MANAGING REVOLUTION: First easy steps to an e-strategy - Established companies can't convert to a new economy culture overnight But they can start by making e-mail the means of internal communication.

MANAGING REVOLUTION: First easy steps to an e-strategy - Established companies can't convert to a new economy culture overnight But they can start by making e-mail the means of internal communication. - Every company should have an e-strategy. Everybody f

by ROBERT HELLER
Last Updated: 31 Aug 2010

Every company should have an e-strategy. Everybody from the prime minister downwards echoes this call to digital arms. But just sounding the battle cry, when there are still companies that don't have e-mail, is shouting against the wind. Managers and proprietors remain confused about what to do, how to do it, and when.

The essential start is to recognise that e-strategy doesn't come singly.

It is tripartite. Part 1 is symbolised by e-mail - using the internet to improve any of the corporate processes where greater speed, efficiency and functionality can be won. Few corners of the business will not benefit from this simple, cheap and everyday technology.

Part 2 of the tripos extends similar gains into the outside world and back again. Communications and processes involving customers and suppliers can be transformed at relatively little cost. With Dell Computer in the vanguard (as usual), smart companies are setting up dedicated web sites for their key customers. One German chemical giant, using the web, now transacts purchases in a day that previously took a week.

Giant after giant is latching on to the truth that purchasing conducted collectively over enormous exchange web sites offers splendid cost savings as well as gains in speed and efficiency. In time, these exchanges will presumably be spun off, yielding easy billions for the car mammoths and other sponsor/users, much as spin-offs from telecoms overlords such as BT can painlessly replenish their coffers.

These lucrative corporate by-products (such as the electronic purchasing exchanges) often represent e-strategy Part 3: either a wholly new business that can exist only in cyberspace, or a wholly new method, such as internet banking, that threatens the existing core business with extinction. Part 3 is where imagination, vision, courage and risk-taking are required, where fortunes can be won or lost and conventional managements may be seduced into silliness.

Leaping into this promising but problematic third stage without having the other two in place is silly. You need the risk-free gains, not only to help finance the risks but to provide both an effective infrastructure and an educative experience for the whole firm. It's like a staircase.

You walk up it before you run, climbing from internal re-engineering to external interdependence to the initiation of a brand-new business model.

Conventional managements do well to study the ascent of their unconventional rivals. The dot.com start-ups have the luxury of passing through all three parts at once. They have no legacy systems (or legacy managers) to worry about. They don't have to change the corporate culture - none exists. Their hirings are full of get-up-and-go: many recruits got up and went from previous high-class employment and are bursting to turn paper options into solid gold.

By contrast, established companies that want to run the entire gamut of e-strategy have mountains to climb. The sensible course sounds obvious.

Begin with Part 1 - now. Turn e-mail into the prime means of internal communication. Create what Bill Gates calls a 'digital nervous system' that binds the company together. Adopt every available method of improving information flows and mobilising information to achieve better decision-making - a key process that most companies don't even recognise as a process.

Using intranets and e-mail, senior management can consult more widely and more rapidly than ever before - and those lower down the pyramid can criticise and contribute with much greater freedom, if allowed and encouraged to do so. There's a better chance of removing those banes of corporate life, the great ideas that disappear into a black hole, action plans that don't get actioned, follow-ups that aren't followed.

These internal reforms have one obvious advantage over the grand e-strategy.

The rewards are also internal, and cannot be infected or affected by the greatest computer virus of them all: free services. In market after market, services that are paid for on earth are being given away for nothing in cyberspace.

Free internet service providers are only one example of the spreading virus. Failing conversion to payment or some ancillary source of revenue, these business models hardly merit the word 'business'.

'Free' threatens to ruin any market. A strange article in the New Yorker explained how wrong it was to pillory Microsoft over its browser tactics, because this market is only worth relative peanuts. But that, of course, is because Gates gives away his Explorer browser to sink Netscape. The latter famously started off as a free supplier, and its switch to payment was paying off - until the torpedo struck.

Would-be Part 3 corporations should focus on the prospect of viral infection.

They may lie between Scylla and Charybdis. Go free yourself, and throw away your revenues; stay out, and lose your revenues. That's another argument for Parts 1 and 2. They at least are sure to pay.

Robert Heller is co-author, with Paul Spenley, of 'Riding the Revolution', published by HarperCollins at pounds 24.99.

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