Net Ready: Strategies for Success in the E-conomy

Net Ready: Strategies for Success in the E-conomy

by Amir Hartman, John G. Sifonis, John Kador
TheWall Street Journal Business Bestseller!

CISCO's secrets revealed!

CISCO is the global standard not just for internetworking but for Web sales strategies that work. CISCO has made itself the pre-eminent player in the new global economy. Net Ready shows how this vibrant company has done it and how anyone else can apply its unique


TheWall Street Journal Business Bestseller!

CISCO's secrets revealed!

CISCO is the global standard not just for internetworking but for Web sales strategies that work. CISCO has made itself the pre-eminent player in the new global economy. Net Ready shows how this vibrant company has done it and how anyone else can apply its unique strategies to succeed on the Web. It's not a blueprint but a set of flexible strategies for Web success­­a unique toolkit for every company ready to seize the Internet's limitless business potential. Net Ready explores the 12 tactics that have catapulted CISCO to the forefront,including its trademark concept of "informatization," which involves giving away the product and profiting from the information about the transaction.

The Wall Street Journal Business Bestseller!

"Net Ready offers valuable advice. . . a must read for any company. "

­­Roderick C. McGeary,Vice Chairman,KPMG consulting Services.

"Net Ready turns traditional business paradigms and the New Economy upside down. It's a wonderfully provocative and powerful primer on preparing your business to thrive robustly in the burgeoning E-conomy. "

­­Lawrence A. Bossidy,Chairman and CEO,Allied Signal Inc.

Discover the proven strategies that will get your business ready for the new E-conomy with Net Ready. Look carefully,as the authors did,and you can see the E-conomy enterprise taking shape. The components that make up net ready organizations are well developed at a handful of companies,in their infancy at a few more,practically non-existent in most. Net-Readiness never comeseasy or without a cost. To be sure,it comes easier to some organizations than to others. Even so,the demands of the E-conomy are such that most born-on-the-web companies fail. One of the rare exceptions to this is Cisco Systems. Consultants,executives,and managers alike continue to have a difficult time focusing on the proper opportunities and many companies continue to approach e-commerce initiatives very opportunistically and chaotically.

What has set Cisco apart from the pack? It operates under a unique set of rules for what the authors call the "E-conomy" and these guiding strategies have enabled Cisco to succeed in e-business. Net Ready identifies these new rules,shows readers how to combine them into unique strategies and provides a tool kit for exploiting each strategy. The companies with the most demonstrated ability to execute in the E-conomy have optimized the four most important properties of success in e-business. Leadership,governance,competencies,and technology­­together create the critical quality the author calls Net-Readiness.

Using examples garnered from Cisco Systems and other wildly successful E-conomy businesses,Net Ready presents expert perspectives on:

  • Creating customized net readiness strategies;
  • Identifying the E-conomy business model right for you;
  • Implementing techniques for creating sustainable E-conomy value;
  • Integrating net and business priorities;
  • Aligning leadership and governance models for maximum impact;
  • Using the net to redraw the boundaries of your industry
  • And more

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Chapter 1: The Four Pillars of Net Readiness

Net Readiness is a combination- unique to each organization- of four drivers that enables enterprises to deploy high-impact Web-enabled business processes that are focused, accountable, and measurable,

Our development of the concept of Net Readiness follows a rigorous investigation of just what makes Web-enabled companies successful. Stated another way, we wanted to know if there are any commonly encountered barriers to success in the E-conomy. Based on our experience in the past five years, it turns out that there is, indeed, a set of attributes that seems to drive E-business success. At the same time, our research identified a number of attributes associated with barriers to success or with outright failure in F-business. We saw a remarkable consistency in both lists.

We have identified four key drivers that predict an enterprise's ability to succeed in the E-conomy by deploying high impact E-business initiatives. Those four drivers are

  • Leadership
  • Governance
  • Competencies
  • Technology

Taken together, these four dimensions underpin the concept we call Net Readiness. When an organization demonstrates the ability to consistently execute in these four dimensions, we say it is Net Ready.

Net Readiness is a measure of a company's preparedness to exploit the enormous opportunities in the E-conomy landscape. The four attributes combined in an infinite variety of permutations are consistently displayed by the most successful players in the E-conomy. Separately, these four attributes represent prerequisites, or barriers, to E-conomy success. It is unlikely that durable E-conomy success will come to any company conspicuously short in any of these four areas. In the following sections, we take a closer look at each of these dimensions and at what organizations have to do to execute each dimension well. We show how the E-conomy prospects of Cisco Systems-the company with which we are most familiar are furthered by attention to these dimensions.


