For use with Strategic Electronic Marketing: Managing E-Business

For use with Strategic Electronic Marketing: Managing E-Business

Copyright 2000 South-Western College Publishing

Chapter 8 Slide: 1

Chapter 9: E-Business Management



Chapter 8 Slide: 2

LEARNING OBJECTIVES(1):• List the pillars of success for innovative

businesses. • Explain how management systems can create

value for a business. • Discuss the interplay between the management

components of the e-business value chain. • Describe the role that leadership and

organizational culture play in giving an e-business a distinctive advantage.



Chapter 8 Slide: 3

LEARNING OBJECTIVES(2):• Outline the role that organizational learning plays in

giving an e-business a distinctive advantage. • Discuss how e-businesses are organizing themselves

to compete. • Recommend the steps that a business would need to

take to restructure to be competitive in an e-business environment.

• Identify which new management positions and duties are used to meet e-business needs.



Chapter 8 Slide: 4

Vignette: AT&T

• Thinking Strategically– Speculate on why AT&T was a late mover into the

Internet industry.

– List the types of skills AT&Ts management and employees will need to demonstrate to be competitive in the online marketplace.

– Determine if AT&T is too large to respond quickly to market changes.

– Explain the importance of a transformational leader in an organization like AT&T.



Chapter 8 Slide: 5

New vs.. Older Business Systems• Newly formed e-business systems may have value

chains that fit the demands of current competitive environments.

• Older business systems face a hurdle because they must break old value chains and develop new e-business value chains to maintain competitiveness. – Momentum: the tendency for businesses to keep

moving in the same direction. Like ships, the larger the business the longer it often takes to change direction.



Chapter 8 Slide: 6

Table 9.1: Pillars of Success for Innovative Businesses

Pillars ofSuccess

Description Value Chain Implication

Business Focus The company stays withina highly focused productline and focuses on itsmission.

A business should determine what it isbest at and focus on those priorities. Abusiness may want to outsource non-essential business functions.

"Hands-on"Management

Top management must beinvolved in the innovationprocess supporting newideas and processes andthey must understand therelevant technology.

Managers must develop cultures thatallow for innovation and flexibility.Managers must also becometechnologically savvy to understand theissues related to organizing a e-businessbusiness.

EntrepreneurialCulture

Internal change agentsmust be fostered. Risktaking must be encouragedand failure tolerated.

An innovative culture must bepromoted in the firm. Innovativeemployees must be allowed to introducenew practices and be allowed to fail.



Chapter 8 Slide: 7

Table 9.1: Pillars of Success for Innovative Businesses

Pillars ofSuccess

Description Value Chain Implication

Adaptability Business must be able toundertake major and rapidchange when needed.

Firms must develop cultures that allowfor flexibility and adaptability. Intranetscan foster the free flow ofcommunication speeding change.

OrganizationalCohesion (ASense ofCommunity)

The organization must haveeveryone working towardthe organizational goal.Ideas must flow freely andquickly.

Less attention should be paid to rankand seniority. Idea sharing andteamwork is important. Collecting andusing organizational knowledgebecomes a priority. Intranets canfacilitate this process.

Sense ofIntegrity

A business must establishlong-term relationshipswith all of itsconstituencies.

Employees must feel empowered tomake decisions at lower levels in theorganization. E-business corporationtechniques can link e-business partnerstogether.



Chapter 8 Slide: 8

Figure 9.1 Management Components of the E-Business Value Chain (1)

MANAGEMENT MANAGEMENT

Organization StructureOutsourcingStaff

Organization StructureOutsourcingStaff

Organizational Learning

Employees and culture

Intellectual Capital


Employees and culture

Intellectual Capital

Innovativeness AdaptabilityIdea generation

Innovativeness AdaptabilityIdea generation

Leadership ManagementCultures

Leadership ManagementCultures

Intranets, Extranets, Internet




Chapter 8 Slide: 9

InnovativenessAdaptability: Break old business models.Idea generation: Use teams, encourage creativity.

InnovativenessAdaptability: Break old business models.Idea generation: Use teams, encourage creativity.


Management

OrganizationStructure:Outsourcing:Staff:

OrganizationalLearningEmployees andculture:Intellectual Capital:.

InnovativenessAdaptability:Idea generation:

LeadershipManagement:Cultures:


Leadership Management: CEOs with vision and technology knowledge.Cultures: Employees who are loyal, flexible, adaptive, and quick to respond.

Leadership Management: CEOs with vision and technology knowledge.Cultures: Employees who are loyal, flexible, adaptive, and quick to respond.



