- 15 February, 1999 11:21
Finding the perfect person to lead your e-commerce efforts depends on what you want to do online.
As companies start e-commerce strategies, finding the best person to lead them is critical. Read this story to learn:When to hire from the outside and when to look within Why the best candidate may not always need an IT background How to organize e-commerce initiatives A deep knowledge of a company's business processes is perhaps the most important quality for an e-commerce leader.
If a company wants to cook up an e-commerce strategy, sooner or later it will need to find the right chef to lead it. The question is, Who? Should a company pick someone from marketing who knows how to speak the customer's language but doesn't know a firewall from a proxy server? Maybe someone from IS who knows how to build links to the company's back-end systems but doesn't know how to build a brand? Or an outsider who is already up to speed on e-commerce but would need to get up to speed on company politics? There are some personal attributes that any e-commerce executive must have.
Communication and relationship-building skills are crucial, since an e-commerce executive must often negotiate with outside partners-or even trickier-negotiate internal conflicts over the way an e-commerce effort meshes with the existing business. Leadership ability is also a must, given that e-commerce strategists will be venturing into uncharted and fast-changing business and technology territory. "That person is going to have to make some tough decisions without there being a clearly defined right way to do things," says David Marshak, an analyst with the Patricia Seybold Group in Boston. "They have to really be leaders, not implementers." JEREMY JAFFETitle: Vice president of electronic commerce Company: Liberty Financial Cos. Inc.
Reports to: Executive vice president of sales and marketing Age: 37 Education: B.A., University of Michigan; M.S., Sloan School of Management, MIT Previous experience: Assistant vice president, strategic marketing, Keyport Life Insurance Co. (Liberty's annuity unit); participated in development of Keyport's Web site. Was director of business development and client management at the Center for Strategy Research and worked at DRI/McGraw-Hill and Dun & Bradstreet.
But the particular skills and experience required of an e-commerce leader will vary from company to company depending on how the company defines e-commerce. A company that wants to sell products directly to consumers might seek someone with direct marketing experience, while a company that wants to let its distributors place orders and check inventory over an extranet might look for someone with a sales or customer service background. And beyond picking a leader, a company must decide how to organize its e-commerce effort. "There's no one right model," says Ron Shevlin, senior analyst of leadership strategies at Forrester Research Inc. in Cambridge, Mass.
Even though there's no model that fits every company, there are issues that most companies will have to consider if it searches for an e-commerce czar and asks that person to carve out a strategy. This article will explore three major issues: the importance of an IT background for an e-commerce leader, the pros and cons of hiring outside versus promoting from within and the creation of a specific line of business or group dedicated to e-commerce.
Decision 1 IT or not IT?
When Jeremy Jaffe's colleagues at Liberty Financial Cos. Inc. have a problem with their PCs, they will sometimes turn to him for help. Wrong move, says Jaffe, Liberty's vice president of electronic commerce in Boston. While Jaffe's credentials include overseeing the launch of a Web site at Keyport Life Insurance Co. (a Liberty business unit), his roots are in marketing, not IT. To be sure, IT has a role to play in any Web site that links with back-end systems and lets customers perform transactions. At Liberty Financial, for example, the IT department already maintains the account access system; when Liberty business unit Stein Roe and Farnham Inc. launched a Web site that lets customers access their accounts and perform transactions, the IT department had to accommodate new customers to the existing system. But that Web site and all Liberty's other Web sites are more than just the technology behind them; they are new channels for selling, marketing and giving service to customers. As such, they need to be overseen by someone with an eye for the entire business.
"IT is involved," Jaffe says. "But e-commerce isn't an IT thing." MARK ROBILLARDTitle: Vice president of electronic commerce Company: VWR Scientific Products Corp.
Location: West Chester, Pa.
Reports to: Senior vice president of marketing Age: 42 Education: Four years of college at State University of New York at Brockport Previous experience: 19-year VWR veteran, most recently area vice president in the Northeast. Came up through the sales organization as a sales rep and then region manager. Spent 15 years dealing with VWRs largest customers in partner relationships that dealt with supply chain management issues.
Similarly, Mark Robillard, a 19-year sales veteran of industrial supplier VWR Scientific Products Corp. in West Chester, Pa., gained on-the-job Internet experience prior to becoming VWR's first vice president of electronic commerce.
