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Turning
the Business Universe Inside Out
By Michael Alan Hamlin
August 2, 1999
The Internet and empowered consumers
are turning the business universe inside out. Back when efficiency,
productivity, and quality were sources of competitive advantage
and supply drove economies, the center of the universe was business
processes, like finances, manufacturing, and materials management.
Efficiency, productivity, and quality are still very important,
but they don't provide the kind of competitive advantage that results
in market leadership.
Instead, they are requisites to being
in business, especially global business. Every company must continually
fine tune its business processes to attain international standards
of efficiency, productivity, and quality. Whether a company dominates
its industry, however, depends on such things as the level of product
and service innovation, sources of profitability, share of profitable
customers, extending distribution networks, and ability to anticipate
sudden shifts in the marketplace.
As a result, the business universe
no longer centers on business processes, but the market itself.
The outer-most ring of the universe
orbiting around the market is composed of core business processes.
When large traditional companies complain that they are not ready
for competition in a liberalized marketplace, it's generally because
they fall short in this basic area of being in business. Precisely
because they have operated in a non-competitive environment, business
processes are sloppy, inefficient, and demonstrate very low productivity.
These companies say they want more time to prepare for competition,
but historically enterprise prepares for competition only when it
must. Introducing competition will force companies to rapidly improve
by restructuring themselves and investing in technology.
The second-most outer ring of the
new business universe is people. Employees in competitive organizations
are empowered. There are two ways in which empowerment takes place.
First, corporate culture and values must recognize both the hearts
and brains of people, and capitalize on their potential. When we
talk about heart, we mean inspiring people to do incredible things.
Inspiring people has a lot to do with leadership, but it has at
least as much to do with learning to rely on people, to value their
inputs, and acknowledge their desire to succeed and to distinguish
themselves. And, they need to feel that they are an important part
of the organization.
Second, people must be given the
tools and information they need to do their jobs. I'm always surprised
when I visit some traditional companies and see people struggling
with ancient computers and floppy disks, for example. There is no
intranet to connect people for collaboration. Employees don't have
e-mail or Internet access to connect them to the world and the company's
customers.
That's perhaps an extreme —
but all too common example. But think about how many people in your
company have access to a computer, have received training on even
standard office applications, or know how to access information
they require to do their jobs. Market leaders are companies that
provide the tools employees need, integrating them into the business
flow. New technologies, in fact, provide access to business information
based on employee profiles and responsibilities so that tools are
not just available, but focused for maximum return. As a result,
the efficiency, productivity, and quality of the work employees
do increases. And, they also wind up doing the right things; not
just doing things right. As a result, profitability increases.
The next ring in the new business
universe is comprised of new ways of doing business that provide
sources of profit. This is the heart of the company, and the connect
between the other rings and the marketplace.
Business-to-business Internet-commerce
provides for increased efficiency, productivity, and quality in
inter-connected networks of companies. But didn't we say that efficiency,
productivity, and quality were no longer components of competitive
advantage? No, what we said was the intra-company efficiency, productivity,
and quality are requisites of being in business. Inter-company efficiency,
productivity, and quality is different.
That's because many companies are
not yet inter-networked, although that's changing rapidly. Globally,
B2B Internet-commerce amounts to about US$75 billion a year. In
the past two to three years, companies like Dell, Cisco, and Intel
have seen the volume of B2B Internet-commerce explode from nothing
to billions of dollars. One of the major reasons for this is that
efficiency, productivity, and quality show up dramatically in the
way orders are placed and delivered.
A good example is business customers
buying network switches from Cisco and 3Com. These switches are
highly configurable, with literally hundreds and even thousands
of alternatives available to large corporate customers. Those alternatives
are much more easily communicated — and rapidly updated —
on the Internet, than through thick catalogues or sales people struggling
to remembers all the data — and where it is — their customers
need. Clients configure the equipment with the assistance provided
by an Interactive web site that prevents configuration conflicts.
Because most of Cisco's products
are actually produced and assembled by outside suppliers and manufacturers,
once an order is completed and confirmed it is quickly communicated
to the members of the network responsible for filling it. Over the
Internet, the component orders are acknowledged, invoiced, and shipment
confirmed.
But B2B Internet-commerce is just
one of the new ways businesses source profitability in the new business
universe. Note that with the rapidity with which B2B is growing
— some analysts suggest to US$750 billion by 2003, a ten-fold
increase in less than five years — like intra-company efficiency,
productivity, and quality, B2B will quickly become a requisite of
being in business, too.
That's why continually searching
for new sources of profitability, building expanded relationships
with profitable customers, and anticipating shifts in the marketplace
by knowing it intimately, are critical components of the new business
universe. And that brings us to the marketplace, where the buying
and selling takes place, the action the rest of the universe orbits
around in a demand economy where the consumer is king.
Copyright © 1999 The Events
& Awards Managers of Asia and
Hamlin-Iturralde Corporation. All rights reserved.
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