CPR
Spring 2000 |
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Page A-10 |
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The Internet Revolution
How To Survive The Five Stages By William L. Zvara |
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As a business leader you may think, "I’d be a visionary if only I could see where I’m going!" Entire sectors of the economy are being transformed by e-commerce. Fortunately, according to the experts, history is simply repeating itself. "The internet in the 1990s is just like the railroads in the 1840s. It is still in its infancy, its growth is exploding, and no one yet knows how to make money at it. It also performs the same economic function: connecting things. And there is no more potent force than connecting buyers and sellers." This according to John Steele Gordon (Forbes ASAP). The founder of Priceline.com, Jay Walker, said "I resist the labels ‘old rules’ and ‘new rules.’ There are fundamentals and then there’s innovation." Business fundamentals like: listen to your customers, control your costs, maintain high quality and personal integrity – these still apply. But success comes when these are coupled with adaptability and innovation. In his book "Information Rules" Hal Varian describes how a technology innovation typically passes through five stages of industrial development. He cites examples with steam engines, telegraphs, automobiles, airplanes and radio. The business cycles could apply to many businesses. Five Stages of Business Revolution 1. Experimentation. With each new technology, inventors and entrepreneurs experiment with different ways to ad value and to sell new products and services. How do I survive this stage? Be persistent, flexible and very willing to experiment. 2. Capitalization. When successful new business applications are found there is a strong need for capital. These up-front funds pay for rapid expansion and development. What must I do to survive this stage? Have vision, connections, skillful salesmanship and a source of good advise. 3. Management. Soon operations become most important to success. Well-managed companies prosper but poorly run companies fail. How do I survive? Hire a professional manager. Cultivate experience, teamwork, motivation and an obsession with detail. 4. Hypercompetition. As the revolution matures, more businesses compete in the same markets. Competition intensifies. Economies of scale become important. What must I do to survive? Have deep pockets. Be paranoid, responsive and market like crazy. 5. Consolidation. Big companies buy little companies (and visa versa). Products and services become standardized. Costs are wrung out of the system. How do I survive? Become a deal maker, negotiator, and public relations expert – and hire good lawyers. Sources: "The Golden Spike" and "Habits of Highly Effective Revolutions" Forbes ASAP, Feb. 21, 2000
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