I hate the terms “old economy” and “new economy,” just as I hate “liquidity,” “supply chain hub,” “think tank” and “Internet guru.” However, even I will occasionally use some of these tired phrases to make a point. I also hate articles that try to find a clever connection between sports and business – I hope the reader will forgive me.
It seems in vogue to continue to discuss the movement away from business-to-consumer to business-to-business. The battle cry is “BTC is over, move on.” If Horace Greeley lived in these times, he’d surely say “Go BTB, young man.” So the money shifts from BTC to BTB, then shifts to BTB “market makers,” then to BTB “infrastructure builders.” Then it shifts back to IBM and General Motors where it all started.
What’s happening in the BTB industry is like a pro-am golf tournament, where the amateurs get to play with professionals because they’ve bought their way into the game. The odds of amateurs beating the pros are overwhelming, but they’ve paid for a shot at it. We’ll cheer them on until we realize there’s a reason CBS doesn’t cover golf tournaments played on public courses featuring guys who sell insurance and fix cars for a living – those guys stink. They are just like the rest of us. There’s nothing special there. A $2,000 set of custom clubs won’t make them any better.
Unlike the BTC space, where a huge marketing budget and a multimillion-dollar advertising campaign can quickly help level the playing field, in the BTB space you need a product or technology to succeed. The concept of “eyeballs” and “stickiness” doesn’t cut it in the BTB space. It’s about having a differentiated and sustainable competitive advantage. In BTB, a truly different and defendable business proposition that leads to shorter-term revenue will be the key to long-term return on investment.
Easy access to capital and inflated valuations has caused some Net start-ups’ CEOs to think the old-economy rules of how to build and run a business don’t apply to them. Many of them are feeling pain now – the pain that comes from not having revenue, not demonstrating market share, and the pain from the board and investors questioning the business model they supported or invested in only six months earlier.
They all knew that simply throwing in money or hiring more people to solve a business problem doesn’t work in the offline world. Now they know this also doesn’t work online. Perhaps the glowing press releases and 30-year-old Internet billionaires distracted them from reality. The reappraisal of their investments (read: falling Net company valuations) has brought them back to the real world – where you need to build a great company before you build a great brand. The world where your brand represents your promises to your customers, not the instant flash of awareness that comes with a multimillion-dollar 60-second Super Bowl ad featuring monkeys and bikinis. The world where you should fix your fundamentals before you even launch your Internet site.
Unfortunately, many successful old-economy firms feel (or felt) the need to get more agile through embracing e-business and embracing it big-time (the droves of burgeoning Net consultants and Web site developers are happy to lend a hand at $350 an hour). This speed-to-market, at-all-costs mentality brings with it a slew of missteps, poor planning and undisciplined product development. It adds up to sloppy compromises the firm would never make in its brick-and-mortar business, all in the name of e-success.
Creating a viable e-business strategy is hard work. The Internet and its ever-changing technologies can intimidate even the most seasoned executives. These business leaders need to place more trust in their years of real-life experiences and professional instincts and rely less on the limited experiences of their Internet consultants.
The distinction between old economy and new economy has been blurring – it is becoming clear that e-business is about strategy, profitability and execution. There’s no magic potion, no rocket science, just smart business.
There is still time to craft that sound e-business strategy. But, just like in the old economy, if your online business doesn’t lead to a timely and acceptable ROI, doesn’t add real value or doesn’t offer something unique – there’s also time to rethink your digital moves. You don’t need to get a hole in one, just concentrate on hitting the e-fairway.