Who will navigate today’s leaders through the e-commerce minefield?
Written by Andrew Grill, January 2001, and presented as a keynote at the Rotary Club of Sydney luncheon, 16th January 2001.
In a recent survey of more than 100 Australian companies, global management consulting and executive search firm AT Kearney found that ‘e-leaders’ are proving hard to find.
Further, such people were more likely to share personality traits than university degrees. The study suggested that successful e-leaders were likely to be paranoid, enjoy taking risks, readily admit to mistakes, and are obsessed with their customers.
The research covers more than 100 Australian companies and looks at companies current readiness, competency and intentions to implement e-business across their operations. The survey respondents were all at senior executive level and able to comment on the organisation from a strategic viewpoint.
e-leaders come from a range of disciplines, with the majority having qualifications in finance/business (24 per cent), post-graduate studies (24 per cent), science or technology (23 per cent) or marketing (19 per cent). More importantly, they were seen as having similar personal attributes.
Who will navigate today’s leaders through the ecommerce minefield?
President Rick, fellow Rotarians, and guests, thank you for the opportunity to address the club today on what I hope will be an interesting and thought provoking topic. I feel especially honoured that as a young Rotarian, I have been asked to present to the club on our Family day. I see a number of young faces in the audience, and I hope this address is of interest to you as well.
So much has been written about ecommerce and the “new economy” lately, but little has been written about what should you actually believe and what it all means to you and your company.
Today I’d like to use my time to look at what has happened to the “dot com darlings” over the last year, which has made the ecommerce landscape resemble a minefield, as well as look at providing a plan for our business leaders to better utilise and embrace the benefits that electronic commerce brings.
What concerns me most is that many companies are being told by their board or by Senior Management that they must “go online” but they are not benefiting from the advice of those actively participating in the ecommerce industry.
The “tech wreck” of April 2000 had repercussions around the world in terms of technology company share prices, as well as making business leaders in general very sceptical about the real benefits of electronic commerce.
A year ago, I heard CEOs saying to their staff “we must be in ecommerce or on the Internet” and literally telling their staff to “just do it” without any real understanding of what benefits ecommerce may bring and if indeed their company was ready to benefit from ecommerce.
Today, in 2001, there may still be some brave CEOs willing to “just do it”, but if like me, you have read any of our papers over the last few weeks, it would make you a little nervous to hear about some of last year’s dot com darlings such as
- Liberty One
- Look Smart
going out of business, radically downsizing or being taken over just 12 months later. The Australian Financial Review reported on their front page a few weeks ago about the urgent sale of a Ferrari under the heading “dot com, dot gone, the toys have to go”.
One of the reasons that I decided to title today’s address:
Who will navigate today’s leaders through the ecommerce minefield
was that as someone passionate about the benefits of ecommerce and concerned that business leaders are losing confidence in the industry, I wanted to construct a roadmap to help navigate you all through this apparent minefield.
After the performance of companies like the ones I have mentioned, and the speed at which we are being told the internet is moving, a minefield would be an apt description of how many of you may feel towards e-commerce.
The concept of electronic or “e” commerce was never meant to be confusing though. Nicholas Negraponte, renowned futurist said in Sydney only last year that that by the end of next year, the words eBusiness and eCommerce will disappear from the landscape. The rationale behind this wild prediction is that by 2002, we will simply continue to talk about Business and Commerce, as it will ALL be done electronically and we won’t differentiate between electronic and non-electronic business and commerce.
Many of the dotcoms that have been poor performers have been those that have been targeted towards consumers so called “Business to Consumer” or B-2-C initiatives. Where every analyst predicts the real money will be is where Businesses deal with other Businesses electronically is called Business to Business or B-2-B commerce.
Confused already? Well did you know that most of the savings that can be realized by using electronic commerce come from activities that occur before any of the technology is switched on…
The well respected Gartner Research group suggests that 6-7% of ecommerce savings can be realized by preparing for ecommerce and developing processes that can be utilized in an online environment, and only 2-3% of savings are realized by the actual technology behind the website and related software.
As an example, if your company re-designed your purchasing processes for something as simple as stationery items, it would allow these items to be bought through a single website. This would ensure that the volume discounts negotiated across a number of divisions would be adhered to.
Those “rogue purchases” where someone purchases items from another supplier, and therefore does not attract the volume discounts would be all but eliminated.
