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March 1, 2000 *3,400 subscribers* Volume 2, Issue 3
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Trend Predictions: Executive ability to adapt to e-commerce (Morph)

As detailed in my comments last month (http://www.ecmgt.com/Feb2000/management.perspective.htm), we are at the start of a major transformation in the ways we interact in our professional and personal lives. Business today is still structured around the concepts necessary for success in the industrial age. To be successful in the information age, we'll need to change everything. By the end of this year, most Global 2000 corporations will recognize that e-commerce is a reality they must embrace. As we are embarking on the largest transformation the business world has ever seen, there are two simple questions we must ask: 
  • Is executive management up to the task?

  • Can executive management morph their companies?

In most cases, the quick answer is "no". According to Mark Walsh, President and CEO, Verticalnet.com "corporate denial of e-commerce (talking the talkwithout walking the walk) will end; however, less than 10% of the global 2000 will have really pledged their business model to the net." ECnow.com believes that the majority of top executives will be unable to "morph" their corporations into holistic Internet-enabled entities in the year 2000.

 Let's look at two terms in the sentence above: "morph" and "holistic Internet-enabled entity"

Morphing or Morph: Defined at techweb.com's encyclopedia as  (http://www.techweb.com/encyclopedia/defineterm?term=MORPHING&exact=1): "Transforming one image into another; for example, a car into a tiger. The term comes from metamorphosis. Morphing programs work by marking prominent points, such as tips and corners, of the before and after images. The points are used to mathematically compute the movements from one object to the other."

Holistic Internet-enabled entity: Defined by ECnow.com (http://ecnow.com) as: "Companies that have fully integrated commerce (business) cycles which completely integrate the corporate vision/goals with employee, customer and partner goals, ensuring satisfaction and streamlined processes for all parties in the value chain.

Becoming a holistic Internet-enabled entity is not easy, particularly for medium to large corporations that have legacy systems, processes and people. First, it must be clear that the Internet should not be treated as a separate technology. In essence, it's a tool (just like the fax machine, the computer, the ERP application, the marketing plan, the salesmen's candor and smile, and the trip to the golf course, to name just a few corporate tools). Just like the salesmen's candor and smile is transparent to the executive planning process, so too should be the Internet. It's just another tool to enable business to run more efficiently.

In order for executives to make the transformation that's necessary, they will need to walk the walk: they must stay actively involved in how the business operates. If the business can now operate much more efficiently than in the past, the executive needs to be actively involved in helping the company morph into a new way of operating.

Treating an e-commerce operation purely as a P&L that must generate the proper ROI to survive is not an approach that will help the company morph. A jean manufacturer stated their intent to pull their e-commerce operations off of the net because the "cost of running a world-class e-commerce business was unaffordable considering our competing priorities" according to the companies spokesman. Why would a company not want to continue to experiment with e-commerce and continue to learn what their customers (or future customers) want them to be?

A computer retailer is another example of a company that approached e-commerce from a perspective that appeared to ignore the customer. They created separate Web sites for their various operations. A customer who purchased online could not return their merchandise offline. Tell me how you'd feel as a customer the first time you purchased a product online and was told when you went to a physical store to return it that you couldn't. Personally, I'd decide not to give my business again.

Several companies that appear to making some of the moves toward morphing include Allstate, Kmart, Rite-aid and Ford.

  •  Allstate is cutting 4,000 jobs, eventually eliminating the need to go through their 15,000 agents and saving a tremendous amount of money by incorporating the Internet into their paper-ridden processes.

  • Kmart has brought on Mark Goldstein to create a separate entity called Bluelight.com that will allow customers to buy online and return in their stores. They've partnered with Yahoo and others to create their online presence. To capture their customer, they are giving away free Internet access (ISP) and using their 2,200 physical stores to give away over 10 million CDs. They will also be rolling out kiosks in stores and making discount PCs and other Internet access devices available to shoppers.
  • Rite-Aid decided that their business is satisfying face-to-face customers rather than online customers, so they have partnered with Drugstore.com to deliver the online experience. The online customer will buy at Drugstore.com and pick up their product at Rite-Aid. Once inside the store, Rite-Aid will provide the face-to-face customer service.
  • Ford has done several exciting things in the last couple of months. First, they have announced that every employee (over 300,000) will receive a home computer and unlimited Internet access for a couple dollars per month. Second, they have partnered with GM, Daimler Chrysler, Oracle and CommerceOne to create a net market for their suppliers that will increase the efficiency of their purchasing cycle and save up to USD $4B to USD $12B per automaker per year.


In the cases above, the companies decided on a vision and used the Internet as a tool to help make it happen. In order for executives to morph their companies into holistic Internet-enabled entities, they need to create a vision and a set of corporate goals that embed the Internet in how they operate. From the goals, there should be a set of metrics that are used to measure the success of the goals. The vision statement, goals and metrics need to be known by everyone in the corporation. Every person's evaluation needs to be based on the metrics that help lead to meeting the goals and vision of the corporation.

Here's a small litmus test for whether the executive team has set the corporation on the path of morphing:

  1.  Does the corporation have the Internet embedded into how it runs its business?

  2. Can every employee in the corporate recite the vision statement (30-second elevator pitch)?
  3. Does every employee of the company get compensated on contributing to a set of metrics that helps the company become a holistic Internet-enabled entity?

Think about your corporation or that of your clients as you answer these questions and let me know what you come up with.

Let me leave you with a few of my favorite quotes this month:


There is an attitude of hiring a consultant and adding an e-commerce group to the business structure rather than immersing the company in the changes needed.  Keep the silos... The Y2K exercise shows what can happen if something critical to the business entity is embraced by the BOD and the President/CEO is held responsible.

(F.L., Silicon Valley, California, USA)


There is a combination of problems.  The majority of companies are focused on short-term goals, because the bonuses paid to executives are very much dependent on how they are measured on these short term goals, which are often related to how well they manage short term divisional budgets. Hence, there is a lack of cross-divisional cooperation.

(K.P., Silicon Valley, California, USA)


In most cases, executives are paying lip service to their in-house initiatives but have not put the full weight of the Executive offices or Board behind the effort.

(M.M., San Francisco, California, USA) 


I hope you enjoy this eZine.
See you in cyberspace,

Mitchell Levy


Executive Producer, ECMgt.com <http://ECMgt.com>
President, ECnow.com <http://ecnow.com>
Founder and Coordinator, SJSU-PD ECM Certificate Program <http://ecmtraining.com/sjsu>
Chair, Comdex Spring 2000 ECM Symposium <http://ecmtraining.com/comdexspring>

*ECMgt.com is a monthly e-commerce e-zine focusing on strategy, trends and related news.

*ECnow.com is an e-commerce strategy, e-marketing and training firm helping start-up, medium and large corporations change their business to harness the power of the Internet.

*San Jose State University, Professional Development, Electronic Commerce Management (ECM) is a Certificate Program for e-commerce professionals (http://ecmtraining.com/sjsu).

*Comdex Spring 2000 E-Commerce Management Symposium is a 2-day event featuring 4 keynote speakers, 2 case studies and 9 panels with over 30 speakers


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