On the Internet, no one can hear you scream. So scream a little louder. Simply building new systems and hoping your good reputation will carry you through is no guarantee of success. Reputable, credible, successful companies are struggling to emerge as leaders in an online world which gives them little credit for their historical legacy when matched against fast paced innovative new comers with smart ideas and can do attitudes. For instance a few years back 17 financial and technology leaders, including a National Australia Bank subsidiary, sunk a reported $6 million into an online financial consortium called the Integrion Financial Network. If recent reports in the Australian Financial Review are correct, those companies must now be wondering if it was money well spent. According to the AFR report (Monday January 11, 1999) the Integrion consortium is now close to collapse. Still, life is a punt, so you can't really fault the NAB's motives. Its partners like IBM, Visa and Citibank all have blue chip credentials so Integrion must have seemed a reasonable bet.
Global brands and ancient reputations are proving to be poor currency in the new economy and no real indicator of success. A big bag of cash is always helpful but increasingly all it buys is a ticket to a dance where gate-crashers are encouraged.
As a local example, and one close to home, The Australian newspaper increasingly finds itself struggling in the classified jobs market against newer smaller players like Jobnet (www.jobnet.com.au) and industry innovators like Monsterboard (www.monsterboard.com.au). Customers like the cheaper rates and higher responses online and are voting with their wallets and their feet.
News has a vast paper empire to protect, its competitors just want to make money and can do whatever it takes to succeed. Another report, this time from the Wall Street Journal Online (January 9, 1999) outlines the growth of the stock market's electronic commerce darling Amazon.com. Its sales over three years grew from $15.7 in 1996 million to $147.8 million in 1997 and are expected to come in at about $600 million for 1998. Amazon is one of the new breed of companies and its stellar growth compares most favourably with established players trying to move to the new medium. The obvious retort, as described in the WSJ article, is that Amazon is still not profitable because of the huge investments in technology required to grow the business. But Amazon has bought more than technology with its investment, it now has a lock on mindshare in its market space and is superbly positioned to expand its vision.
The Web has created its own brands, companies like Amazon.com, Netscape and Yahoo. Not all of these companies will succeed, just as not all the established leaders will fail. The clash between them, between old and new, reinvention and reinvigoration will be the only IS business story that really matters in the years to come.
Andrew Birmingham is the chief operating officer of IDG Communications. He can be reached at Andrew_Birmingham@idg.com.au
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