The ebusiness Scandal

Friday, 01 December 2000

Jonar Nader photo
Jonar Nader

    JONAR NADER says any company that utters the words ‘internet strategy’ is doomed. Is he a contrarian?

    Is he a latter-day Don Quixote tilting at convention? Or, as he prefers, just pushing the envelope of e-business in a way that is bound to lose friends and infuriate people . . .

    Enough is enough. Let this be the last article we have to suffer in relation to the hideous subject of e-jolly-business. Listening to the IT industry's hype about e-business is not unlike the nonsense that is broadcast on late-night television where every month someone invents a new way of toning those thigh muscles or plucking unwanted hair. As a member of the IT industry, I am appalled at the highway robbery. I am ashamed of those who pump out lies about the brave new world and its new economy – engulfing it with e-this and e-that. For a start, anyone who thinks e-business is all about "technology in business" is missing the point. The "e" in e-business has nothing to do with electronics. It has nothing to do with computers or the internet. It has nothing to do with e-commerce or the on-line world, and it definitely has nothing to do with the Web. IT vendors will tell you e-business is all about supply-chain management, or enterprise resource planning (whatever that means), knowledge management, business intelligence, and some other fuss and nonsense. They say it's all about using the internet to improve your business. Visit their Web sites and read their speeches. Study them carefully (I mean really carefully) and you will see the trickery, the stupidity, the unbelievable relentless misinformation, hype, jargon, hollow concepts, and a never-ending cycle that promises the earth year after year. How can they stand there and deliver such speeches? What credibility are they leaning on when they say time and again that "we admit that last year's technology was not good enough... but now it is, so hurry up and buy it." Dubious success During his visit to Sydney in September 2000, Bill Gates said, "For people who work in business, a lot of their time is spent inefficiently today..." My goodness, how can that be? Have we not been told that if we used Microsoft software we will be able to operate efficient, productive businesses that could do anything at the press of a button? Are we to assume that Gates is retracting all the literature, speeches, TV ads, and other promises that his company has been throwing at us for a decade?

    Gates is not the only culprit. Scrutinise speeches from other vendors, including Oracle – whose Larry Ellison was seen on the front cover of eCompany Magazine with the November headline, "I saved a billion dollars". Here Ellison was referring to using his own products to improve his company's performance. Sun and IBM have also been ostentatious about their supposed savings. I wonder if they would allow an independent auditor to check their claims. Furthermore, they are boasting about their savings to potential customers who are not even a fraction of their size. Some of their important customers have an annual turnover less than what these giants would spend on photocopying paper. Oracle's profits for the fiscal year ending 31 May was $US2.1 billion. How many of its customers are in that league? Very few. So how can one be impressed that Oracle saved a billion dollars? So what? How can the average business put this into a meaningful context? Another feature of their speeches and white papers is the heralding of the dawning of the new age. We are told we are about to embrace the next wave, the new thing, the second phase, the be-all and end-all is coming our way, so we had better get ready and buy into e-business.

    Don't be fooled. Do you think that IT vendors care about your business? Do they wake up each morning and say, "Oh dear, Mr Jones from needs our help, so let's make our software better." Fat chance. They wake up and look at their stock price and compare it to their competitors' and say, "Oh no, we need three percentage points and four new products to be announced so that the analysts will be kind to us this afternoon." All this chest-beating about how much money they have saved is a curious activity. Can you remember the last time a company was willing to tell you that it was able to reduce its expenses? It has been traditional for companies to cry poor, and justify price hikes on the basis of increased expenses. Now we are told that the likes of Oracle has saved one billion US dollars in one year! Wow, that's some achievement.

    Not only do these executives boast about such achievements at board meetings, they place full-page advertisements to tell us about them. Does that not seem strange to you? In addition, they produce sales kits and slideshows for their underlings to present at industry conferences where eager delegates are thirsting for some words of wisdom from industry gurus. Instead of receiving useful advice, the delegates are disappointed as the talking-heads rock up with their notebook computers to spread propaganda about how they have managed to save millions of dollars by eating their own cooking. Well bon appetit. What they are really trying to say is, "We have run out of case-studies and customer testimonials because all of our reference-sites have kicked us out. So in the absence of a convincing customer reference site, we have decided to use our own company as a case study. So now will you buy our e-business solutions?" What is e-business? In a word-association test, what would you think of when you hear the term e-business? Does the web spring to mind? Does the internet crop up? Do you think of e-commerce? If these things dominate your thinking, then you have failed to embrace the essence of e-business. If BI, CRM, WAP, and other impressive abbreviations and acronyms come to mind, then you too have been duped.

