The Powers That May Be

The Powers That May Be

Most companies that are serious about competing in the global market of the next century understand that Web technology-intranets, extranets and the Internet-will play an increasingly important role in the shape of their business strategies. Technological decisions today are not only about what technology to use but how to use it. And the people who make those decisions are no longer simply technologists: They are business leaders and, in the best cases, business visionaries.

Understanding that, and wondering where in the corporate ranks these engineers of tomorrow's business models will come from and where in the corporate hierarchy they will perch, we asked six people with six different perspectives the following question:Has the time come for corporations to create a new executive position, one that might be called Chief Web Officer and one that would oversee the strategies of company intranets, extranets and Web sites?Jeffrey F. RayportDirector of Marketspace Centre (a unit of Monitor Co.) and Associate Professor (on leave) at Harvard Business SchoolThere is something quite appealing about a Chief Web Officer loose in corporate America. I imagine a thirtysomething executive with ponytail and black suit (no tie, of course) attending meetings in the staid offices of the chairman in every Fortune 50 company across the land. That individual sports three earrings, a tattoo and a tongue stud-and constantly reminds his or her chronologically challenged colleagues that Generation Y, with a host of new technologies and demands, is on its way.

A lot of established corporations would benefit from this shock to the upper ranks. After all, it's hard enough to get many senior managers to turn on their PCs, let alone take the Web seriously. It seems that nearly every high-powered laptop in the first-class cabins of domestic and international flights these days is being used by senior executives to play solitaire. Clearly there is a role for someone at least to introduce them to other, newer games pre-installed on their hard drives.

But the Web, at the end of the day, is just one manifestation of a broader phenomenon. While it is surely the most ubiquitous of e-commerce platforms, the Web is one of many enabling technologies that supports companies in doing business through virtual, rather than physical, channels. After all, banks use ATMs and VRUs; catalogue retailers use telephone networks and call centres; and fast-food restaurants use kiosks and other automated order-entry systems.

Every one of these interfaces represents a substitution of technology for people in the management of customer relationships. To focus only on the Web misses the point. There is a revolution taking place, but it's not about any one specific technology or software. It's about the opportunities and threats that arise for businesses when machines-instead of people-are used to manage customer relationships.

But that is not to make light of the proposition. The bottom line is that in most businesses the impact of virtual channels on a company's future strategy is enormous, whether on the back-end supply chain or on the front-end consumer interface. In that sense, our chief Web officer is really the person tasked with thinking about how a company should exploit its virtual channels, integrate those with existing physical channels and then determine its overall vision for the enterprise going forward.

In other words, from my perspective, there is already someone in every corporation who bears responsibility for these tasks, if they are the tasks for the Chief Web Officer.

For better or worse, that person is usually called the CEO.

David J. Farber

Alfred Fitler Moore Professor of Telecommunication Systems at the University of Pennsylvania and nationally esteemed editor of messages sent out over IP, a mailing list that includes 25,000 digeratiThe traditional CIO is technologically oriented, and the Web introduces another set of issues. There's marketing, which is not a traditional role of the CIO.

There's public relations, which is not a traditional CIO role. There's employee relations and human resources issues. Now the marketing people may understand marketing, but they may not understand things like privacy issues or other issues.

That is not to say no one uses the Internet well. Some use it very well internally. Some use it well externally. But very few use it well in all aspects, and that's why you need one person who understands all the issues.

It's very complicated, especially for multinationals that may do it well in their home country but will trip over things in other countries. And the Net is always international. Anything you put up has a hundred-odd countries looking at it. You've got to end up offending somebody.

That's one issue. The other is the many things you can do with the Internet.

You can use it to get information across, sell, coordinate, and many companies do those things well. I think the one thing that most companies haven't caught on to is how to effectively get image across. They get information across fine.

They give you lots of information, but they have no idea where the corporation's head is. It's different from the world of print, where companies often don't transmit information, they transmit image. The Web offers an opportunity to do both, but I haven't seen anybody put them together well.

