Air strikes

1
Chapter 6

• Air strikes

2
Merrill Lynch vs. Schwab

• ML Direct
• Integrated Choice
• By mouse, phone or human being
• Money manager, advisor and credit card of choice

• Schwab Empower the individual investor
• Discount/Phone order
• B of A Merger and buy back
• Move to internet trades 1 M new accounts, up
  19 in revenue, 29 in profit

3
Other Financial Services

• 20,000 down to 8,000 commercial banks
• NYSE vs ECNs ECN have 30 of Nasdeq,
  commissions dropped from 6.25-18.75 cents per
  share to .075 cents
• eBay and Yahoo!

4
Key Concepts

• The internet defies management understanding in
  terms of speed and capabilities.
• The more successful the executive, the more
  vulnerable to understanding the impact of the
  internet on the business.
• The dot.com phenomenon is only the first round of
  new internet competition.

5
My Two-Bits

• Is this all an example of my suggestion that as
  information is more widely distributed, each
  piece of information is worth less until it
  becomes a public good? Thus, the more
  successful we get in the information business,
  the less the information will be worth. The key
  is to develop and protect proprietary information.

6
Chapter 7

• Overcoming Dot Vertigo

7
Gerstners Transformation

• Sense of the Customer
• Incentivize and Lead People
• Respond to Customers
• Streamline the Back Office reengineering, less
  reliance on staff, cost reduction, organizational
  simplification.
• Managing Resistance to Change

8
Biggest Dot.Com Strategy

• New Product Strategy Dump the desktop, acquire
  Lotus Notes.
• Network-Centric Strategy Combined the largest
  internet business with the largest consulting
  business (both IBM)
• e-IBM e-Care e-Commerce e-Learning
  e-Procurement.
• Outsourced PCs and Thin Clients

9
Key Concepts

• It takes an outsider to see the forest, not just
  the trees, and to mobilize the organization to
  see the same thing.
• High cost challenge viability, and must be halved
  in short order.
• Customer sensing and responding is key, and it is
  a long haul for the transformation of the
  industrial age company.

10
Chapter 8

• Drugstore.com

11
Some Lessons

• Build Fast and Highly Focused
• Agile and Quick-Reacting Management
• Internet Impact in the Industry

12
Key Concepts

• IT Strategic Advantage has shifted from the back
  office to the front office connection with
  customers. However, the focus has shifted back
  to the back office.
• Greenfield sites have cultural advantages but one
  big disadvantage customers wont pay for
  navigation!
• Dot.Coms change an industry.

13
Chapter 9

• The Case of Cisco Systems

14
Renaissance CIO

• Manages technology as integral to business
  strategy rather than a support function.
• Internet Years rather than Annual Budgets
• Replacing Legacy Systems
• Building out the Web-Based Front End on the
  ERP-based Back Office

15
Benefits on the Strategic I-Net

• Employee Self-Service Internal Applications
• Communications and Distance Learning
• Customer Self-Service Electronic Connections
  for Service and Supply with Customers
• E-Commerce
• Information Transparency in the Supply Chain
• EIS and DSS
• Integrating Acquisitions into Ciscos Strategic
  I-Net

16
Key Concepts

• The renaissance CIO makes the difference
• Dont even think about it unless your CEO is
  Internet-savvy and Internet-ready.
• Internet benefits are managed they dont just
  happen.

17
Act Like a Venture Capialist

• Chapter 10

18
Starting Points
19
Action Agenda for Zone 1 Industrial Age
CompanyIBM

• Cost Structure
• Change Management
• Focus Management on Customer Relationships
• Redesign Business Processes and Install
  Up-to-Date Technologies

20
Action Agenda for Zone 2 Incumbent Spin
OffsVisteon, Delphi

• Leverage near-greenfield sites
• Update legacy systems
• Reengineer legacy processes
• Avoid retaining the bad and ignoring the good

21
Action Agenda for Zone 3Dot CompaniesDrugstore.c
om, e-Bay, Dell

• Assemble savvy internet team
• Build out front office to connect with customers
• Grow in partnership with your customers
• Build out a back office designed for real-time
  customer relations
• Maintain momentum to satisfy investors

22
Action Agenda for Zone 4Bricks and
ClicksSchwab, Microsoft, Wal-Mart, Cisco

• As large companies, they need to focus on speed
  and flexibility
• Successfully grapple with legacy systems and
  processes
• Understand category of one standing

23
Chapter 11

• Five Myths of the Internet

24
5 Myths

• Dot Companies are Dot Nothings
• Legacy Systems Cant Be Built Upon
• The United States is the Internet Leader
• PCs Provide the Internet Access
• English is the Language of the Internet
• Only 4 has remained true!

25
Evans Interprets Nolan

• Many dot.coms were dot.nothing
• Relational databases are still the heart of the
  front and back office.
• Be careful of penetration rates, growth rates,
  etc. Look at the baserate.
• Think Thin Clients
• China is teaching English from 3rd grade on!
  India is the most populous English-speaking
  country in the world.