You Only Think You Understand the Internet Age

Is your company doing all it should to respond to the challenges of the Internet era? Almost certainly not. I'm confident the answer to that question is no, because I see so many companies behaving as if meeting the Internet challenge requires no more than creating a Web site through which to disseminate information and sell products. In effect, they apply a thin veneer of customer-oriented information technology over a corporate organization and mentality that are rooted in a hundred years of post–Industrial Revolution business practices. They think they can do everything—planning, manufacturing, shipping, and customer service—the same old way if they just do it faster via the Internet.

The real task is much bigger: to use Internet-based technologies in fundamentally changing the way your company is organized and how it relates not just to your customers but to suppliers, partners, and employees. I've been thinking about this a lot recently as we set our budget and plan our editorial coverage for the coming year. We say the Internet changes everything, but have we changed sufficiently in the process? Have we done enough, and are we moving quickly enough? Probably not.

Another person thinking about this long and hard is Douglas Aldrich, vice president and managing director of the global information technology practice at A.T. Kearney, the management consulting firm. His new book tackles the subject head on. "Digitization for the sake of digitization" is not only insufficient for future success, it's a trap, he says in Mastering the Digital Marketplace: Practical Strategies for Competitiveness in the New Economy (John Wiley & Sons).

Instead, Aldrich says, companies need to focus on their core competencies and rely on computing and especially communications technologies to create what he calls "value-based organizations." These rely on a constantly evolving mix of partners to provide the greatest value of products and services to their customers. This kind of organization is the antithesis of what most corporations are trying to manage and grow today, in his view.

Aldrich dropped by my office the other day to discuss his theories and his new book. What fascinates me the most about his ideas is that today's trends take him to the extreme realization that "the digital economy is about one thing: information." He means that this applies to every business, no matter what product or service it provides. Soon only the digital content will distinguish your products from those of your competitors, and your ability to use digital technologies to create a community around your product and services will make or break you.

Think of how PC makers use Internet access and other services as key competitive advantages, rather than the hardware itself, and you'll have a glimpse of the future. It's one in which you may choose one oven or car over a competitor's machine based on their relative abilities to respond to voice input and connect you immediately with customer service.

Every industry will come to the same realization, he says—some sooner than others. He adds that even some of the technology leaders are still missing the point. "The bane of the technology field is that there is an arrogance bordering on insanity," he told me. The attitude is, "If we're doing it, it must be right; if not, it must not be important." No doubt all of us have some painful lessons ahead.