improving)
Revenue Model	List Price	Subscription period	Subscription & user fees
Marketing objective	Brand loyalty	Relationship-building	Community-building

customers

Esther Dyson says, "...electronic commerce is all about changing the center of power from the company to the customers. This change will be expensive, but it is what is going to differentiate an organization from its competition. Companies can succeed if they

listen to their customers,
learn about their needs, and then
answer their questions individually and in person...."

The Internet puts the customer in charge. It's easy for customers to find today's best bargains, information once jealously guarded up and down the supply chain. "For many companies, customer ignorance was a profit center," says Gary Hamel.

staff

Pioneering companies are finding that the biggest drag forging ahead with e-business progress is staffing. Technical talent and the ability to innovate are in short supply.

"For companies on the cusp of the Internet Age, the resource in shortest supply is neither raw material nor capital, neither powerful technology nor new markets. What keeps managers up nights at these companies is the scarcity of brainpower, the talent to give wings to visions of a future that becomes the present at the speed of light. 'Capital is accessible, and smart strategies can simply be copied,' says Ed Michaels, a McKinsey & Co. director. 'The half-life of technology is growing shorter all the time. For many companies today, talented people are the prime source of competitive advantage.'"

Business Week, The Search for the Young and Gifted, Octoer 4, 1999

"People bring imagination and life to a transforming technology. They bring success and profit to simple and complex ideas. Or, as Dell Computer Corp. Vice-President Tehresa Garza puts it, they bring 'hum.' Not the whirling white noise emanating from your computer, but the very tangible sense of fully engaged people, channeling unbounded energy into their work. 'You know it as soon as you enter a building,' says Garza, general manager of Delll's large corporate-accounts group. 'You can tell when a company feels dead just by walking through its halls. We try to create the hum. It's people who have momentum, who are working hard, and who are excited to be here.'"

Ibid

:"Internet Age companies rely on the initiative and smarts of individual employees to foster decisions that are closer to the customer and therefore more responsive to the market. The ultimate goal, says CEO Jorma Ollila of Finland's telecom giant Nokia, is 'flexiblity, an open mind, and transparency of organization.'"

Ibid

Tom Peters' rant on talent

networks

Taxonomy of Network Elements (NetAge) & the Periodic Table of Network Elements

e-Business: Ready or not?

As we (IBM) have worked with customers to develop and deploy their e-busienss solutions, we've learned a number of valuable lessons. You can draw from what we've learned to help your customers capitalize on e-business:

1) e-business solutions are created by connecting and integrating business processes, information and people. e-business solutions reflect the style of the Internet and the World Wide Web.

They are built from existing assets
New function can be added quickly--as long as it's base on standards

2) e-business soluitons continue to evolve over time.

New devices can be supported--on a pllug-a-play basis.
Information can be leveraged to continuously improve the user experience.

3) e-business solutions must grow quickly in multiple dimensions..

They must support many new users, even if they appear overnight.
They must handle frequent changes and additions to content and creative design.

4) Finally, e-business solutions must work. They must offer:

Reliability that builds trust.
Security that builds confidence.
Manageability that ensures performance.

just do it

five things a business can do to capitalize on the opportunities for business in cyberspace:

Establish direct channels. Companies can use the increasingly ubiquitous Internet to establish direct, interactive links with customers, suppliers, trading partners, and others in their value chain.

Create new value. Companies can use the Internet to create and deliver new products and services that have not been feasible before.

Extend boundaries. Cyberspace transcends geographical borders and other traditional boundaries, enabling businesses of all kinds and sizes to widen their horizons.

Become a community magnet. With effort and commitment a company can dominate the information and access channels within an industry or community of common interest, effectively setting the rules by which others must play.

Short-circuit the value chain. Direct links with customers and suppliers make it possible for businesses to bypass others in the value chain, either eliminating intermediaries or capturing their businesses.

from Customers.com

how to succeed in ecommerce

1. Make it easy for customers to do business with you.

2. Focus on the end customer for your products and services.

3. Redesign your customer-facing business processes from the end customer's point of view.

4. Wire your company for profit: design a comprehensive, evolving electronic business architecture.

5. Foster customer loyalty--the key to profitability in electronic commerce.

Getting E-Business Insights from a Customers.com Leaders Forum

the new customer relationship

A Cluetrain To Do List
These seem particularly worthy:

Share your secrets. Flip your 80:20 rule for keeping secrets. Instead of classifying 80% of your information, aim at classifying only 20%. Most of the secrets you keep no one would bother reading even if you delivered them with the morning newspaper.

Tell stories. Without a story, you have no company, just as a family without a story is only a collection of relatives. Aim at telling it so often — and hearing it so often from other people in your company — that it transcends story to become myth.

Hire a historian. Get someone who knows history to tell yours. Capture your narrative.