Eventually, I think, image management is going to be the killer app. Someday someone is going to figure out how to advertise on the Web, really advertise on the Web. Some big corporations are doing a very good job, the ones that are doing better have put the management of Web resources there. For that, you need to have a Web officer.

Ira Magaziner

President of SJS Inc., a business strategy consultancy based in Quincy, Mass., and former senior adviser to the President of the United States for policy developmentThe Industrial Revolution brought a fundamental change in the products companies produced, the way they organised their work, the way they served their customers. Some companies transformed themselves using the new technologies-electricity, motors, steel. Most did not. They clung to their old ways of doing business and were supplanted by new companies that formed around the new technologies.

We are going through a similar revolutionary period today with one exception.

The ability to communicate and process information at high speeds and the linking of the people of the world through the Internet will transform the world economy as did the Industrial Revolution. The major difference is that today the changes are occurring much more rapidly. Companies must adapt quickly or find themselves at a serious competitive disadvantage. Many companies will need to rethink their product development strategies to build in the capability of interacting with the networks. Companies will want to network their R&D centres around the world. Tremendous productivity improvements will come to those who reorganise their work processes to do supply chain management and customer service via the Internet. Where the Industrial Revolution reduced the direct costs of producing a product- labour and materials-the information revolution will allow a significant reduction in overhead and transaction costs. And in most companies these make up well over half the total costs.

Companies will also increasingly sell their products and services electronically. That will require radically different strategies for marketing and advertising. It will also require establishing systems that differ significantly from those used today for order fulfilment, billing and customer service.

In traditional industrial organisations, the managers of manufacturing, sales, logistics, marketing or customer support provided the day-to-day leadership that allowed the companies to succeed. In the new Information Age, the success of their jobs will depend to an increasing degree on how well a company runs its Web activities.

Those companies that are serious about making a successful transition to the Information Age will need to create a senior-level position to coordinate all Web-based activities and to put resources, both people and capital, into his or her organisation. Traditional IT organisations are often not flexible or innovative enough and often do not have sufficient status in a company to perform the kinds of functions successful Internet use requires: Skillful people who are both good managers and Web-savvy are few in number.

As more companies understand the importance of the Internet and electronic commerce to their businesses, there will be far more demand for these good Web managers than supply.

The competition is likely to resemble the free agent market in professional sports. Smart companies will elevate the status of Web coordinator within their companies, will pay well and will try to use a mix of stock options, perks and long-term contracts to tie the really good Web managers to their company. Those companies that move too slowly will find themselves at a serious competitive disadvantage.

Victor Kiam

Chairman of, and legendary pitchman for, Remington Products Co. LLC, manufacturer of electric shavers for men and womenI think for some companies creating an executive position to oversee Web technology makes a hell of a lot of sense. For other companies, at least for the moment, the Internet is a relatively minor area. Let me make a comparison.

Twenty years ago most companies didn't have an MIS officer. Then it became universal in any company of any size, because they realised that they needed someone to manage information flow. That is what is going to happen here. Right now, the Web officer may report to the MIS person, or he may report to the marketing person. Where that chain of command goes ultimately will depend on what you want to use your Web site for. But whoever reports to whom, the marketing department will have a lot to say.

Remington has a Web site, but so far we have not promoted direct sales over the Web. Instead, we have 800 numbers that people can call. We also have a travel appliance business called SmartTravel, and there we are trying to make more use of the Web. We are trying to align our Web site with the Web sites of companies in the travel business. We know that people are booking their vacations on the Internet at travel sites, sites like American Airlines Inc. or Carnival Cruise Lines, and we want to be linked to them. If you're going on a trip with Carnival Lines, you may need luggage, and we want to be right there.

We are still working things out, and we are trying to figure out how to sell online and still give our partners a percentage without it costing a fortune.

It's tough because people can go home and order a product and you don't know where the lead is coming from, and the travel sites are not just going to give us the link for nothing. The same thing happens in stores. That's the reason we have held up on selling Remington products online. We are discussing this with our retailers because if we suck customers away from them they aren't so happy.