Think about the outstanding Net Ready companies. Does it surprise you that most of them are so uncannily associated with their leaders? Michael Dell. Jeff Bezos. John Chambers. Bill Gates. As we surveyed the most successful companies in the E-conomy, it became clear to us that, without exception, they all had the benefit of a particular kind of leadership. What are the essential qualities of leadership in support of a Net Ready organization? Is your organization's leadership Net Ready? Ask yourself the following questions and see how often you can answer in the affirmative:

  • Do we solve business process problems first?

  • Is senior management attuned to the opportunities/threats enabled by the E-conomy?

  • Is generating competitive advantage via E-business a top priority of senior management?

  • Are our E-business initiatives integrated with our business strategy?

  • Is senior management involved in, buying into, and participating in E-business efforts?

  • Do we have an E-business vision or road map in the twelve-to-eighteen-month time frame, and is it communicated up and down the organization?

  • Do we have an E-culture (Web-enabled business mind-set) up and down the organization?

  • Do we have a culture of information sharing?

Net Ready leadership starts by empowering every corner of the organization-from the CEO to the custodian-to think and act in E-conomy terms, to use E-business tools, and to hold themselves accountable in measurable ways. The overriding leadership message must be: This organization is a Web culture from top to bottom, and everyone in this business is empowered to do E-conomy. The leader's job is to promote this vision by personal example.

Library shelves are groaning with the weight of books about leadership, so we propose to restrict our discussion here to the essential attributes of leadership that promote Net Readiness in its myriad manifestations. Although leadership in the E-conomy features some new wrinkles, its first goal, like the first goal of leadership in the traditional economy, is to define a workable balance between the visionary and managerial components. Leadership-when spread across functions, hierarchies, and structures -combines strategic thinking (that is, setting the vision, mission, and goals of the organization) and operational leadership (that is, ensuring that all the tasks involved in meeting performance measures are successfully accomplished). We have heard the adage, "A leader is one who does the right things, a manager is one who does things right." In the E-conomy, leadership evolves to a new reconciliation of this polarity. It's not enough to do the right things flawlessly; Net Ready CEOs must do it with a conspicuous display of vision and character. As General H. Norman Schwarzkopf says, "Leadership is a potent combination of strategy and character. But if you must be without one, be without the strategy."

The E-conomy needs leaders who evangelize rather than encourage, empower rather than delegate (see Table 1-1). More volatile business conditions and advances in technology mean that we have to move decision making and problem solving out of the corner office and distribute them throughout the organization.

The stewards of Net Ready companies constantly face the challenge of being barraged with too many ideas, proposals, partnerships, business opportunities, and barrels of cash. It takes a highly focused CEO and management team to navigate these treacherous waves. Cultivating the ability to say "no" is perhaps more important than getting people to say yes. "We get a thousand opportunities a day," says Kevin O'Connor, CEO of the Internet advertising company DoubleClick (see our profile of this company on page 224 in chapter 7). "Strategy is half deciding what to do and half what not to do." The E-conomy demands CEOs who can think paradoxically. The following sections elaborate on tasks that E-conomy leaders must accomplish if they are to succeed.

Solve Business Process Problems First

Begin by solving the business process problems. Your fundamental goal is to define how to better address customer requirements. This goal takes precedence over everything else, including the development of information technology (IT) projects explicitly designed to support these business process improvements. There's good news when you attack process issues first. For example, many traditional order entry functions go away. Most customer service reps take on larger, more challenging customer management roles. In the self-help model enabled by Net Ready process changes, customers and partners willingly take on responsibilities formerly handled by the organization.

Have a High Tolerance for Ambiguity and Chaos

Gone are the days when business was so stable and predictable that long range strategic plans actually made sense. Today, the game belongs to those who can think and act nimbly. When the relationships between the major storefronts in any given industry can completely shift in a matter of weeks, when even the definition of an industry is open for grabs, there is little profit in insisting on maps that refer to past behavior. E-conomy leadership means understanding that the competitive business environment is chaotic, and good leadership (at every level) means being comfortable dealing with the ambiguity caused by chaotic behavior.

At one point in our economy, past behavior offered reliable guidance for the future. Not in the E-conomy. Net Ready leaders acknowledge that the strategic landscape can be neither predictably known nor systematically addressed. Formalized strategic thinking-of the kind Michael Porter recommended in Competitive Advantage as recently as 1985-is doomed to failure in an ever-changing and technologically driven business environment. These facts may be inconvenient, but they apply equally to every storefront in the E-conomy. Advantage, then, accrues to the storefront that can adapt most quickly to the reality that the E-conomy is about change and movement. Net Ready leaders can learn from Epictetus-the first-century Roman philosopher who would have been very comfortable in the E-conomy and who provided the epigraph for this book.