    Ignoring the desperate pleas by vendors, and disregarding the dotcom craze, e-business is concerned with how businesses prosper in the electronic world. E-business describes the framework for organisations to compete within the new economy of the networked, digital world. With that in mind, it stands to reason that the critical success factor is one of understanding the characteristics of the networked world – where the networks in question refer to the political, social, criminal, financial, and religious networks, not only the technological ones. New ways to cope with an old economy Is the networked world different to the previous industrial world? Is the new economy different to the old economy? Is the adult "you" different to the adolescent "you"? Yes and no, in that you are the same person that you were 10 years ago. However, you have new characteristics. Your appearance, your health, your maturity, your views, your preferences, your habits, and your activities and social standing are all different.

    So it can be said that the new economy is the same as the old economy, except that it has new characteristics that are significantly different, forcing new ways of operating. The internet and all its peripheral technologies will not make you efficient if you are now inefficient. It will not make you faster if you are now slow. It will not enable you to deliver better customer service if you currently deliver none. In fact, if you are inefficient, e-business will amplify your inefficiencies for all to see. If you are slow, it will slow you down even further. If you do not currently delight your customers, it will help you to drive them away faster than ever before. Therefore, those who pin their hopes on e-business will never succeed because the networked world is not a place in which you can enter with deficiencies in the hope that the technology or the infrastructure will be good to you. In fact, the networked world is intolerant. Those who do not have their house in order now will not be able to survive the merciless landscape.

    E-business and e-commerce are not territories in which to venture unless you have perfected your craft. The haphazard will surely die. Who are we kidding? One super-famous person recently said that stock prices are evaluated according to whether or not a company has a great internet strategy. How true. Often internet strategies and e-business hype have nothing to do with delivering better products or services. Such supposed strategies are usually smoke and mirrors for the sake of increasing the value of the company's share price. This tactic is nothing new. We suffered similar distractions in relation to TQM, QA, and Y2K – where being seen to be doing something was more important that actually doing anything. Any CEO who utters the words "internet strategy" is doomed. I am flabbergasted at the number of times I am called to organisations to assist with their e-business strategy. The conversation usually goes something like this; "So Jonar, we want to have an internet strategy, where do we begin?" asks the CEO. "Begin by telling everyone in your organisation that you do not want a net strategy!" I reply. "No, our shareholders want us to articulate a strategy," retorts the CEO. "Oh really, which shareholders are these?" I say, as the client stares at me in disbelief.

    "Look Jonar, I need to present something to the board," exclaims the frustrated CEO. "Ah, so you need to look good in front of the board?" I ask as the CEO's head nods embarrassingly. I have also been in situations where the new CEO has inherited a supposed strategy. "How can we make this work, Jonar?" comes the nervous plea. "You can't make it work. You have inherited a mess. The best thing you can do is disband this motley crew and start afresh with a real plan, a smart strategy, a team that works, and a calculated investment," I say calmly as if negotiating with an irritated hijacker. "Look Jonar, you don't seem to understand. We have already spent four million dollars on this, and we just have to make it work, that's all there is to it. So please come and meet our taskforce and stop being so negative." "Okay then, I am positive it won't work." The time has come for those of us who do know what e-business is all about, to tell those who don't. However, instead of presenting you with elaborate explanations that will no doubt make your eyes glaze over, here are some very simple ideas that will give you a good starting point to mastering the art of e-business.

    The error of so many organisations starts with the misapprehension that e-business is a source of revenue, as if it is a new division, or a new opportunity that they need to address. They often ask whether they can make money from e-business. That mentality is flawed. One of the major risks is not knowing who your next competitor will be. In the networked world, while your customers are beating a path to your door, your competitors are beating a door to your path. In the networked world, there is a basic rule that says, "If you can dream it, do it before your competitor does". Forget about cost justifications and endless research. Ask your staff members what they think would be a cool thing to do to make customers' lives easier. What would it take to make your organisation pleasant to deal with? Are you delivering on the promises you make in your advertisements? These are very simple questions. However, they point the way to constructing a business that can meet the needs of society's members who have to cope with new demands and new pressures.