We are really tiptoeing.

Right now at Remington we are using the Web site primarily as an educational tool, although it will certainly become a sales area. Things are changing. If you look back over the business of electric shavers you see something interesting. Here is an item with a lot of features that the customer wants to know about: 'Is it cordless? Is it rechargeable?' Twenty years ago you had personal salespeople in stores to answer those questions. You would go to Macy's, and someone there knew everything about shavers. That has changed, and when that changed, we tried to make our package our sales tool. Right on the box we describe the product and its competitive advantages. But all that information that we put on the box you can now put on a Web site. That's the next phase. It will happen. The number of people using the Web is increasing every day.

In the big picture, what's happened is that we went through a couple of hundred years of man's extension of his physical power through the Industrial Revolution. Now we are going through the extension of his brain power, and the scope of that is great. Of course, we don't know what will happen. You know when you work in electric shavers and you work like hell to find something new, and this is all new. This field is just exploding. It's very exciting.

Philip Anderson

Associate Professor of Business AdministrationAmos Tuck School, Dartmouth CollegeI think not. General managers are tasked with creating value, and increasingly this can be done only via intranets, extranets and Web sites. Hence, Web strategy is becoming inseparable from business and corporate strategy, which are the province of line managers. Senior managers are paid to set aggressive (yet realistic) performance standards, help their subordinates achieve them and reward accomplishment. CEOs should set the bar high so that in order to clear it, subordinate general managers are led to leverage knowledge, streamline supply chains, build customer loyalty and generate new revenue streams. Making effective use of the Web for such purposes is a general management problem, not a staff problem. Creating a Chief Web Officer who oversees Web strategies makes the Web a staff problem.

Anointing a Chief Web Officer may seem attractive for political reasons. Many CEOs and CIOs complain that their IS shops are resisting instead of enabling the transition to the Web as strategic platform of choice. Telling managers to get help with their Web strategies from people who feel threatened by the Web seems like a recipe for chaos, so why not create a new position to help managers bypass traditional IS? If we rename the CIO the Chief Web Officer, we identify the executive with a technology, not a function. We don't have Chief Telephony Officers, though most of our businesses would collapse in an hour without phones. The CIO is the senior staff executive who oversees the firm's architecture for creating value from information. Overseeing all things involving the Web is only part of that charter. If we appoint a CIO and a Chief Web Officer side by side, we signal that IS isn't concerned with the Web and vice versa. We also set up a guaranteed competition between two executives that can only sap the time and effectiveness of both.

De facto, the marketplace is working out a solution to political resistance.

General managers whose IS departments can't or won't support value creation via the Web are turning to consultants. The Chief Web Officer is whoever helps the general manager use the Web strategically. A CIO who isn't viewed by line managers as the Chief Web Officer will be replaced in all but name by a vendor who can help those managers meet their performance targets.

Sherman Woo

Senior Director of US West Inc., the $11 billion Regional Bell Operating Company based in Denver, and main architect of the company's landmark Global Village intranet, which connects 40,000 employeesCreating a new position is not a good idea. The problem is Web technology by itself will not transform a business. You must transform your business to avail yourself of the advantages the technology enables. From a practical organisational view, every aspect of your organisation must redefine itself to achieve the desired outcome. I believe that is easier to do if the existing leadership develops a transformation strategy using a team approach rather than introducing a new political entity that would have to develop new relationships with existing business units.

The value of an intranet is that it enables an enterprise to quickly develop new connections, expands its capacity to absorb more information and allows it to coordinate distributed activities. Intranets are more about corporate culture and collaborative management than about technology-you can buy an exercise machine, but you can't get a new body without using it.

Business will have to master the Internet to survive. It has become a significant marketplace. Again, what is required is a remapping of how a business is organised to provide product and services to its customers. That is difficult work involving embedded systems of software and people. The folks that know what pieces to move first and next are already on the job.

If they are not a part of the solution, they will be a big part of the problem.

(Senior Editor Art Jahnke can be reached at

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