In 1995, while Robillard was area vice president in the Northeast, he landed a deal with MIT that made VWR part of a Web-based purchasing pilot. Prior to that, he worked with large VWR customers on process reengineering projects to make it more efficient for them to order, receive and pay for small-dollar maintenance, repair and operating supplies. Robillard has a high-level understanding of e-commerce technology-such as how TCP/IP networks and digital certificates work-yet he does not claim to be a technologist. "I have a working knowledge of the technology," says Robillard, who has been vice president of electronic commerce since June 1996. "But I have a very intimate understanding of the supply chain." Indeed, analysts say, a deep knowledge of a company's business processes is perhaps the most important quality for an e-commerce leader. That's not to say that such a leader can't be found in an IS department; in fact, Forrester's Shevlin says top IT groups probably have employees who "know the business operations better than the business people do." And an understanding of the technology will help an e-commerce leader avoid the kinds of strategic wrong turns that can slow down an implementation, such as picking the wrong vendor or technology. But since many companies set up cross-functional teams to tackle e-commerce, a director or vice president of e-commerce does not necessarily need to have an IT background. "If he or she doesn't have technology expertise, then that's a component that needs to be built into the team," says Alyse Terhune, a research director with GartnerGroup Inc. in Stamford, Conn.
How important is it for a candidate to have Web experience? Even the best candidates may have at most only two or three years of direct, hands-on experience with the Web, recruiters say. For a business-to-business post, previous experience can include responsibility for EDI initiatives. For a consumer-oriented post, marketing skills may be more important than vast Web experience. Stephen Mader, managing director in the Burlington, Mass., office of executive recruitment firm Christian and Timbers, recalls working with a household appliance manufacturer that was looking for a vice president of electronic commerce to set up its commerce Web site and do deals with other Web vendors and major portals to get the site noticed. The firm wound up hiring a brand marketer from a major food and drug company who didn't have any Web background at all. As the Web is increasingly seen as a more strategic part of the business, companies are looking for strategists, not purely technologists.
"Before [the most important skills were] technology, strategy and business development," says Stuart Burch, the Washington, D.C.-based managing director of the software and Internet practice at Russell Reynolds, an executive search firm headquartered in New York City. "Today it's strategy, business development and technology." Decision 2 Look inside or outside?Recruiters say they are beginning to get requests to fill e-commerce executive spots in industrial, financial and consumer products firms. But some analysts say their clients often promote someone from inside the company to that post so that they can be sure that the person understands the supply chain and the relationships with customers.
In 1996 Liberty Financial did pick an outsider to be its first vice president of e-commerce. The executive, who came from Forrester Research, set up the Internet infrastructure and got several Web sites up and running, including Stein Roe and Farnham's e-commerce Web site. He was then hired away by the financial services firm Scudder Kemper Investments. When he left, the technological infrastructure was in place, and Liberty's top executives were bullish on e-commerce, according to Jaffe. But the operating companies had only lukewarm support for the Web efforts, and the sites weren't well publicized to customers. Liberty picked Jaffe for the e-commerce post because of his internal sales skills. When he needs to get a Web promotion approved, for example, he can sit down face-to-face with key decision makers and win their support. "I had contacts already with the different [operating] companies," Jaffe says.
"You bring somebody from the outside, they have to develop new relationships from scratch." MARISHA GERAGHTYTitle: Divisional vice president, electronic commerce Company: Kmart Corp.
Location: West Troy, Mich.
Reports to: Vice president of direct marketing Age: 39 Education: B.S. Business Management, State University of New York at Binghamton Previous experience: 15-year veteran of JCPenney, most recently as electronic retailing manager. Oversaw interactive television trials and launch of JCPenney online stores on America Online, CompuServe, Prodigy and the Web.
Still, there are times when it may make sense to bring in someone new. For example, mass merchandiser Kmart Corp. based in Troy, Mich., decided to search outside in 1997 for someone to fill a newly created e-commerce vice president position because no one internally had Web commerce experience. And since the company was also going through a turnaround, it wanted someone with fresh ideas. Kmart hired recruiter Spencer Stuart to find Marisha Geraghty, who had 15 years of retailing experience with JCPenney Co. Inc. Geraghty started her career in merchandising. In the 1980s she helped JCPenney's IS group develop an intuitive interface for an online assortment planning system used internally by buyers. Being the liaison between the buyers and the developers helped Geraghty learn how people navigate around an application. Later on Geraghty led the group that was involved in interactive television trials and launched JCPenney store areas on proprietary networks America Online, CompuServe and Prodigy and ultimately on the Web. Geraghty's background with a catalog company was also a plus. Her experience selling directly to consumers outside a store environment would be valuable as Kmart began to set up its own nonstore fulfillment system to handle Web orders.