Chapter 8 Slide: 10


Management

OrganizationStructure:Outsourcing:Staff:

OrganizationalLearningEmployees andculture:Intellectual Capital:.

InnovativenessAdaptability:Idea generation:

LeadershipManagement:Cultures:


Organization Structure: Flatter, less bureaucracy. Outsourcing: Focus on core values.Staff: CIOs,CKOs, and Webmasters.

Organization Structure: Flatter, less bureaucracy. Outsourcing: Focus on core values.Staff: CIOs,CKOs, and Webmasters.

Organizational Learning Employees and culture: Must be willing to collect and use knowledge.Intellectual Capital: Requires careful hiring and training.

Organizational Learning Employees and culture: Must be willing to collect and use knowledge.Intellectual Capital: Requires careful hiring and training.



Chapter 8 Slide: 11

Leadership

• Top management leaders of organizations:– Set the vision for the company

– Oversee the development of strategy

– Delegating responsibility to be sure that plans and strategies are carried out.

• Some executives– See e-business as unproven technologies.

– Fear disconnection from management practice because of changes in technology.

– Fear loss of power due to new business practices.



Chapter 8 Slide: 12

Forward-Looking CEOs• A survey of 303 IT managers indicated that forward-

looking CEOs are learning to love the net:– 61.7 percent saw their CEOs as advocates of Internet

based technologies,

– 36 percent were neutral, and only

– 2.3 percent were technology blockers.

• CEOs see the use of information technology, the management of data, the impact of new technology, and reengineering as the most important business issues they are facing.



Chapter 8 Slide: 13

Forward-Looking CEOs

• The most important business issues forward-looking CEOs are facing:– The use of information technology

– The management of data

– The impact of new technology– Reengineering



Chapter 8 Slide: 14

Organizational Culture

• An organization's culture includes the shared values, beliefs, behaviors, and norms that are generally accepted and practiced by group members. – The founder of the organization often sets the tone

for an organization's culture.

– An organizational cultures must adapt to the competitive situation in which it finds itself.

– Cultures can become self selective and reinforcing.



Chapter 8 Slide: 15

Organizational Culture

• A "miss-fit" between the organization and its culture can occur when the competitive environment changes. – Organizations that have developed cultures that fit

a competitive environment may look to hire only individuals who "fit" the current culture.

– Individuals who rise up through organizational ranks may be very good at operating within that culture and they, in turn, reinforce that culture.



Chapter 8 Slide: 16

Cultural Typologies

• Organic cultures: – Decentralized control and non-formal relationships. – Organizational structures are often flatter and more

responsibility is given to individuals at the bottom of the organizational hierarchy.

• Bureaucratic cultures:– Use strong hierarchies

– Set rules and regulations

– Have strong management oversight



Chapter 8 Slide: 17

Innovative organizations

• Innovative organizations often:– Have organic forms of culture. – Encourage change agents – Have a culture of innovation where new ideas

can be developed, brought forward, nurtured, implemented without fear of failure.



Chapter 8 Slide: 18

Tools of Innovative E-Businesses Leaders

• Organizational Learning: Develop systems that can learn from the environment and experience.

• Hire Talent: Attempt to hire employees who will fit flexible work situations.

• Cross Functional Teams: Allows for input from multiple constituencies with an organization.

• Sense of Community: Individuals must feel loyal to an organization and the organizational goal.

• Develop Intranets: Intranets that can link all internal constituencies within a business



Chapter 8 Slide: 19


• Organizational learning implies that a business is able to develop insights, knowledge, and associations between actions taken and the effectiveness of those actions. This should allow the organization to adapt by making incremental adjustments to the environment. – Learning occurs at the individual level, but a

business can help to spread knowledge throughout the organization



Chapter 8 Slide: 20

Creating Learning Organizations (1)

• Creating a learning organizations requires:– Creating a knowledge culture: Encourage

employees to capture and share information– Setting value on knowledge created: Show returns

for individual effort.– Democratizing knowledge: Allow individuals to

collect and use captured knowledge.– Usage of knowledge tools: Email, Intranets,

databases, guides, etc.



Chapter 8 Slide: 21

Creating Learning Organizations (2)

• Creating learning organizations requires:– Understanding what the organization knows

and does not know: Undertake knowledge audits to assess how knowledge can better be captured and utilized.

– Acting on the knowledge: Access to organizational knowledge should be easy and encouraged. Intranets can facilitate this process.

– Training of Workers: Workers need to be able to access and use the knowledge created.