    The foundations for e-business start with a basic look at what excellence means in your sector. It then tries to find ways to reach these levels of excellence. It is rare that technology needs to be the focal point. On the occasion that it is required, it needs to be implemented to solve a business challenge, not used to jump on a bandwagon. Business logic asks "what if?" Business creativity asks "wouldn't it be great if?" Logic keeps the business on track, while creativity fuels it. Creativity is concerned with creating – bringing into being that which was not there before. What can you create? Are you creating new ways of adding value to your people, your customers, and your shareholders? What are the characteristics of the networked world?

    Do your customers really want to do business with you? In most cases, customers hang around for convenience, not loyalty. The moment they have an alternative, they will take it if they are unhappy with you. Their decision to switch camps comes from a desire to vent their frustrations and exercise their power over an unhappy relationship. It's about time organisations faced the question of customer loyalty based not on how many customers they have, but on how many they would have if their customers were given the opportunity to make a meaningful protest. There are many networks operating around the globe. We have social, monetary, political, and military networks, as well as corporate, infrastructural, and religious ones. Although some are larger than others, their characteristics are similar. We are at a stage where networks form the backbone of society. Hence, understanding their characteristics has become a matter of survival. The networked world: is fast, lacks time; is changing; demands information in real time; is complex; is linked; places emphasis on intangibles; catapults an operator from the "marketplace" to the "market-space"; relies on information; and, seeks growth through convergent technologies.

    Although many executives agree with these 10 characteristics, they do not always realise that there are more profound findings at deeper layers. The pertinent finding behind each of these characteristics is outlined below.

    Characteristic 1: Speed To say that the networked world moves very quickly does not seem to be of much value because upon closer scrutiny we would find that, throughout the ages, every generation has experienced a pace that could be said to be faster then the one before. Naturally things today occur at a much faster pace, but the most important element to surface from this is not the speed, but the "acceleration". Upon reaching the desired speed, an organisation would find that things have changed once more. This is why we must comprehend the nature of acceleration.

    Characteristic 2: Time In the networked world, time is the only resource that is dependable, predictable, and self-replenishing. It is generous and, best of all, it is free. When viewed in this way, we can see that time does not work against the modern organisation, because time has been consistent in its performance. It has never promised us any more of itself, nor detracted from its generosity. If we choose to expect more from it, we only have ourselves to blame for being unreasonable.

    Characteristic 3: Change To suggest that things are changing could hardly point to anything new. Things change daily. Change is not something new to have emerged within the networked world. Change is not exclusive to an accelerating environment. The important factor about change is that we need to be able to understand the differences between "lasting change" and "temporary change". The ability to discriminate quickly between the two will differentiate between the winners and losers.

    Characteristic 4: Real-time In the networked world, people want immediate answers to their questions. Customers want information, prices, data, and delivery dates, and they want them post haste. We have seen this level of expectation creep up during the years. With the advent of real-time computer processing, it became reasonable to ask for immediate information. The winners in the networked world will be those who not only process data in real time, but those who train and enable their staff to think in real time and make decisions in real time.

    Characteristic 5: Complexity A complex world is what we are familiar with. Complexity is normal. It is something we have grown to respect. We stand in awe of nature's complexity, from the function of the human body to the incomprehensible marvels of microscopic particles. To messy minds, complicated things are much easier to construct than complex orderly structures.

    Characteristic 6: Linked Survey your colleagues about the networked world and they would be likely to tell you that one of its characteristics is the way in which things are linked together – computers, telephones, facsimiles, the Internet, international agreements, banks, and educational institutions. Being linked is not, in itself, an advantage. The important element is that of "connectivity". In the networked world, the aim is to be connected with customers, suppliers, partners, friends, banks, governments, influencers, and resources.

    Characteristic 7: Tangibles and intangibles Well-read individuals realise that this world operates on several fronts. We generally understand that we move and operate within tangible and intangible parameters. Many would also agree that things that operate well in one domain are changing to the point where tangibles are becoming intangibles, and vice versa. Respected observers have alerted us to the fact that things are switching camp, meaning that products are becoming services while things that were real are becoming virtual. Furthermore, those who found riches from tangible assets are now beginning to appreciate the values of intangible assets.