This is where the 6-7% savings come in. The rest is just technology executing a transaction, pretty much like a souped up EFTPOS machine.
Well, I could have come today and presented on the latest ecommerce trends, or technologies, instead I thought I would go to the heart of the matter and understand what we as business leaders and professionals should be looking for to sustain and grow our position in electronic commerce.
I want to leave you today with a plan to help you and your business to stay ahead of the game in the new “new economy”, and by new “new economy” I mean the one that actually makes money.
Speed of Change
So we’ve heard all the hype, but just what are the real benefits of ecommerce? And what are you as business leaders expected to do to keep up with all of the changes?
When you consider that it took over 50 years for the number of radio subscribers to double in size, just 14 years for television, and only 5 years for mobile phones, it will come as no shock to you that the internet doubles in size every 9 months.
In the industry we often talk about “internet speed” where the technology and techniques change so quickly that a month in the e-world in terms of advancement and pace would seem like seven normal months in business. Internet years as they are called are much like dog years, one e-year for every 7 normal ones.
The so called “tech wrecks” of April 2000 have filled many inches of newspaper columns over the last few months as commentators try to explain why the darlings of last year have all but faded. Those companies that emerge in 2001 will have to fight off the obvious comparisons with last year’s dot coms. I believe that online companies that are supported or founded by established off-line companies will be the ones that will survive.
Regardless of who survives, any new ecommerce initiative will be closely scrutinised, and will require very committed backers.
All of the companies I mentioned earlier started off with ambitious plans and a truck load of money. In the case of Dstore, it has just been sold for a song to Harris Scarfe, and ToySpot was picked up by David Jones.
It is also interesting to note that both David Jones and Harris Scarfe were struggling to come up with an online strategy, just as Dstore and ToySpot were struggling to become an offline company (that is hold stock and develop distribution networks). In the end, the companies with the established offline brands took over those without.
How to prepare
So if the NEW “new economy” is bearing down on us like a runaway train, what can we do to prepare for it
Do we have the right training and experience to understand all of the issues of the online world, such as supply chain management, customer resource management, trading hubs, ADSL, broadband, portals??? More importantly, do our successors have the skills to embrace this change – and are we training our school leavers and tertiary students in the right subjects? Will there be enough of them to go around? What should we do right now?
Even the current education system is being dragged kicking and screaming into the new economy.
I noticed with interest a few days ago that school students are going to be tested for “internet literacy” to ensure that they have an adequate understanding of the internet before they leave school. One politician was critical of this, and they claimed that this would force all teachers and staff at schools to become eliterate rather than computer illiterate. I fail to see the problem with this.
It is also interesting to note that some management courses claim to offer ecommerce subjects and degrees, but do not harness today’s e-business professionals and practitioners in their delivery. I would argue that an academic of 20 years standing cannot possibly stay in touch with the happenings in ecommerce in the same way that ecommerce practitioners must.
Why then when I look at the ecommerce subjects being taught at well respected Universities do I see very few lecturers that come from the industry? We need to encourage those working in the industry to give up some of their time to help train students in ecommerce with practical and relevant examples.
We must also ask if we training enough young people in technology and business subjects, and attracting school leavers to start studying the right courses early enough?
I feel that I am qualified to tackle this somewhat controversial subject today as I have just completed an MBA in eBusiness Management and I hold a Master’s degree in information technology & telecommunications. I also have over 14 years experience in the IT&T industry, and have spent that past 2 years solely focused on e-commerce, both developing strategy and executing initiatives to help Australian businesses. I also have a healthy dose of reality thrown in!
There are many IT&T and eBusiness courses around, and I feel strongly that they must not only teach about the technologies employed but also cover the business issues and train students as “business smart technologists” at a greater rate, the problem is that we simply cannot train them fast enough. Thankfully this is being addressed by the IT skills task force that I know some of you here are involved with.
This brings me to an interesting observation? What will our ‘e-leaders of the future’ look like?
A recent survey by the consulting firm AT Kearney addressed this question – and I quote from their research:
They argue that the e-leader needs to be:
- customer obsessed
- a risk taker
- have bandwidth separation anxiety (that is cannot be more than 5 minutes away from a mobile or an internet connection)
- admits mistakes
- is an evangelist
- and is brutally frank
An interesting range of traits I hear you say – and I wonder how many of you here have these sorts of people working for you today – and are they part of your succession plan? One interesting point is that if you do have people with these traits working for you right now, – how will you keep them??