Screw deadlines. Empower the people who can get it done. Ask them to work on it as hard as they can. In such an environment, deadlines are nothing but a power trip.

Stop pretending to your customers. Invite your best customers into your annual sales meeting. Then speak as frankly as you would if they weren't in the room.

Guide your market. Write a guide to your industry that actually serves your customers' interests.

Dump voice mail. A good beginning would be voice mail. Dump it. Talk to the public. Take your kudos and take your lumps. It's part of life, part of business, part of humanity.

Introducing the Value Creation Index

jay @ 20-May-00

In April 1999 Forbes ASAP magazine announced that it was embarking on a joint research venture with the Ernst & Young Center for Business Innovation and the Wharton Research Program on Value Creation in Organizations to develop the first practical audit of intangible assets. We teamed up to study how managers and investors could truly evaluate nonfinancial assets--and how we at Forbes ASAP could establish real-life, accurate metrics that could be used in routine business by investors, managers, and analysts.

Here's What You Said Drives Corporate Value (In Rank Order):

1. Customer Satisfaction
2. Ability To Attract Talented Employees
3. Innovation
4. Brand Investment
5. Technology
6. Alliances
7. Quality Of Major Processes, Products, Or Services
8. Environmental Performance

In Comparison, Here'S What Our Research Found Drives Corporate Value In Durable Manufacturing (In Rank Order):

1. Innovation
2. Ability To Attract Talented Employees
3. Alliances
4. Quality Of Major Processes, Products, Or Services
5. Environmental Performance
6. Brand Investment
7. Technology
8. Customer Satisfaction

Stunning, isn't it? Although our readers rated the importance of alliances relatively low, our statistical analysis shows that companies with more joint ventures, marketing and manufacturing alliances, and other forms of partnerships have substantially higher market values. It suggests that in the connected economy, connections matter. Alliances are incredibly, even decisively, important. Similarly, our results indicate that quality is not dead. Our survey respondents ranked it seventh in importance, yet in the durable sector, product quality, including the quality of the manufacturing process, remains statistically a strong predictor of corporate value. Just as surprising is the importance of environmental performance. Although most companies pay only lip service to this issue, and readers ranked it the least important of the value drivers, companies that perform better in this dimension have significantly higher market values.

Perhaps the most amazing result of our research is that two intangible asset categories--use of technology and customer satisfaction--had no statistical association with market values. That means these things, in contrast to our readers' perceptions, aren't helping companies create value at all. For all the blather over the past 10 years about the importance of customer satisfaction, it apparently has no effect on corporate value.

Why? It may be that real customer satisfaction is now inextricably tied to innovation.

e-commerce firms. Here's our list, in order of importance:

(1) alliances,

(2) innovation,

(3) eyeballs (usage traffic),

(4) Xbrand investment,

(5) Xstickiness (minutes spent on Web pages).

Taken together, these three category relations indicate that the strength of an e-commerce company's network--both in connections to its customers and alliances within its economic web of suppliers and other partners--has a profound effect on a firm's value.

By contrast, investment in building brand awareness has no statistical association with market values. So much for those millions spent on Super Bowl ads. Big marketing campaigns may boost the egos of company executives, but our research suggests they do little to raise a firm's value. Equally surprising, "stickiness"--vaunted as the next competitive step after eyeballs--proved only a minor contributor to value.

The predictive ability of the VCI proved even higher for Internet firms than companies in the manufacturing sectors. The index alone can account for nearly 80% of an Internet company's market value, with a 10% change in the VCI associated with a 5% change in market value.

So what does it all mean? For managers, it provides a set of levers that, if effectively applied, can improve both corporate performance and market value. For investors, it offers a powerful new way to evaluate how a company is using its resources in creating value for its shareholders. For both groups, the VCI holds out the promise of a more efficient allocation of capital.

Forbes ASAP Value Study

Digital Transformation by Keyur Patel and Mary Pat McCarthy:

Being an e-business is not about changing the way you do one thing, nor simply adding a new channel to your existing channels. It is about changing everything.

Many e-business efforts have failed because of the ad hoc nature of their strategy and management. They were like trucks careening down a highway with no drives, no road maps and no real destinations in mind.

...the average new online user visits 100 Web sites, bookmarks 14 and stops bothering to search after that. How do you ensure that your Web site is one of the 100 visited, much less one of the 14 bookmarked?

b2b is more about using the Web to shorten the order-to-delivery cycle, to reduce their cost of sales, to reduce their overall operating costs and to increase their overall profitability.

Don't go to slow or too fast -- maintain a balance.

Keep it? Or spin it off?

If it's disruptive -- spin it off.
If it's sustaining and consistent with cost and culture -- keep it.
If it's sustaining but inconsistent with cost and culture -- spin it off.

The winning strategy is fast and flexible.
The winning system is versatile and scalable.
The winning team is totally committed.
Settle for nothing less.