R EFERENTES EDUCATIVOS

The fourth section of the literature review examines aspects pertinent to the

management of businesses that are either "bricks and clicks" (ie they have a physical and a virtual presence) or exist solely on the Internet. Key issues of managerial and staff commitment are examined. Lessons from the fields of product development, IT project development and software engineering are applied to the Internet in the following section.

2.4.2 Managerial commitment

"Strategy is half deciding what to do and half what not to do" according to Kevin O'Connor, CEO of Internet advertising company DoubleClick (cited in Hartman, Sifonis & Kador, 2000, p5). The authors say the E-conomy demands CEOs who can think paradoxically and acknowledge that the strategic landscape can be neither predictably known nor systematically addressed. According to them, formalised strategic thinking, as recommended by Michael Porter in his book Competitive Advantage, is doomed to failure in an ever-changing and technologically driven business environment (Hartman, Sifonis & Kador, 2000).

From its early start in consumer goods companies, the product management concept has rapidly spread into other industries. Ames ( 1 98 1 ) said successful product management groups are distinguished by four basic approaches to planning. First, written plans are developed for product lines incorporating in some form the five basic elements: overview of industry characteristics, review of current business, basic product strategy, future goals and programs and a performance summary. The aim of

the written plans is to define explicitly product and market needs and opportunities and indicate what can be done to meet and exploit them. A written product platL reduces the risk of planning gaps or outright errors and provides a far better basis for top management evaluation.

The second approach is focussed on those areas that can make or break the product and the third involves moving across organisation functions to focus on activities crucial to product success wherever they are located. Personal stature and top

management support is required to avoid organisational conflicts. The fourth and final approach is concerned with continuous planning rather than a one-off effort. This involves following up on actual results, initiating new plans and modifying old plans to ensure goals are achieved.

In order to accelerate change towards e�commerce, management needs to drive communication and demonstrate commitment through overt actions such as that outlined in the product management concept. Networks are likely to need redesigning to support change and continuous improvement around process and culture,

increasingly so as the business is involved with supply chain and demand chain partners. During the development cycle for example, customers and suppliers must actively participate in establishing a collaborative environment for the development of services. Company employees need to learn to work directly with their partner

company colleagues. To create value-added relationships, networked companies must engage in an open exchange of information and ideas.

The vision for change in an Internet organisation needs to be much clearer than that of a traditional company because much of the business is intangible. The necessary speed of innovation and change makes communicating the change vision critical. "You've got to evangelise the concept," said John Chambers, CEO of Cisco Systems (Fortune, 1 999).

Organisations that have different cultures may have problems working together. Companies need to adapt and embrace change as their industries are transformed by the nature of the Internet. Those potential partner companies that are risk-adverse and avoid change may not be ideal partners with whom to form alliances, as the impact of one company's actions, positive or negative, will directly impact the success of others. In conjunction with open communication and compatible cultures, new models of behaviour are needed in this radically changed business environment. Management must ensure that employees are aware of what new behaviours are necessary and in many cases, must literally reinvent itself as it leads by example in the face of changing roles throughout the company. Management needs to select individuals who model the behaviours required to meet the challenge of change and who can serve as mentors or instructors for others. Changes in a company's business model also bring changes in employee evaluation metrics that must measure skills and attitudes with regard to external relationships.

2.4.3 Staff commitment

Employees need to know the company's business model in order to manage change successfully. Employing Internet or e-business strategies and technologies frequently alters the business and open communication and employees' willingness to accept and

promote change is essential. Embedding innovation into the company and into the individual learning environment makes possible the evolution of the business model and helps the company adapt to the constantly changing environment. In such an environment, managing change becomes everyone's responsibility.

2.4.4 Product Development and IT Project Development

The product development structure and software engineering are both relevant to the development of an Internet presence. There are a wide range of stakeholders with management, general and technical staff, marketing, communication and human resource personnel, graphics experts and both retail and business customers. The next part considers the impact of these on the design and implementation phases.

