Magazine article New Zealand Management

Thought Leader: The Internet - a Game Changer

Magazine article New Zealand Management

Thought Leader: The Internet - a Game Changer

Article excerpt

Byline: Vikram Kumar

The archetypical internet story is one of young people working long hours out of garages, developing an online service that will change the world. Many of these ventures struggle and die unnoticed but a few bring immense riches to their founders. The mainstream media trumpets their achievements, inviting people to consider how a company that has never made a profit can be worth so much.

All of this is far removed from the everyday reality of 'traditional' industries, those that provide 'real' products and services. Business leaders in traditional industries ignore or dismiss the stories as an interesting but irrelevant sideshow. Their focus is on producing real benefits for their customers, be it agricultural produce or insurance services.

For a long time now, most business leaders in traditional industries have been happy to disclaim any technical knowledge and leave the internet to their technical staff. If anything, business leaders view the internet with a sense of unease, nervous of how internet projects seem to cost too much and under-deliver on the benefits promised.

Meanwhile, the internet has had an impact on almost every traditional industry. In some cases it has been marginal, perhaps an additional information or sales channel. In other cases, it has been profound -- be it newspapers struggling for survival or the almost complete disintermediation of travel agents for booking routine flights.

The reality is that the internet is changing traditional industries. The internet is not merely about online services, it is also about the 'real' economy. The choice business leaders have is to either react to competitors, often from outside traditional boundaries, or proactively innovate using the internet as a competitive advantage.

What then should non-technical business leaders in traditional industries do?

My suggestion is to treat the internet, and more broadly IT, in two different ways simultaneously. The first, as a business function. At the same time, look at the internet as a critical element of business strategy.

The internet as a business function is relatively straightforward. Business leaders can treat the internet similarly to standard business functions like finance or marketing or human resources. …

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