    Characteristic 8: Market-space Once upon a time retailers, manufacturers, and service providers were required to become experts in their respective marketplace. Discerning operators quickly realised that survival depended on a new level of understanding that encompassed the market-space – being cyberspace, international space, and cross-border trading. The exciting concept of trading within the market-space has been widely discussed. What is little understood is the notion of market-pace. Organisations wishing to survive and compete within the accelerating networked world need to grasp the notion of the market-pace because it is the pace of change, development, and attack that will sift the amateurs from the professionals. Characteristic 9: Information Since the proliferation of computers in the workplace, managers have struggled to turn data into something useful. When they found ways to prepare reports into useful structures, they were quick to rejoice in the transformation, calling data "information". Doubtless, the networked world feeds on information. However, there are two things that must be understood if we are to appreciate the nature of this two-edged sword. The first is that information-overload comes not from too much information, but from the fact that inappropriate information is not informative. Data cannot become information until it informs the recipient about matters relevant to the recipient. Therefore, information is nothing more than graffiti until it is customised to the user. This means that information must have form and structure.

    The second important element is that survival depends on our ability to keep up with the market-pace. As such, information needs to become informotion, meaning that it must have motion. It must be able to live and grow. Not only must information exist within the requirements of the user, and not only must it have form and structure, it must also be connected to its source so that it remains updated in real time, thereby providing the user with satisfactory and vital inputs for real-time thinking. Characteristic 10: Convergence Convergence used to be subtle. It used to be the case that technologies, innovations, and improvements converged very slowly to construct new machines, new engines, new processes, and improved performance. Once this phenomenon was understood, the boardroom zealots started to force-fit elements and machines so that they could be converged into a new whiz-bang product. Within this, the "ER" craze was born wherein things were said to be better if they were faster, smaller, bigger, cheaper, lighter, and so it went.

    Convergence became a way of finding permutations for the same set of components, so that they could be re-packaged and sold as a new product. These days organisations are deluded by the Internet and are therefore losing sight of their core competencies. They are trying to converge the Internet (Web) with their existing systems to arrive at all sorts of dubious electronic solutions that ultimately distract them. The networked world has generated a myriad of social and business pressures. The shrewd would eventually realise that we must not become dazzled by electronics in business. Instead, it is more important to examine how business (or government) is conducted in the electronic networked world. Furthermore, the most important element to comprehend is that convergence ought not to focus on the materials being brought together (converged), but by what it is that the new combination produces. It is important to understand what your organisation specialises in, and how it differentiates itself. Only when you can articulate your worth and your final outcome (whether this be a product or a service) can you truly benefit from a convergent technology.

    So, while others are blinded by the technology, you ought to be focused on what you want to achieve. Do not let gadgets squander your core competencies. Take what you do best and ignite it (not smother it) with technology. Gazing into the future Don't worry about the future, let the future come to you, as it will, whether you like it or not. The future will do unto you what it will. Do you want to stand and be subjected to the future's indiscriminate forces, or would you rather engineer your future? What are you doing about it? Apart from sudden death, nature is generally fair and will allow you to engineer your future so long as you understand nature and its laws. Sadly, many who gaze into the future do not see anything. They wait for something to happen, then they know for sure that something has happened. When they find themselves surrounded by new terrain, they seek to change in order to meet the new demands. This wait-and-see approach is now a dangerous habit that will render organisations obsolete. The new consideration is something I call SAF. This stands for surprise absorption factor. How well can your organisation absorb a surprise, a new tax, a new competitor, someone dying, a backlash in relation to a social taboo, or a new invention?

    If organisations are to survive the networked world, they need to understand its characteristics. At its core is the imperative to stay away from that which is applauded. Meanwhile, it is advisable to investigate that which is hated, and invest in that which is laughed at. Go in search of the unbelievable. Therein lie the clues to the future. The future has nothing to do with e-business. However, e-business has everything to do with the future.

    Jonar C Nader, digital-age philosopher will be MC at the AICD 2001 conference in Hobart. His book, How to Lose Friends and Infuriate People – Leadership in the Networked World, is available through AICD Publications. He may be contacted at


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