InformationWeek

Nowhere is this more evident than in the world of Internet companies. Internet investors are beginning to demand more than just hot technology--they want profits. Technologists need to make it their job to influence both. Yet after working as a consultant with some of these Internet businesses, I realize that message hasn't gotten through.

In the frenzied startup period of an E-commerce company, business basics such as competitive analysis, brand building, and financial measurements can fall by the wayside. Two E-commerce technology companies recently asked us to perform a competitive analysis of their new products. Both had less than two months before product launch. These two companies had spent millions of dollars developing new technology,

but didn't even know how their market segments were organized, what features and functions would put them in a leadership position, or how they stacked up against potential competitors.

One of the biggest mistakes technology-related management teams make is ignoring "old-fashioned" management principles, believing this new age of technology means those rule don't apply.

Our two clients didn't do any formal industry modeling. In one case, the company hadn't looked at its competition at all. That product rollout has been delayed because the company found out through our analysis that there were several companies with well-established products that already do what its new product would have done. A simple analysis of the feature/function gap of current products would have given the company the information it needed to leapfrog its competitors.

It's critical for technology businesses of all kinds to analyze competitors' strengths and weaknesses, entry barriers, customer-switching costs, features or functions missing from current products, and other competitive factors to make a product or service rollout successful. Technologists need to demand a role in this process. The expertise of a technical manager, especially a senior manager at an E-business, is just as important in assessments such as competitive analysis as they are in creating new technology.

Technology-driven Internet companies also can fall in love with their ideas or technology and not think about how to build and leverage their brands in cyberspace. "Build it and they will come" just doesn't work, even if the business has big names such as former Surgeon General C. Everett Koop or Barnes & Noble. Barnesandnoble.com has made progress, but it demonstrates how difficult it is to translate a great brick-and-mortar brand into online market share against a powerhouse such as Amazon.com. DrKoop.com recently said it was down to about four months of operating capital because advertising and other revenue have fallen short of expectations.

Technical staff must work with marketers and allow the marketers input into the product-development process. Technical staff can also help the branding process by identifying potential technology-related business partners, such as other companies that make complementary products.

Finally, E-commerce ventures must commit to measuring real returns. Technical people have a tendency to get excited about a great idea and lose interest in calculating the return on investment for developing technology or marketing and business development. Some E-commerce ventures have gotten away with ignoring traditional measurements, but shareholders and venture capitalists have grown skeptical, as evidenced by the market's drop in May. Technologists must be involved in setting these goals, collecting the data to measure it, and managing the path to profits.

Around 1994, business schools started creating "techno-MBA" programs. They were designed to make business-school students technically literate enough to communicate with the IT experts, acknowledging that being able to use technology effectively is critical to leading a company. Technologists have to start turning that thinking around--learning how to communicate with their business counterparts and playing a part in leading the business. It's time they took seriously their own "business literacy."