Two primary propositions were at work in the first wave of the cyber revo- lution: use of the Internet to secure a consumer base at all costs and to get rich in the process. While a few well-intentioned technology pioneers were introducing a new media of communication, a horde of new entrepreneurs decided to cash in on the results. The trick was to hook consumers on using a particular Web site while the entrepreneurs appeared as new intermediaries in typical supply chains. In the absence of any real understanding of business values or sensible business propositions, these early cyber players launched into a drive to secure a significant base of loyal consumers, while totally neglecting the need to make a profit.
Investors could not wait to give these entrepreneurs money. In fact, so much money flowed that the whole balance of capitalization was upset for a time. Noticeably missing from the propositions being foisted during this time was a discipline that required a return on the investments being made. Some of the new players burned the influx of cash so fast that they were penniless by the end of the first wave. A legacy of Wave 1 is that there were
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far too many entrepreneurs and a paucity of business sense. The revolution- ary battlefield became cluttered, understanding of sound application logic was obscure, and the need to promote a soaring stock price prevailed. The cyber battlefield is now littered with the remains of those entrepreneurs who did not have the business savvy to back up their grand ambitions. A typical supply chain lament was that they could not fulfill the orders received.
On the sidelines was another group of somewhat older and wiser business people, many longing for a more stable situation in which tried-and-true practices would prevail. This group was often afraid to make a move into the cyber arena, but did so at the urging of aides determined not to be left out of the action. This group included old economy hard-liners who delighted in the crash of many of the cyber darlings. They reminded those who would listen of predictions that e-business was not a solid concept. Most were very happy to settle back into their overstuffed chairs and discuss business in the usual manner as Wave 1 ended. There is a problem with this attitude. This group is unprepared to take advantage of the changes occurring in Wave 2. The most important learning from the first wave is that winning the revolu- tion will require strategies and generals missing in action in Wave 1. The Internet is not going away; it will be a part of future business strategies and success. Those who do not understand this proposition need to increase their awareness — quickly.
Technology is an inevitable process. We have known that for some time. But since the time of the Luddites, there have been those who would try to eliminate the progress it can bring. As the cyber revolution took us on a merry ride, there were those who knew it was overhyped but heading to a different and better way to conduct business. There were also those who were not sure. Some took the time to learn what the revolution was all about, while others remained in the dark. After years of studying supply chain and the emerging need to enable advanced efforts with technology and collabo- ration, I have one major conclusion: some business managers still do not get it. Call it reluctant conventionalism; there are industry leaders who simply do not want to change the traditional way of doing business.
Louise Kehoe, writing for the Financial Times, addressed this issue when
she said, “There is a crisis brewing in the corner office. If truth be told, a lot of chief executives are information technology illiterate and the smart ones are uncomfortable with their lack of knowledge. As IT consumes an ever-larger proportion of capital spending budgets, too often the person signing the cheques has only a vague idea of what he or she is paying for. Worse, when it comes to strategic planning, the chief executive who is not tech savvy is at a severe disadvantage. The issue is not whether the chief
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executive is proficient in the use of a personal computer, but whether he or she can bring a general understanding of IT issues to business decisions” (Kehoe, 2001, p. 1).
These managers are missing the boat. Internet technology can bring new efficiency to the business networks that back any supply chain, leading to better customer satisfaction. Indeed, most analysts now confidently predict the greatest benefits from Internet technology will accrue to the B2B portion of the value chains, emerging as the logical evolution of advanced supply chain and e-business applications. As business and technology practices con- tinue to converge, the drive for riches and a solid consumer base will have had a beneficial effect, teaching that a more sensible approach to applying one of the most significant events of our lifetime can lead to a superior business model.
As Thomas Foster, editor of Supply Chain e-Business magazine puts it,
“The real e-business revolution is about changing the way businesses operate. It’s about companies working more openly with outside partners to eliminate wasted time, resources, and duplicative effort. It’s about shared, streamlined business processes, building new business models with inexpensive virtual assets, and laser-like focus on truly strategic activities” (Foster, 2001, p. 8). To fully benefit in the second wave, the executives being mentioned must avail themselves of the learning so they can better lead their organizations through this second wave of the battle. IT executives, for example, are well advised to set up tutorials for these individuals.
But making progress in this area starts with finding out what you do not know. A study conducted by the Economist Intelligence Unit (EIU) and Meritus Consulting recently confirmed the issue being considered:
In responding to the survey, 82 percent of senior executives said they believed Internet technology would have a major impact on — or even totally transform — their supply chain performance within the next three years. No big surprise there. Yet the vast majority of those same compa- nies acknowledged that they were ill prepared to integrate this technology into their business processes and supporting systems as they currently exist. Notably, only a meager four percent of respondents believed that their customers were satisfied with their supply chain performance. (Ljungdahl, 2000, p. 82)
Technology and collaboration are the tools of this new revolution, but at the heart of what is going on is dealing with global competition, more demanding customers and consumers, and a rethinking of how firms can come together and use the tools to increase top- and bottom-line performance.
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Those who fail to see this risk being caught up in the same kind of hype and the problems with the technical sector as occurred when the dot-com frenzy was at its height.