Making the Move from Bricks to Clicks
McDermott, Michael J., Chief Executive (U.S.)
Leading your company into e-commerce means thinking totally differently about how you do business.
The world economy is undergoing a fundamental transformation at the start of the 21st century, one that raises both challenges and opportunities for companies and their CEOs. According to the Progressive Policy Institute's (PPI) Technology, Innovation and New Economy Project, some of the most obvious outward signs of change are, in fact, among the root causes of it: revolutionary technological advances, including powerful personal computers, high-speed telecommunications and the Internet.
Hence some of its nicknames: "Digital Economy," "Knowledge Economy," "Weightless Economy." This New Economy, however, is about more than high technology and the frenetic action at the cutting edge, says Robert D. Atkinson, director of the PPI project. "Most firms, not just the ones actually producing technology, are organizing work around it. It is also as much about new organizational models as it is about new technologies."
Embracing technology and capitalizing on the benefits it has to offer are challenges and opportunities that virtually all CEOs are facing. The analogy of "bricks to clicks" has frequently been used to describe this transition. But "bricks and clicks" probably is more to the point, because New Economy technology is going to enhance, not supplant, Old Economy values.
As CEOs manage the transition to the New Economy in their own companies, they can expect to face challenges in several areas. One of the most important is providing the vision their companies need to succeed in a world now doing business on Internet time.
CEOS LEAD THE CHARGE
Corporate culture is still a top-own-driven phenomenon at most companies. In making the transition to the New Economy, managers and employees are going to look to the chief executive. In fact, a new study by Mercer Management Consulting concludes that overhauling a company's culture is the No. 1 requirement for implementing a successful Internet strategy, and it's a charge that must be led by the CEO.
David S. Pottruck, co-CEO of Charles Schwab, has a strong grasp of that concept. Schwab has been an acknowledged leader in the bricks-to-clicks transition in the financial services industry. Over the past four years it has transformed itself into an Internet company-it manages more than 40% of total online assets, more than double that of its closest rivalwith a bricks-and-mortar base of more than 350 branches. Yet, even in that environment, there has been resistance to change within the company.
Pottruck chose a dramatic gesture to overcome that resistance. Gathering almost 100 of Schwab's senior managers at San Francisco's Golden Gate Bridge, he gave them all jackets embroidered with "Crossing the Chasm" and led them on a march to the other side. He refers to the symbolic event as "the beginning of the reinvention of our company."
CHANGE CARRIES RISKS
Julie Wainwright, CEO of Pets.com, has also led a bricks-and-mortar company. She points out that taking such a company to the Web is "a gutsy move" because CEOs must not only adapt to a new culture, but they also risk competing with stores and distributors and antagonizing analysts. Yet, she notes, good CEOs realize they will always look worse before they look better whenever there is a major shift in their business.
Being an inspirational and gutsy leader is only part of the job, though. Trevor R. Stewart, a partner with Deloitte Touche Tohmatsu, notes that success in e-business requires a genuine commitment from the top. At such companies, he says, "management thinks strategically, creatively and 'outside the box' about the opportunities and challenges of e-business." That means being "prepared to reengineer processes dramatically, not just incrementally," and having "a realistic view of the significant effort and funding that e-business requires. …