The manager of the organisation still not on the Internet had better have a good reason for failing to adopt this revolutionary technology. By Max Franchitto
The Internet is the fastest growing alternative to customary distribution channels in all sectors of the market. Yet many managers have not come to terms with the new medium or adequately assessed its likely effect on the way organisations will engage in commerce in the future.
The decision to go on the Internet is difficult in many services sectors, as it is feared that adopting it may cause conflicts with other distribution channels that have been reliable in the past.
However, it is a pressing question, as the Internet offers more speed, accuracy and probably a more individualised customer-service delivery than was possible before. Whereas service previously meant more capital expenditure, it now means only a fractional increase.
Tip If your organisation does not begin to participate soon, it will be forced to follow its competitors and accept their benchmarks.
One of the main questions that the Internet raises is: what information can I gather via this medium to make it easier for customers to do business with me?
Take examples such as Yahoo.com and Excite.com. They are not mere search engines but researchers gathering information about users, and marketing it strategically to retailers that in turn pay to access it.
This knowledge allows a greater ability to tailor products or services to each customer. This is undoubtedly one of the main platforms for the differentiation that all services organisations have sought to achieve throughout the 1990s.
Tip Getting to know customers costs less than not getting to know them, as it allows you to do things right first time.
This quest for information is threatening to many customers. Most of us are unwilling to divulge personal details; yet as managers we must gain this information if we are to perform effectively.
The key here is to realise that most customers are willing to share information about their purchasing traits if they can be persuaded that this will ultimately benefit them. Only the organisation can do this persuading, and it is dependent on the service relationship it is able to build with the customer once the customer has chosen direct contact.
Tip People may prefer dealing with people, however it is the experience that creates the lasting impression.
An organisation on the Internet is an “infomediary” or a “transactionary” – that is, it provides information or sells something. John Hagel and Mark Singer speak of infomediaries rising to power and cutting off companies from their customers. This can be particularly true of financial services organisations, as one provider can be a gateway to a plethora of other financial services and simultaneously be collecting vital information and providing products and services.
Tip Your company’s future is highly dependent on the decisions you make today as to the relationship you want to develop with the customer.
To assist in defining the challenges the Internet poses, we need to answer some key questions:
- What parts of our business could we conduct with customers over the Internet?
- What is the cost of providing services to customers over the Internet?
- What are the costs of not providing such services?
- How would our organisation use the information it collected?
- Would the organisation be significantly disadvantaged if our competitors were to find customers over the Internet before we did?
For managers still in doubt, the news is that many companies have answered these questions and are rebuilding their customer relationships and marketing approaches.
The undecided manager should start with the following actions:
- Seek advice from external sources.
- Listen carefully to what your customers are asking for.
- Break traditional thinking on channel conflict.
- Keep a close eye on what relationship-marketing champions are doing at the local and global level.
Ghosh, Shikhar. “Making Business sense of the Internet”. HBR, Mar-April 1998.
Hagel, John, and Jeffrey F. Rayport. “The coming battle for customer information”. HBR, Jan-Feb 1997.
Hagel, John and Marc Singer. “Unbundling the Corporation”. HBR, Mar-April 1999.
How not to
How not to be a corporate planner
There are many contenders for this prize, including virtually every communist national executive after 1950, the Kennedy administration in the US, and any number of fund managers. But the prize in corporate land must go to General Electric. In the early 1970s, GE was regarded as the corporate planner par excellence. Its chief executive, Reginald Jones, tried to centralise control by building a strong corporate planning department with 193 staff. This department became a “centre of excellence”, creating world-leading work on strategic planning. A blizzard of theories of strategic analysis and techniques of planning came from it.
GE’s elite planners oversaw all operating divisions, a fact that led to great resentment among line managers who were no longer able to run their divisions. The results were nothing if not persuasive: GE’s share price remained flat and its price/earnings ratio declined. When Jack Welch, one of the more lauded managers of the contemporary era, took over in 1984, one of his first acts was to remove all the corporate planners. The savings thus achieved were enormous, proving that there is a point to a planning department after all.
How not to be imaginative
The prize for the best failure of imagination goes to a 19th-century professor of natural philosophy and astronomy at London’s University College, Dr Dionysius Lardner. Lardner asserted that rail travel at high speed was not possible because passengers would be unable to breathe and would die of asphyxiation.
He also asserted that no large steamship would be able to cross the Atlantic because it would need more coal than it could carry. Two years later, the Great Western steamer crossed the Atlantic.
Lardner’s achievements in lacking imagination have so impressed the Australian financial markets, that they have dedicated their efforts since World War II to saying that new ideas will not work unless they have something to do with mining or agriculture. Their latest supreme accomplishment has been to fail completely to provide any investment capital for the Internet revolution, as important a commercial development as the advent of rail travel.
How not to give a medical report
- By the time he was admitted, his rapid heart had stopped, and he was feeling better.
- On the second day the knee was better and on the third day it had completely disappeared.
- She has had no rigors or shaking chills, but her husband states she was very hot in bed last night.
- The patient has been depressed ever since she began to see me in 1983.
- Patient was released to outpatient department without dressing.
- Discharge status: alive but without permission.
- The patient refused an autopsy.
- The patient has no past history of suicides.
- The patient expired on the floor uneventfully.
- Apparently she slipped on the ice and her legs went in separate directions in early December.
How not to talk corporate speak
- Thank you. We are all refreshed and challenged by your unique point of view.
- The fact that no one understands you doesn’t mean you are an artist.
- I have plenty of talent and vision. I just don’t give a damn.
- I like you. You remind me of when I was young and stupid.
- I am already visualising the duct tape over your mouth.
- I will always cherish the initial misconceptions I had about you.
- I’m not rude. You are just insignificant.
- Yes, I am an agent of Satan, but my duties are largely ceremonial.
- No, my powers can only be used for good.
- How about never? Is never good for you?
- I’m really easy to get along with once you people learn to worship me.
- You sound reasonable Time to up my medication.
- I’ll try being nicer if you’ll try being smarter.
- I’m out of my mind, but feel free to leave a message
- I don’t work here. I’m a consultant.
- Who me? I just wander from room to room.
- At least I have a positive attitude about my destructive habits.
- I see you have set aside this special time to humiliate yourself in public.
- Someday we’ll look back on this, laugh nervously and change the subject.