As Good As Gold

Enduring principles for the new economy

These days, everyone is talking about “top-down” vs. “bottom-up” leadership. In reality, today’s CIO walks a very fine line as a leader and must embrace both concepts. The CIO must be the voice of reason — the one person in the organization who is not content to preserve the status quo, and is cautious about going overboard with all sorts of radical, dramatic changes without buy-in from customers, the organization, and the business environment. Topping off the challenges facing today’s CIO is the need for speed and the ability to make fast changes while managing risk.

CIOs today must embrace the New Economy with the understanding that:

• The New Economy is based on information and knowledge. There is no middle person and no middle ground. Products go directly from concepts to consumers.

• The New Economy is instantly global, with no parochial strategy.

In our work with such New Economy companies as Rulespace.com and DAT.com, we’ve identified a set of enduring business principles to keep in mind. In some circles they may carry the stigma of carrying over from the “Old Economy” (where traditional products were slowly designed for customers with few choices). In reality, these principles are more vivid and critical than ever before.

1. The customer still holds all the cards. Those companies that best understand their customers’ needs win. The New Economy does not change this absolute: “The customer is always right.” Successful e-commerce models must understand customers’ stated and unstated needs. Development teams must learn to foster intimate conversation with customers and translate that knowledge into value and new products. “My goal is to visit customers as much or more often than our sales people,” said Charlie Kawasaki, president and CEO of RuleSpace Inc., an e-commerce company that provides instant Web content recognition services. Kawasaki’s goal vividly demonstrates the importance of total immersion in customers’ needs.

Customer care, customer support, and customer satisfaction will continue to be paramount for sustained growth. The Internet has clearly placed the customer in the driver’s seat. Customers can now choose from suppliers and merchants from a much larger area than ever before. Comparing “value” is easy. “The customer has never had more power than now,” said Jean-Claude Balland, Ph.D., a consultant in the area of strategic marketing. “Those who take best care of customers will succeed.”

2. Leadership is still a key ingredient in any organization. Sooner rather than later, the need for leadership will become apparent. E-companies must acquire and develop leadership skills for their organizations. We all work in “Internet time.” Those that set the direction of the company must learn to make sound decisions quickly and consistently with the company’s short and long-term strategies.

CIOs have absolutely made the transition from technologist to strategist. (Although, ashamedly, all companies have not acknowledged this fact by giving the CIO a place at the business strategy table.) What is the implication of this role augmentation? Ask John Cimral, CEO of ProSight Inc., a software company dedicated to making the CIO a CEO, and he will vehemently state, “In the New Economy, it is crucial that a CIO take seriously the responsibility of IT driving the business — as opposed to the business driving IT. This means that in addition to responding to the sexiness of e-marketplaces and B2B exchanges, CIOs need to enforce the fundamentals: ensuring IT alignment with overall business objectives, making IT investment and divestiture decisions with data [and] not conjecture, and most of all, keeping their eye on the ball of IT operational excellence. These blocking and tackling items do not disappear in the New Economy; rather, they become the reason for success.”

3. Employees are still your greatest assets. The “knowledge” in the knowledge worker is more important today than ever. Constant learning and the ability to apply new knowledge are critical factors in the long-term success of e-commerce companies. At the end of the day, all companies are in the business of knowledge. Great ideas cannot get off the ground if we do not have the talented people to make them happen. In the New Economy, those who hire and retain most effectively win. The demand for talent is greater than the supply. Companies have to develop hiring and retention as core competencies — not as afterthoughts they leave to underlings.

Human beings interact best through teamwork. Every time we collaborate, we create a new matrix. This is particularly true in the New Economy, where teams consist of people from many companies and even countries. The ability to get maximum value from teams is essential.

4. Innovation still reigns supreme. We define innovation as “the ability to bring new value to a customer” and the obvious corollary “it’s not innovation until the customer says it is.” For example, many e-commerce companies are bringing new value to customers by using the Internet to do the same things more conveniently, quickly, and less expensively than ever before: that’s innovation. Fostering innovation from every corner of your e-commerce company is mission-critical.

“When everybody has immediate access to the same information, how do you differentiate?” asked Jean-Claude Balland. “Continuous innovation is the answer; never rest on your laurels.” Creativity is a skill and a value set that we must embed in the culture of the organization in order to feed the innovation machine.

Generally, the innovators in your organization are those employees that have been hired recently, and the entrepreneurs. Give them more visibility, and encourage them to innovate.

5. Corporate values still need to go beyond the banners and coffee mugs. Remember when people stayed at their jobs for decades? In the New Economy, your job and your company change so quickly that you’re recreating yourself every couple of years. At the same time, new jobs with new companies are always popping up, creating “oppor-threats” to both management and staff. We need to do more to retain great people. We should start by asking people “are you on board?” Dot-coms and start-ups need to take monthly time-outs to assess who they are. Is everyone together on this mission? Are we all still on the same mission?

At every meeting and even casual conversation you are creating a corporate culture, one that should pass the test of time. The good news is that your company is relatively new and you can shape its identity; there is no “cultural legacy.” On the other hand, creating a new culture requires staying power, and above all, sincerity. We must embrace and nurture such key values as integrity, trust, and respect.

6. Building for the long haul is still crucial. While there is a very short-term focus in many e-commerce companies, such as the ever-popular IPO or the founders’ cash-out, building something that lasts is more difficult. When we measure time in nanoseconds, our ability to think far ahead and develop solid strategies diminishes. Can your company’s strategic intent pass the test of time? Can you see beyond the IPO?

Remember the day you got your IPO and the most talented engineers, the folks who wrote elegant code and existed on Pepsi and pizza late into the night suddenly became zombie-like stock watchers and forgot what they do best? Many New Economy companies are facing the “IPO hangover.” For investors banking on future earnings, this is a scary place to be — like living on credit. These companies are spending and not bringing in money on the back end. Sure, the money is great. It shouldn’t change you into something you’re not, and should not be the sole motivator.

And finally, following your bliss is still crucial. Follow the energy. Is what you are doing providing joy and fulfillment? If not, perhaps it’s time for introspection. While we live in a society that values profits, we must also identify those things that allow us to make a difference, our personal legacy combined with the joyful feeling of accomplishment.

The bottom line is to realize that the New Economy does not do away with value creation, customer satisfaction, and solid corporate models. In reality, it forces us to be even more concerned with such issues, as the competition only intensifies, and customers become even more astute and selective.