Chapter 8 Slide: 22

Talent

• E-businesses have recognized that human capital is a key area of competitive advantage. In a knowledge economy employees must have the capacity to learn and relearn new tasks. – Human capital is the skill that individuals gain

through education, training, and experience.

– A knowledge economy gains wealth based on what individuals can create from knowledge, rather than what they can create from physical labor alone.



Chapter 8 Slide: 23

Case 9.1: Pooling Talent (1)

• Thinking Strategically– List some of the advantages and disadvantages

that employees may see in working for Microsoft and Netscape.

– Determine how different generations of workers may feel about each of these companies.

– Explain why an employee would want to leave Microsoft.



Chapter 8 Slide: 24

Case 9.1: Pooling Talent (2)

• Thinking Strategically– Determine if Microsoft worry about the brain-

drain problem. – List some of the advantages and disadvantages

employees would have in working for a startup like Netscape.

– Speculate on if Microsoft and Netscape would attract different types of employees.



Chapter 8 Slide: 25

The Net Generation • Net generation (N-Gen - born after 1977)

– This is the largest generation that has ever exited.

• Understand and have grown up with digital technology.

– The Internet has already played a role in the development of their lives.

– The youngest segment of this generation will not have known a world without the Internet.

• Prefer collaboration to working alone and do not like the idea of having a traditional "boss".

– The have ability to shift easily between jobs.

– When they invest their intellectual capital into organizations they expect to be compensated for it



Chapter 8 Slide: 26

Organization

• Community vs. Hierarchy– Communities of workers represent social

networks as opposed to organizational hierarchies. Social networks map how people in organizations actually communicate. This structure includes individuals, hubs, and gatekeepers



Chapter 8 Slide: 27

Figure 9.2: Hierarchies and Social Networks

Marketing

Info. Services

Production

CEO

Purchasing

A

Hub

Individual:

Communication flow:

Social NetworkHierarchy



Chapter 8 Slide: 28

Teams

• Marketers must work together with technology specialists, designers, and other individuals with specialized skills in order to create Web sites, e-commerce applications, database management, and utilize other technology based tools– The traditional role of the marketing core (those

directly involved in the marketing process) is to stay close to the customers and act as the interface between the company and the customer.



Chapter 8 Slide: 29

Aligning Information Technology With Businesses Practice

• The most important factors for aligning information technology with businesses practice:

– Senior executive support for IT

– IT's management involvement in strategy development

– IT's understanding of the business,

– A partnership between the business core IT.

• The largest inhibitor:– Lack of IT and non-IT relationships.

A five year study of executives from over 800 businesses in 15 different industries: Jerry Luftman, Enablers & Inhibitors, Information Week, September 14, 1998, pp. 283-286.



Chapter 8 Slide: 30

Virtual Corporations• Allows a business to focus on its core competency by

developing a temporary network of value chain components brought together to take advantage of market opportunities. – Partnerships may last only as long as the market

opportunity or may continue long time.

– Can bring together of the "best" components in developing a value chain.

– Aids in creating new ideas for products, positioning in the marketplace, and develops a team of partners who can successfully get the product to the market



Chapter 8 Slide: 31

Distance Workers• Telecommuting allows distance workers to

interface with their job and work groups online. • Advantages:

– In 1998 an estimated 52.1 million workers did all or part of their job by telecommuting from home.

– The average age of telecommuters is about 41 years and 48 percent are knowledge workers.

– More than 60 percent of employees see telecommuting as having a positive effect on their careers.

– Telecommuters save companies money by lowering office space requirements.



Chapter 8 Slide: 32

Distance Workers• Disadvantages of telecommuting.

– Concerns about being out of the political office loop.

– Have less ability to form relationships with other employees.

– Are less likely to be seen by those who can aid in advancement and promotion.



Chapter 8 Slide: 33

Implementing Telecommuting (1)

• Carefully select who will telecommute– Not all jobs or employees are likely to fit.

– Employees who don't work well at a business are not likely to work well at home.

• Provide training– May take distance workers up to 18 months to adjust to

working at home. – Managers also need to feel comfortable with

supervising employees that they can't see.



Chapter 8 Slide: 34

Implementing Telecommuting (2)

• Support telecommuters with technology– Technology staff must support equipment that is as

good as, or better than, what can be found in the office.

• Allow for face-to-face contact– Employees and supervisors must be allowed to develop

relationships to minimize feeling alienated from the organizational culture.

• Ensure management support– Ensure top management support - resistance often

comes from mid-level managers.



Chapter 8 Slide: 35

Case 9.2: Buying Into BuyPower• Thinking Strategically

– Determine who would be hurt in the new business model proposed by GM.