There is a worldwide shortage of qualified and motivated ‘e-leaders’ and they are being snapped up by companies in the US and being paid in US (read real) dollars.
Our senior leaders
I’d like to turn my attention now to the very top of the corporate tree and survey where our very senior leaders are today. I’m talking about the boards of our major companies – those that are already online, those making an effort, and those that are yet to make an entry into the online world.
Today’s boards are comprised of a number of diverse and talented people with literally years of experience, many of you here today sit on a number of boards. Herein lies the problem – they are experienced in the old way of thinking. They have probably developed and executed plans and strategies based on existing processes and methods. What about if we were able to supplement these years of experience with young, talented eLeaders?
Jack Welsh at General Electric in the US has put this in place, with young university graduates being assigned a board member that they can coach or guide through the ecommerce minefield. This is almost like reverse-mentoring when the wise and experienced is guided by the young and enthusiastic.
What if we extended this concept one step further and looked at recruiting one of these mentors, an eLeader onto the board – someone who is young, but commercially savvy, has the skills of a good communicator and could help guide the board, and ultimately the company into the online space and be involved in all the major decisions…perhaps we should call them eDirectors.
Great idea I hear you say – let’s get them involved in some workshops – but we won’t put them on the board – too much of a risk…too young…not experienced enough, wouldn’t understand the way things are done around here…..well haven’t we heard this all before????
And they’d be right, people my age AREN’T experienced in the old way of doing things, we don’t have pre-conceived ideas about the ‘way it has always been done’ and we would probably challenge the status quo…but what about the positives of such a move?
This would mean that someone with the RIGHT sort of experience…and by that I mean experience with emerging technologies and new business processes, and would be able to impart their knowledge and experience in these new areas and help drive the company into the online world.
They would also provide a fresh look at what is going on, instant access to the new way of thinking, the ability to challenge old ideas and inject new ways of thinking..perhaps not such a bad idea after all!!
Global Recruitment firm Korn Ferry recently surveyed boards in Australia, and came up with the following conclusions….
Board sizes have decreased from eight to an average of seven members…..and they have a more diverse range of skills, and more women are being appointed..
However what I noticed was missing from the survey was an appreciation of the diverse skill sets needed in the online space and the plan to address this shortfall. No-one surveyed seemed to know what do to address this urgent need.
If more suitably qualified people, including many of my peers were to come forward and make themselves available, boards in Australia would be able to supplement their ranks with eDirectors and help navigate today’s leaders through their e-commerce minefield.
What I believe is urgently needed by Australia’s education system and business community as a whole is an e-plan that addresses three key career stages.
Stage 1 of the eplan is what I call the grow them strategy, addressing school leavers and tertiary students and finding ways to attract them to the industry and get them to study the right subjects up front. In my experience, by year 10 or 11, a student’s subject choices can affect their future career path.
Stage 2 is the keep them strategy to keep the talents that we have fought so hard to find. This may involve some succession planning, to identify the movers and shakers and ensure you can retain them and get them involved with the company’s strategy. I speak of these people as “the people who get it”. These people are key in your organisation, people you cannot afford to lose.
Stage 3 is coach them strategy, to find and engage the eleaders, and install them onto our Boards. Perhaps over the next few years we will hear more about “eBoards”, those boards who can now claim they “get it” and can confidently plan for their ecommerce future.
In closing, let me offer some eRecommendations to help better prepare today’s leaders for electronic commerce.
- Why not create a new ecommerce division to focus solely on ecommerce initiatives
- How about providing all staff with internet access at work and at home
- Encourage staff to buy goods over the internet
- Subscribe to internet magazines
- Initiate study tours to the US
- Link bonuses to eBusiness milestones
- Draw up a plan to appoint eDirectors
- Provide targeted eBusiness training
- and source eMentors for your senior managers and the board
Fellow Rotarians, I am passionate about the ecommerce industry, and the benefits it can bring, and I firmly believe in its future.
As a Rotarian, I want to be able to build a bridge over the minefield and help all of you understand the benefits that ecommerce can bring to your business and ensure ecommerce in Australia is a success.
Korn Ferry Study on Australian Boards
Red Herring article (October 2000) on eMentors (no longer available online)
Jack Welch – Jack Welch & The G.E. Way McGraw-Hill “Management Insights and Leadership Secrets of the Legendary CEO”