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Inability to overthrow the dominant, outdated business design often leads to business failure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