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Preface

Preface

Even the Super Bowl, the most sacred and most watched sporting event in the United States had succumbed to the Internet and its influence. Victoria's Secret, the lingerie company, was the first to take the initiative with a 15-second slot promoting a live supermodel fashion show on the Internet[1]—an event probably more memorable than the game itself. By Super Bowl XXXIV only two years later in January 2000, with an estimated 130 million viewers the excitement and conversation was centered as much around the "dot-com" advertisements airing during the game as the game itself, each company paying out a record $2.2 million for each 30-second slot.

[1] For further reading, see C. Allbritton, "Victoria's Secret Net Show a Bust," Associated Press, February 4, 1999

The message is clear: the Internet is here to stay. But beyond the start-up leg-ends, the intermediaries, infomediaries, and service providers, the Internet is challenging established corporations' relationships with customers. The question they face is: "What will be the impact of the Internet on our business, our competitive strategy, and our information systems trategy?"

In researching this book, I interviewed senior executives at more than 40 major corporations in the United States and Europe. These in-depth interviews evealed diverse approaches to how this question is being approached.

  • Most companies have recognized that they need to create and execute an e-commerce strategy; however, as they look for strategy models to follow, they realize that there are none available, especially for manufacturers in traditional industries. To blindly follow the strategy of the new Internet stars such as Amazon is impossible.

  • Some companies still feel that they can largely ignore the Internet and that they can offer a token Website with a basic product offering. To executives at these companies, my response is "How quickly could you respond if your strongest competitor came out with a powerful e-commerce strategy tomorrow?"

  • Other companies, however, have recognized some of the drivers in e-commerce and have adopted one of them to the exclusion of the others—for example, positioning themselves to have a low-cost Internet customer service position. However, this lack of balance between service, branding, technology, and marketing can be extremely detrimental.

  • Clearly, some organizations are winning in the battle for the Internet marketspace and are creating adaptive, intelligent solutions that will keep them ahead of the competition, build successful barriers to entry against insurgents, and allow them to create new empires as the slow giants of the old economy fight to change course and pick up steam.

Thus, in the face of a barrage of new rules for the information economy, business is finding that the boundaries of strategic thinking, and of competition, have vastly expanded. The challenge is to keep up with the rapid growth in converging technologies and to translate the potential of these technologies into business vision and dynamic competitive strategy.

So, what exactly is corporate strategy in the face of e-commerce? We can define corporate strategy as the formulation of a set of directives that, when effectively executed, fulfill the competitive vision set by executive management. In light of that, my consistent finding has been that, to be effective, an e-commerce strategy has to be integrated with the strategic vision of the company as a whole. As an executive from American Express put it, "The Net has to integrate into your core business." However, the approach to the creation of an effective e-commerce strategy is not always clear. True, many classic examples now exist and are very visible— Amazon.com, AOL.com, eBay.com—but these are new organizations, born on the Web. What if you're an industrial manufacturer of cyclical products, how do you proceed? What if you are a supplier of information-based services and wish to develop an Internet strategy, again, how do you proceed?

Executives can study the successes of the Amazons of the world, but does an Amazon-type strategy translate to other industries or organizations? Probably not. A sample of one type of Internet strategy, even if derived from the best of pure dot-com companies, has severe limitations.

The aim of this book therefore is twofold:

  1. To enable CEOs, senior executives, and managers to understand the competitive ramifications of e-commerce within their arenas of corporate competition

  2. Through the methodologies presented, to enable executives to take effective action in developing a strong, unique, and effective strategy for their own organizations

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