Five Steps to a Dot-Com Strategy: How To Find Your Footing on the Web

The Internet changes everything -- particularly for companies with brick-and-mortar operations, branded products and services, and traditional supplier and customer relationships. The author addresses five key issues confronting such companies: strategic vision, governance, resource deployment, operating infrastructure, and leadership alignment.

Strategic vision. Because e-business is evolving so rapidly, companies must continuously augment current business models (e.g., improve supply chains) while experimenting to create new ones. New business models change the rules for competitors and deliver markedly improved customer value. Companies must be willing to cannibalize existing products and services and engage in strategic alliances.

Governance. Companies can organize their dot-com operations as subsidiaries or as part of their existing operations. Subsidiaries make sense when the company is exploring new business models or needs greater freedom to enter alliances, raise capital, and attract talent. Integrating the dot-com business with current operations makes sense if the entire company is migrating to the Web. Governance is further complicated by a war for talent that is being won by Internet startups.

Resource deployment. Companies must commit significant resources to differentiate their dot-com operations from those of competitors. They should enter alliances to explore a wide range of opportunities and leverage those that succeed. Outsourcing services can speed implementation. Established companies must develop incentives to attract and retain Web-savvy talent.

Operating Infrastructure. The dot-com infrastructure delivers enhanced customer value by straddling physical and digital spaces and providing linkages to partners. At minimum, it must deliver superior functionality, personalized interaction, streamlined transactions, and pragmatic privacy.

Leadership alignment. Dot-com operations require superb alignment among key executives. Each must play a leading and supporting role for different aspects of the business. If the management team is not aligned, the dot-com strategy may be hijacked by one or two members with a partisan agenda.

Powerful transformations are under way as companies blend their traditional and Internet businesses. Managers must align their vision to the dot-com world lest the leaders of the Industrial Age become the dinosaurs of the dot-com era.