I must admit I was wrong. And I am quite disappointed.
Over time, a change of perspective will probably prevail. But
its happening much more slowly than I expected (or hoped) a
few months ago.
There were clear symptoms of new thinking. Books,
articles, discussions, high-level meetings pointing to the
fact that most companies dont really understand what they
can do with the internet; and that there is much more to the
new economy than some hasty rush on the stock exchange. But
that wisdom isnt showing up a the working level. Most
companies are still trying to force the net to fit into their
traditional thinking, or trying to attract attention with
some cosmetic tricks, or simply copying what everyone else is
doing without even bothering to check if it made any sense in
the first place.
Most traditionalcompanies still have no idea
of how they can really use the internet. But whats even more
surprising is the lack of depth in the strategies and
behaviors of the new wave the internet
That isnt happening only in relatively
underdeveloped countries such as Italy. American
dot coms dont seem to be setting a good example for the
rest of the world. Forrester Research has been producing,
over the years, some of the most optimistic projections on
the growth of e-business. Its interesting to find that from
that source we are getting some pretty harsh criticism.
At the end of April George F. Colony, chairman of
Forrester, published an article with a pretty strong title:
He explains that many new economy
companies need to be exposed as what they are: empty, full of
air, shallow. Here are some of his comments.
I recently did a series of interviews with CEOs about the
next 10 years and how the Internet would change their
business. Most of the interviews were with Global 2,500 CEOs
people like Harvey Golub at American Express. But 20% of
my conversations were with the leaders of Dot Coms.Yes, the
traditional CEOs were scared by the internet and were
scrambling to catch up. But that wasnt what grabbed me. The
biggest revelation was the low quality of the Dot Com CEOs
when compared with the traditionalists.
What was missing? Many of the Dot Com CEOs lacked depth,
experience, and common business sense. Their commitment was
short-term three years on the average. They talked about
their highly fluid work force a constantly changing cast
of characters, washing in on the promise of more stock
options and an IPO and then washing out, post-offering, in
search of another pre-IPO company. The business thinking of
these CEOs centered on simplistic and clichéd mental
models: Be like Amazon! Advertise,
advertise, advertise! Its a land grab!
We dont want to be profitable too fast.
B2B is the place to be. There was a fanatical
focus on valuation getting public and liquid while
value what the customer eventually gets was a back-seat
discussion. In many ways, these companies felt hollow,
lacking some of the fundamental ingredients of long-term
success. Four dynamics drive this mentality. The first is
history. Capitalists and entrepreneurs look backward at
companies like Microsoft, Sun, or Cisco and perceive that
first-mover status creates a tornado, in the words of
Geoffrey Moore, that steals the air from competitors and
locks up a market. The lesson: Go fast or die. The second
dynamic driving this trend is jealousy. Entrepreneurs see
undeserving people getting rich fast, and they want their
piece of the pie. The third dynamic is the flavor of current
capital. Public markets are gullible and ready to buy equity
in half-baked, or even quarter-baked, "companies."
Venture capitalists appreciate the window for quick-flipping
and encourage entrepreneurs to think in the short term (check
out a great article
in Fast Company, to get a full taste
of this trend). The fourth reason is greed. The thinking
goes, Hey, why get rich slowly with a lot of work when
I can get rich quickly with not much work?
These factors are creating hollow companies, which have
limited experience, wisdom, commitment, long-term view,
allegiance to the customer, or sense of construction. These
companies are not built to withstand competition, theyre not
built to deliver sustained value, and theyre not built to
last. The idiocy of the Hollow.Coms was embarrassingly
revealed during this years Super Bowl. By the third quarter
the advertisements for Dot Coms had become the running joke
of the game. With the exception of a few good ads, most were
a phenomenal waste of money. They failed to identify the
company or critical information like the benefits and
features being offered.So whats going to happen? Some
fantastic companies will be built that end up dominating the
Internet economy. But let me emphasize the word built.
Its going to take years; blood, sweat, and tears; developed
wisdom; and enlightened business decisions to construct the
truly stellar Internet companies. The Hollow.Coms will get
trashed along with a sinful amount of venture and day
Pretty tough... but Gerorge Colony is right. And his prose makes me
feel at home. Thats the same feeling I have when meeting with
companies, large and small, on this side of the ocean.
There is equally sound (and critical) thinking in the article by Jim Collins,
Built to Flip,
quoted by George Colony. Its quite long and worth reading in full;
but just to get the feeling here is how it starts.
«I developed our business model on the idea of
creating an enduring, great company just as you taught us
to do at Stanford and the VCs looked at me as if I were
crazy. Then one of them pointed his finger at me and said,
Were not interested in enduring, great companies. Come
back with an idea that you can do quickly and that you can
take public or get acquired within 12 to 18 months.
A former student was reporting to me on her recent
experiences with the Silicon Valley investment community. As
an MBA student at Stanford, she had taken my course on
building enduring, great companies. She had come up with a
superb concept that involved doing just that. But when she
took the idea to Silicon Valley, she quickly got the message:
Built to Last is out. Built to Flip is in.
And here are two short paragraphs at the end.
If the new economy is to regain its soul, we need to ask
ourselves some tough questions: Are we committed to doing our
work with unadulterated excellence, no matter how arduous the
task or how long the road? Is our work likely to make a
contribution that we can be proud of? Does our work provide
us with a sense of purpose and meaning that goes beyond just
If we cannot answer yes to those questions, then were
failing, no matter how much money we make. But if we can
answer yes, then were likely not only to attain financial
success but also to gain that rarest of all achievements: a
life that works.
Copycats in my country, as in the rest of the world, think that
the best they can do is to imitate the hollow coms (or, even worse,
produce clumsy second-hand imitations of their local imitators).
They should, instead, learn from their mistakes and try to do better.
Of course it isnt easy, but it can be done. There is a big traffic jam
on the way to nowhere; while less visible, but quite effective, paths to real
success are pleasantly unspoiled by the madding crowd.
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