If your company does decide to look outside for an e-commerce leader on the vice president level, be prepared: Anyone with experience is in hot demand and limited supply, recruiters say, and salaries reflect that. "Whenever you apply the word Internet in any job description, you're instantly seeing inflated compensation," says Philip Schneidermeyer, a managing director in the Stamford, Conn., office of recruiter Korn/Ferry International. Candidates for vice president of e-commerce on the consumer side can expect a base salary ranging from $150,000 to $200,000 plus a bonus and stock options. The salaries of business-to-business e-commerce executives tend to track lower, Schneidermeyer says, and may or may not include options. Other recruiters report base salaries of up to $300,000 for posts at major financial institutions and technology vendors.
Decision 3 Build an island or a bridge?
Just because an e-commerce powerhouse like Dell Computer Corp. created a new organizational unit dedicated to Internet commerce doesn't mean that every company interested in e-commerce needs to do the same, says Forrester's Shevlin. If a company plans to eventually do half of its business on the Web, it may make sense to have a dedicated e-commerce unit to ensure that people working on e-commerce can give it their full attention. But if a company foresees doing only a small percentage of its sales over the Internet, or if it plans to take orders only over the Internet but still rely on sales reps for face-to-face calls, it may not be wise to set up a separate e-commerce division. For example, a pharmaceutical company need not form a dedicated e-commerce unit if it will always have a sales force to sell products to hospitals and pharmacies but will let customers place refill orders over an extranet.
What many companies have done organizationwise to date is form what Shevlin calls a "formal Internet alliance" to oversee Web efforts, including e-commerce. Typically in such situations, the staff and budget for the Web efforts are carved out of different departments including IT, marketing, sales and customer service. At Greenville, S.C.-based Michelin North America Inc., for example, the marketing and sales group sponsored the company's e-commerce extranet effort in 1995. But, according to Tom Hall, a sales veteran and Michelin's manager of e-commerce, the company put together a cross-functional team to build and oversee the extranet. Having people who understood distribution and back-end systems on board was deemed as crucial to the project's success as having people who understood the customer.
Called BIB NET, Michelin's extranet went live in 1997 and lets independent tire dealers place orders, check inventory and process claims. The team is considered part of Michelin's group services area, which houses functions such as legal and IT that are shared by different business units. However, to keep lines of communication open, many team members still have their desks in their old departments. As of press time, Hall says, the extranet still has "project" status, meaning that it has a set scope and five-year time frame. Michelin is evaluating whether to give the group more permanent status to continue evolving the system to keep up with changing technology and changing customer needs.
Hall is not sure what direction the team and the project will follow, but there is one nice thing about working in a fast-changing corner of the business. "I don't feel that we make a lot of mistakes," he says, "because I don't feel that there's a model for this organization." Looking Outside Executive e-commerce positions filled or being filled by recruitment agenciesVice President of Internet Commerce Company description :Industrial firmResponsibilities: Direct creation and execution of the companys worldwide e-commerce initiatives; establish and maintain the governance process required to optimize the development, deployment and support of e-commerce applications while interfacing with key executives in and out of IT Skills sought: Executive level; specialization in e-commerce technology and solutions, preferably global; knowledge of e-commerce and online trends; track record of successful directorship and implementation; strong presentation skills; ability to motivate teams, analyze the financial impact of a project to the company and work across organizational boundaries Background of candidate hired: MBA degree plus technical undergraduate and master's degrees; consulting and business development experienceSalary: $300,000-plusVice President of Worldwide Electronic Commerce Company description: Computer hardware manufacturerResponsibilities: Conceptualizing and launching e-commerce business and meeting revenue, profit and investment milestonesSkills sought: Marketing or business management skills, technology savvy and experience launching a new business ventureBackground of candidate hired:MBA degree and B.S. degree in computer science; 10 years of e-commerce experience, 5 at executive level in a billion-dollar corporationSalary: $175,000-plusVice President, E-Commerce Technology Company description: Consumer Web siteResponsibilities: Developing technical solutions that enhance company revenue through e-commerce services; responsible for overall e-commerce technical strategy and network architecture; manage a 20-plus person staff and work closely with senior management team in understanding the companys long-term technical needs Skills sought: Executive with track record of technology leadership in systems engineering, design and integration; a strong personal presence and leadership skills; ability to translate business information needs into systems solutions; establish a vision for Web-based consumer merchandising and membership services Status: As of this writing, the job is still openSources: Russell Reynolds; Lucas Group; Korn/Ferry InternationSenior Writer Sari Kalin can be reached at email@example.com.