– List the key people that would need to buy into the new selling process.

– Contrast the incentives and disincentives that sales people would have in adopting this model.

– Speculate on GM’s top management support for this new business model.

– Determine what key areas could be leveraged to speed adoption of this new business model.



Chapter 8 Slide: 36

Business Processes Reengineering (1)

Five steps to BPR:• 1) Top management commitment:

– Top management must support the change process and a clear leader of the change team must be designated.

• 2) Understand current business model: – Modeling how the current business operates.

• 3) Identify key players in the organization: – Individuals with organization knowledge must be

allowed to become part of the change process.



Chapter 8 Slide: 37

Business Processes Reengineering (2)

Five steps to BPR:• 4) Develop communication plan:

– Communication allows for individuals to become part of the change process.

• 5) Develop an implementation plan: • Analyze leverage points

• Identify process breakthroughs

• Design business processes

• Implement the business process

• Institutionalize continuous improvement



Chapter 8 Slide: 38

Spin-Offs• Pure-play Internet companies

– Are able to develop new e-business models, hire technologically savvy employees, mover quickly to serve new markets, and set strategic goals that fit their competitive environment.

• Traditional businesses have attempted to achieve these objectives by spinning-off divisions. – A spin-off occurs when a parent company creates

an independent division.



Chapter 8 Slide: 39

Case 9.3 : An Old Player in a New Gamble

• Thinking Strategically:– Speculate on the reasons that P&G would want to start a Web

based venture.

– Determine why P&G would spin-off this venture rather than have it “in-house”?

– Why would the venture would be located in San Francisco.

– Contrast the advantages and disadvantages of having a corporate board tied to P&G.

– Evaluate www.reflect.com against other customizable cosmetic Web sites.

– Speculate on the future of reflect.com and P&G’s ability to compete online with this current strategy.

http://www.reflect.com/



Chapter 8 Slide: 40

CKO, CIOS & Webmasters (1)

• Chief Information Officers (CIO)– Senior executives in charge of information technology

and systems

– Help direct the use of information technology to support a company's goals.

• Vice Presidents of Electronic Commerce– Are responsible for the creation and execution of e-

commerce business practices.



Chapter 8 Slide: 41

CKO, CIOS & Webmasters (2)

• Chief Knowledge Officers (CKO)– Oversee organizational knowledge management.

– Act as knowledge champions to encourage individuals to add to and use knowledge.

• Webmasters– Cross-functional experts who designing Web pages,

graphics, code, maintain pages, answer user’s questions, aid in Web strategic planning, compile statistics, and make purchasing decisions.



Chapter 8 Slide: 42

ALE 9.1: Identifying Components of the Management Value Chain

Outline the management value chain for a business that you are familiar with and indicate areas that can be improved by applying any e-business techniques outlined in this text.

Management

Organization Structure: Outsourcing: Staff:

Organizational Learning Employees and culture: Intellectual Capital:.

Innovativeness Adaptability: Idea generation:

Leadership Management:Cultures:




Chapter 8 Slide: 43

ALE 9.2: Message Count (1)

• Keep a log of the number of messages that you receive in one day.

• Place the message count into categories– Phone calls, email, voicemail, postal mail, interoffice

mail, faxes, post-it-notes, message slips, and any others message sources.

• Rate the messages in terms of:– Immediate action needed, information to remember

for future actions, organizational knowledge, and social information.



Chapter 8 Slide: 44

ALE 9.2: Message Count (2)

• Compare and contrast your list against others. • Determine if it is possible to remember all of the

messages received. • Recommend a Web based strategy that would help

you receive, organize, and use the information that you must work with every day.



Chapter 8 Slide: 45

ALE 9.3: Mapping Social Networks

• Develop a maps of social networks that you are involved with (This could include networks at business, school, or friends).

• Draw out any communication links between individuals that would link these networks together.

• Determine the role that you play in each of the hubs.



Chapter 8 Slide: 46

ALE 9.4: Design A Corporate Portal

• Design a corporate portal for a business. • Set up links to the types of information that is needed

by each constituency inside the business. • Determine how the Web site would foster social

networks. • Determine the types of information that should be

used to increase organizational knowledge. • Justify the design of the Web site given the business’s

culture.



Chapter 8 Slide: 47

ALE 9.5: Business Process Reengineering

• Choose a business that you believe needs to restructure itself to compete in an e-business environment. – How does the business model need to change?

– How can top management commitment be obtained?

– Who are key players in the organization that need to back the change?

– What are some key leverage points that can be addressed?

– What process breakthrough can be achieved with success?