CEO Best Practice: E-Business

Executive Tools

• Executive Summary
• Self Assessment Checklist

Expert Practices Articles

• Bricks, Mortar and Beyond: An E-Business Overview
• From "Product Push" to "Customer Pull"
• The "Wired" CEO
• Information Is Power
• Re-Engineering for the New Economy
• The Boom in B2B
• Clicks and Mortar: The Future of E-Business

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CEO Best Practice: Board of Advisors/Directors

Executive Summary

• Bricks, Mortar and Beyond: An E-Business Overview
• From "Product Push" to "Customer Pull"
• The "Wired" CEO
• Information Is Power
• Re-Engineering for the New Economy
• The Boom in B2B
• Clicks and Mortar: The Future of E-Business

Bricks, Mortar and Beyond: An E-Business Overview

According to VISTAGE e-business experts Jordan Ayan, Wally Bock and Howard Coleman, the influence of e-commerce -- buying and selling goods and services on the Internet-- and e-business -- using Internet Vistagehnologies to conduct business, serve customers and streamline processes -- has shifted from fringe market status to the mainstream. And the global marketplace is shifting with them.

As businesses re-engineer basic processes to meet the new challenge of e-business, greater benefits accrue, including:

• Far-reaching market penetration. More than 200 million people buy and sell on the Web. What other sales channel can compete with that?
• Lower transaction costs. Online customers research their own needs, compare price and features, place orders themselves -- all significantly reducing transaction costs for businesses.
• More efficient supply chain. Web-based tools improve a company's ability to integrate and manage the entire process from raw materials to consumer purchases.

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From "Product Push" to "Customer Pull"

Web-savvy customers move easily from one sales channel to another; they can investigate a business online and then make a purchase in the physical store -- a process called "channel shifting." An effective e-business strategy should include "channel blending" -- building in processes that "remember" these customers as they move across channels and provide them with the tools to purchase from the business when they want to.

In the new global market, consumer expectations are high and the cost to the customer of switching from one business to another is low. When products become increasingly commoditized, satisfying customers is absolutely critical to survival.

Our E-business VISTAGE experts suggest answering certain basic questions:

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The "Wired" CEO

In nearly all respects, e-business is throwing the limits of conventional business thinking into stark relief. Instead of conventional goals -- saving money, gradually improving services, etc. -- the template for the digital economy stresses (1) speed; (2) a willingness to partner with others (suppliers, distributors, even the competition); and (3) a capacity to meet diverse, ever-changing customer needs and preferences.

The Vistage experts recommend that CEOs convene a strategic planning session focused exclusively on e-business. Use this forum to answer important questions. How can we exploit Internet Vistagehnology to improve our business processes? What existing processes or customer expertise can we leverage to our advantage? How can we use the Web to position ourselves as leaders in our industry?

Senior management commitment to e-business initiatives is the single most critical ingredient for success. This commitment includes learning about the Internet, finding the right people to design a companywide Web strategy and making necessary structural changes within the organization.

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Information Is Power

Despite the changes wrought by e-business, certain fundamental principles remain the same. Customers are motivated by the same buying impulses as ever and, in general, use the same decision-making process.

What gets transformed in e-business is the information component. "Infomediation" could be the single most important core competency in coming years. Web-based customers are gradually shifting loyalties from companies that make the best products to those who make the best use of information about their customers. As a result, businesses must strive to develop the right infomediary strategy to meet the challenge.

How does a company make the most of the information it has? Our VISTAGE experts advise the following:

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Re-Engineering for the New Economy

In the rush to get up and running on the Web, the VISTAGE experts say, many companies forget or overlook certain basics: those online processes that have a fundamental effect on the customer's experience. Web-savvy customers who have a bad experience on your Web site may never come back.

Some pitfalls to avoid:

• Designing a glitzy site, but failing to integrate a functional back-end
• Launching new products without anticipating sales levels
• Predicting delivery of goods but not coming through, due to lack of integration with carriers or distributors
• Posting products for sale online, with inadequate information about them

Efficient fulfillment systems are obviously essential for e-business success. The VISTAGE experts outline specific principles to keep in mind:

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The Boom in B2B

Many companies are using the Web to build new bridges between themselves and their strategic partners. Buyers and sellers who may have never encountered one another in the physical world can now gather and move huge amounts of basic goods like never before.

Most B2B sites fall into two major groups: horizontals and verticals. A horizontal site offers products that nearly all businesses need: office supplies, capital equipment, maintenance and operating supplies. Also known as "functional hubs," these sites provide the same function or automate the same business function across different industries.

Vertical markets, by contrast, operate independent, industry-specific trading sites. These sites offer everything from raw materials to finished products within a particular industry, where no single buyer or seller dominates the market. Vertical hubs are effective in:

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Clicks and Mortar: The Future of E-business

Personalization will have a major impact on e-business, the VISTAGE experts predict. Adapting your product or service to individual customer preferences will be the surest means toward converting Web browsers into Web buyers. Done correctly, personalization leads to customer loyalty and trust. That generates unique opportunities to cross-sell related or complementary products, or to up-sell into higher-ticket items.

Growing customer demand will likely compel pure play Internet merchants and traditional retailers to join forces sooner, rather than later. "Joining forces" could take the form of coming together in mergers or strategic partnerships; outright acquisitions may also play an important role in future e-business endeavors.

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