4. Ten Rules of E-business: Rule 1 Technology is no longer an afterthought in forming business strategy, but the actual cause and driver Conventional, risk-averse businesses cannot ignore e-business E-commerce poses most significant challenge since advent of computing Most execs unaware of impact of these changes Need to see business differently; maintaining status quo not a viable option
5. Ten Rules of E-business: Rule 2 The ability to streamline the structure, influence, and control of the flow of information is dramatically more powerful and cost-effective than moving and manufacturing physical products Core driver of structural transformation of business Few companies have info-centric business designs for continuous business change and innovation Changing info flow requires changing product mix and ecosystem DEC’s demise Most companies unable to cannibalize existing business structures, reallocate assets to compete with startups
6. Ten Rules of E-business: Rule 3 Inability to overthrow the dominant, outdated business design often leads to business failure CompuServe & Prodigy Vs. AOL Not the earliest adopters, but the most serious, eventually prevail AOL outlasted, outwit, and outsmart competition Often in the early phase, there is an “arms race” between competitors Need to convert technology advantage to process advantage to business model advantage Deeply-embedded innovations are difficult to implement – but also to copy!
7. Rule 3 -Value Chain Disaggregation and Reaggregation Disaggregation to separate means, or products, from ends, or customer needs Value of a business in the needs it serves, not in products it offers Intel with continuous innovation in chip design and manufacturing Requires identifying, valuing, and nurturing core of business: the underlying needs satisfied by company Reaggregationto lower cost or enhance differentiation from competitors Streamlines entire value chain Success dependent on well-integrated enterprise apps Amazon.com Vs. Barnes and Nobles
8. Rule 3 -The Road Ahead: Steps to a New Beginning Six steps of disaggregation and reaggregation What is the new industry structure? Configuration What does the digital consumer want? Value in terms of experience and expectations What are the new economics? How to convert value creation into revenue? How do you engineer the end-to-end value stream? How do we reorganize our business? Right partnerships Where is the value? Integration How do we implement change? New generation leaders who understand how to create digital future by design and intent, not by accident
9. Rule 3 -Challenging Traditional Definitions of Value Customers need businesses to improve Speed of service Convenience Personalization Price Managers should ask how they can use technology to create new value proposition for the customer Domino’s Pizza, Dell, Amazon.com Ability to view world from customers’ perspective prevents visionary companies from starting in wrong place and ending up at wrong destination Market segmentation analysis difficult to execute in turbulent environment
10. Rule 3 -Changing the Notion of Value: E-commerce Web and ecommerce have accelerated value innovation in speed, convenience, personalization and price dimensions of a service Changed underlying value proposition Customer’s looking for cheapest, most familiar, or best quality product A product or service that is 98 percent as good, unfamiliar or costs 50 cents more will not survive Companies following such middle-of-the-road strategies will underperform
11. Ten Rules of E-business: Rule 4 E-commerce is enabling companies to listen to their customers and become either “the cheapest,” “the most familiar,” or “the best” “The cheapest” not synonymous with inferior quality Southwest’s “No Frills Flying” Wal-Mart’s “Everyday Low Prices” “The most familiar” means customers know what to expect McDonald’s, Coca-Cola took decades to build brand AOL and Yahoo carved out strong identities in only a few years using technology
12. Ten Rules of E-business: Rule 4 Being “the best” Reinventing service processes to enhance quality Turning company on a dime to move in more profitable directions Raising relationships with customers and suppliers to unprecedented levels of cooperation and trust Amercian Express’ Return Protection Plan
13. Ten Rules of E-business: Rule 5 Don’t use technology just to create the product; use it to innovate, entertain, and enhance the entire experience surrounding the product, from selection and ordering to receiving and service Amazon.com in the book retailing industry identified new source of customer value by streamlining consumers’ buying experience Microsoft anticipated changing customer experiences and reengineered several value chains: Travel (Expedia), Automotive (CarPoint), Real Estate (HomeAdvisor), Finance (Investor)
14. Ten Rules of E-business: Rule 5 CEOs must understand the threat posed by value migration Is there an Amazon.com that can squeeze margins in your business? If not, can you create one -- “destroy your business” initiative at GE? Are any new entrants in your industry leveraging Web to rewire customer experience and change service expectations? CEOs must understand how to manage in a fast-moving environment
15. Ten Rules of E-business: Rule 6 The business design of the future increasingly uses reconfigurable e-business community models to best meet customers’ needs Competition no longer between companies but between Business Webs (BWs) Auto-By-Tel vs. Big Three in the car industry
17. Rule 6 -Harvesting Outsourcing: E-business Core Competencies 3rd Gen: Need advice, contacts and Web savvy 2nd Gen: Cannot go at it alone Process Outsourcing Investment Partnerships 1st Gen: Cannot do everything well Contract Manufacturing Co-create critical tasks Focus: Market position via ease of doing business (e.g, GE in India) Administration HR Accounting IT Outsource critical tasks Focus: Time-to-market, Market position via ease of doing business Do not outsource core competence Focus: efficiency and cost reduction
18. Rule 6 -Creating the New Technoenterprise: Integrate, Integrate, Integrate Strategy Process App integration key to e-business Not easy, requires major app overhaul for integrated front-end/back-end infrastructure Integrated app architecture critical with advent of e-commerce Threat of losing customers looming large with advent of new market entrants Customer Needs Corporate Strategy Process Strategy Application Integration Decisions
19. Ten Rules of E-business: Rule 7 The goal of new business designs is for companies to create flexible outsourcing alliances that not only off-load costs but also make customers ecstatic E-business enabled outsourcing a big deal Pressure by shareholders for double-digit revenue growth CEOs have already reengineered, downsized and cut costs; now looking at technology to transform business model and deliver results
20. Ten Rules of E-business: Rule 8 For urgent e-business projects its easy to minimize application infrastructure needs and to focus on the glitzy front end apps. The oversight can be costly in more ways than one Decision to adopt e-business architecture is a business, not technical, decision The lack of attention to the back-office systems and process side of E-business is the primary reason for many project failures.
21. Ten Rules of E-business: Rule 9 The ability to plan an e-business infrastructure course swiftly and to implement it ruthlessly are key to success; ruthless execution is norm Most e-business strategies in dire straits even before they start Managers often don’t understand complexity of converting strategy into a working architecture The goal of every successful e-business strategy is help the firm either save or make money.
22. Ten Rules of E-business: Rule 10 The tough task for management is to align business strategies, processes, and applications fast, right, and all at once; Strong leadership is imperative Many managers good at planning strategy and looking at things strategically but not at implementing strategy Implementation takes leadership, commitment and backbone “Creative destruction” or breaking free from habits of past necessary