Model E-Business from Top to Bottom

Net Ready companies have leaders who embrace the Web and extend it to every corner of the organization. Cisco's John Chambers believes that everything pertaining to Cisco belongs on the Web. If something's not on the Web, there has to be a good reason. These leaders not only embrace new technologies and new applications that are enabled by the Internet, they push its use within every level of the organization. In one company we worked with, for example, the CEO led the movement toward electronic communication on the company's recently implemented intranet. Although not an expert by any means in the use of E-mail or electronic calendaring, this CEO set the tone and expectation level for the rest of the organization by communicating electronically and refusing to accept written communications for most situations.

Even Cisco experienced a transition in going from a paper-based expense reporting system to their Intranet application, Metro. After the application was operational for several months, the paper-based expense system was eliminated, and it was no longer possible to submit an expense report unless it was done electronically. Such transitions force an E-culture up, down, and throughout your organization.

Avoid Incrementalism

E-conomy leaders realize that they cannot inch their way to Net Readiness. Doing something-customer service, TQM, benchmarking-incrementally better than the competition is useful, but is not a sufficient condition for competitive advantage. Operational excellence, as Michael Porter observes, means that you're running the same race faster. But Net Readiness involves, in addition to operational excellence, choosing to run a different race because it's the one you've set yourself up to win. He points to the dominant storefronts in the E-conomy as classic exemplars of successful strategic thinking. "The average technology company is not all that gifted in terms of strategy. But the most successful companies-the Dells, the Intels, the Ciscos-don't think about strategy as incremental or impossible. They have a clear sense of what they're trying to do and how to do it." Different may not be necessarily better, but better is always different.

Be Early

Net Ready leaders tend to be risk takers; they take on a set of behaviors we call Rule Breaking (see chapter 9 for a fuller discussion of Rule Breakers, Shakers, Makers, and Takers). Not all Rule Breakers are successful (witness Edwin Lands's instant movie flop, Polavision, or Federal Express's ZAP Mail). Federal Express spent millions of dollars on the infrastructure to enable ZAP Mail, a point-to-point facsimile service. Unfortunately, ZAP Mail arrived at the same time as the adoption of the personal fax machine and could never put a dent in the trend for every company to have a fax machine. To its credit, however, the leadership of Federal Express didn't let the failure of ZAP Mail get in the way of trying new rule-breaker concepts such as Internet tracking and shipping.

Engage in Counterintultive Thinking

The E-conomy makes mincemeat of many sacred business values. Net Readiness teaches you that thinking small and acting small is the path to getting big. Net Readiness suggests that success is not something that you aim for. The more you aim at it and make it a target, the *ore elusive it is. Success, like happiness, cannot be pursued; it must ensue, and it does so only as the almost unintended side effect of focusing on customers and partners and serving them meticulously. In the E-conomy, Net Ready leaders let success happen by not caring about it.

Meet the Author

An author, lecturer and consultant, for the past 14 years Amir Hartman has worked at the intersection of business and information technology. He is on the faculty at UC-Berkeley's Haas School of Business, and is a Partner at Sai International, a strategy consulting firm. Amir is the co-author of The Search for Digital Excellence, a book on E-business. He is also the creator of CommerceNet's Inaugural Seminar and course book Internet Commerce: Capitalizing on Business Opportunities and is on the advisory board of Harvard Business School's Annual Internet Business Conference Cyberposium. His research involves fieldwork which develops e-business benchmarks and strategies.

Amir consults with numerous Fortune 500 firms to assist them in building transformation strategies for the emerging digital economy, working with them to build innovative business solutions for sustained competitive advantage. Much of this work is the basis of his forthcoming book with John Sifonis " New Rules for Competing in the Digital Economy." He also has extensive experience managing and consulting with major consulting firm such as EDS, Deloitte & Touche, and Ernst & Young, and in industries as varied as financial services, energy, hi-tech, and healthcare. Professor Hartman is on the advisory board of a number of Internet related companies. His recent consulting assignments have included:

  • Developing a set of Future Scenarios of the Digital Economy for a major management consulting firm in order to create a new offering for their clients.
  • E-business strategy development of global financial services for a major international bank in order to better position the organization as aleading competitor in the financial services sector.
  • Strategy and Scenario Development for clients of leading an e-commerce organization. These scenarios were used to create new opportunities and business spin-offs.

Clients Amir Hartman has served include, Arrow Electronics, BankOne, Blue Cross/Blue Shield, Chevron, Hewlett-Packard, Microsoft, NTT, Nationwide Insurance, Oracle, and others.

Amir Hartman is a frequent speaker at major Internet business conferences and consortia, and has made appearances on television to discuss business trends on the Internet. Amir's seminars on the business value and strategies of e-commerce, have been popular additions to the MBA curricula as well as executive management at major corporations.

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