2.4.4.1 Product Development

"A host of environmental forces, including changes in consumer and competitor behaviour, technology and government policy have combined to make product innovation a vital element in the formulation of corporate strategy and planning" (Rothberg, 1 98 1 , p3). The development of new products and services is a difficult and challenging task. The innovation process itself is complex with the co-ordination and control of a multitude of other tasks often in an environment of uncertainty and very limited information.

"Product innovation" like "product" can be defined in several different ways. A product may refer to a physical entity or a cluster of anticipated customer benefits depending on whether the perspective adopted is that of the business or that of the market. That which is considered a product innovation by a business may not be recognised as such by its customers (Rothberg, 1 98 1 ). A change in the chemical makeup of a product may not be consciously recognised by the customer while an otherwise unchanged product may be repositioned in the customer's mind by major changes in advertising and pricing designed to stimulate new users and new uses. Two trends in the marketplace tend to stimulate product innovation: the increasing instability of consumer preferences and the growing intensity and sophistication of competition. Growing markets, rising discretionary incomes and changes in technology also affect product innovation, often leading to radical changes in the character and size of established product markets.

Schumpeter ( 1 950) used the phrase "the gale of creative destruction" to refer to competition that breaks the commonality of a technology base, such that the survival of disadvantaged firms may be threatened. The latter have no choice but to respond in kind if they are to maintain or regain their former marketplace position.

According to Utterback ( 1 994), an emerging technology will show signs of slow growth in the beginning where a reluctance to adopt the new technology is seen but if the new technology has the potential to deliver dramatically better performance- or lower production costs, then it is capable of surpassing the established technology. This theory seems to fit with what is being seen with e-commerce. Utterback ( 1 994)

also stated that the established technology would generally offer better performance at the time when the invading technology was first seen. The technology performance can be illustrated using the S-Curve or a product performance curve, which shows the technological progress from infancy to maturity (Foster, 1 986).

In 1 996, the Internet seemed to have reached a rate of adoption in the United States­ roughly 1 0 to 25 perc'ent of its total market- that indicated the system would gain users even faster than the previous few years. The adoption rate of between 1 0 and 25 percent of the total potential market remains crucial in what is known as "the diffusion theory" based on the work of Professor Rogers of Stanford University. The theory contends that once a technology has diffused into a segment of 1 0 to 25 percent, the rate of growth will increase dramatically. These patterns have held· true for the adoption of radio and television (Rogers, 1 986).

Each stage of a technology is associated with different strategic implications. Utterback and Abernathy ( 1 975) say, "The earliest stage in a technology's life cycle tends to feature frequent major product innovations, heavily contributed by small entrepreneurial organisations, often closely tied to lead users' needs. The intern1ediate stage of a technology may include major process innovation, with continuing product variation, with increasing numbers of competitors, both large and small. The late stage of a technology features less frequent minor product and process innovations,

contributed primarily by large corporations, motivated mostly by cost-reduction and

quality-improvement operational objectives" (cited in Roberts, 1 987, P 1 8). An

organisation's planning needs to anticipate and encompass each stage.

Managerial research has repeatedly demonstrated that 60 to 80 percent of successful technical innovations seem to have been initiated by activities responsive to "market pull", ie forces reflecting orientation to perceived need or demand (Utterback, 1 974; Gerstenfeld, 1 976; Rothwell, Freeman, Horlsey, Jervis, Robertson & Townsend,

1 974). This demonstrates the importance of market research and being responsive to the customer base as part of the planning phase related to organisational products or processes.

2.4.5 Summary

This chapter highlighted the importance of initial and continued managerial support for either a solely or partly Internet based business. The role of organisational culture and commitment was discussed as well as the importance of mentors and models for new ways of working. The need to communicate change and have compatible cultures within and between organisations was emphasised.