InformationWeek

January 17, 2000

The E-Business Balloon Ride

By Lou Bertin

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s we begin the final year of this century (those of you who, when asked to count 10 pennies out of a large pile, begin counting at zero and end at nine ought feel free to pick nits with me over the previous statement), a thorough read of what my colleagues and counterparts have had to say in their forecasts might lead one to reasonably believe that 11 months hence, we'll be entering "The Century of the Customer" or a reasonable facsimile thereof.

That's an exaggeration, of course, because if the past few weeks are any indication, 11 months is far too short a period to remedy the shortfalls between the visions that product and service providers have for customer-relationship management and the occasionally depressing reality.

This isn't intended to cavil regarding the occasional slipup that is an inevitable part of conducting commerce: orders are dropped or lost, inventories fail to match up with demand, Pokemon becomes the hot toy instead of the talking space ships, an idiot teen-age employee of an ice cream parlor inexplicably fails to reorder ice cream in time for Memorial Day weekend (guess who?). Stuff happens.

My point is that the traditional global economy and the digital economy (in both its business-to-consumer and business-to-business iterations) are significantly out of synch and will remain so for a good long while. Against that backdrop, what's to become of companies that have (or will) become dependent on digital commerce, which is to say all companies?

Floyd Norris, writing his 1999 year-end wrap-up in The New York Times from the perspective of 10 years hence, tells the tale of a Silicon Valley recession that pole-axed a wide swath of dot-coms, reintroduced profitability as a desirable trait for enterprises, and corrected real estate values to the point where bungalows no longer are priced starting at $1 million. In short, the tale of an Internet bubble that burst.

Respectfully disagreeing with Mr. Norris, whose work I admire, I offer instead the imagery of a hot-air balloon that can dramatically rise and fall based on the combined factors of internal controls and uncontrollable outside forces. Do some balloons crash? Certainly. But do the vast majority manage to take off, stay aloft, and make it safely (if, sometimes, in stomach-turning fashion) to their destinations that they might reinitiate that process? Absolutely.

What we're experiencing in the Internet economy isn't a bubble that will burst. It is, instead, that wild balloon ride, I think. While the holiday selling season was a success for some electronic retailers, it was a nightmare for others. I'm certain that the good people at Toys R Us weren't wild about having to send out $100 make-good certificates to those consumers whose orders were accepted but couldn't be filled. Nor could any responsible company be happy to notify consumers that their orders wouldn't be shipped in time for receipt before Dec. 25, despite previous assurances to the contrary.

Are those sorts of events enough to scuttle a company? Perhaps. But they're surely not enough to subvert the digital economy. We'll see dot-com and E-business failures, perhaps in significant numbers. But they won't be enough to bring down that big hot-air balloon. The balloon might list and it might dip, but there's no way it's going to crash. Excess baggage will have to be jettisoned, but that balloon will stay aloft. Why? Because customers, however spottily served they may have been to date, are demanding it, and fulfilling customer demand always is the ultimate imperative.

Feeling obliged to offer at least a couple of predictions for the year ahead, here are my top two: For one, the external factors I alluded to in my balloon analogy will make themselves manifest in the form of some taxation of retail transactions conducted over the Net. The online consumer economy is too big and too irresistible a target for local and state and federal governments to ignore. However counterproductive online taxation will prove to be, online taxation legislation in some form will be enacted. Lions aren't big on ignoring raw meat that's sitting before them, regardless of whether or not they're hungry at the moment.

More significantly, I see the Internet as being one of the elements figuring in the demise of at least a few Fortune 500-level CEOs. That demise will come not because their organizations failed in their online efforts but because their organizations were allowed to be slow or half-hearted, or both, in embracing the Internet. When Jack Welch talks, as he did when he said that companies that can't deal with General Electric online simply won't be allowed to deal with GE, corporate boards listen. However foreign the concept of "ready, fire, aim" might be to that body of comfortable, profitably hidebound corporations, they'd better embrace it when it comes to the business of online commerce.

With neck stuck out, I offer you my best wishes for the year to come and a promise that my December column will revisit these prognostications. Go and do great things.

Lou Bertin is an industry consultant. He can be reached at Lou.Bertin@gte.net.

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