Challenges for Senior Corporate Leadership and Strategic Management in a Rapidly Changing Environment - Term Paper Example

Topic: E-commerce management Introduction The horizon of the term e-commerce has expanded, taking it to new heights of advanced technologies with the advent of Internet, making the whole world a market place to buy and sell products and services. Now, “E-commerce is the function of creating exchange i.e., buying and selling over digital media” (Kalakota and Robinson 1999). Once it was interchangeable in meaning with e-business. Now, the term e-commerce has come of age by not just exchanging business but beyond that – comprising e-marketing, e-franchising, e-mailing and much more. Corporate success has to be essentially a strategic application based on entrepreneurial principles. Traditionally, strategy was formulated and implemented on Solution-Based Logic. Senior members of companies used to spend days in suggesting strategies to increase profits. Strategies suggested by board members served personal interest more than real work, questioning and ridiculing others’ ideas. All members had different perspectives of evaluating the proposed strategy. It was an amalgam of conflicting strategies, where finding a consensus was just a formality. Politics played a major role in zeroing on a strategy. Customer satisfaction on adopting a strategy based on traditional method was not beyond 5% to 15% better than earlier solutions. (Anthony, 1999) Advanced strategy, on the other hand, involves thinking process applied at senior level, called Outcome-Based Logic. It provides solutions, satisfying 80% more customers than the earlier solutions, performing ten times better than traditional strategies. Due to the fast changing IT environment, advanced business strategy needs to be formulated to convert new opportunities and add value to turn corporate investment into appealing propositions, remaining in the competition by providing durable benefits to business units. The fast pace of technological development has changed the ways of doing business on the global platform. The World Wide Web has changed the strategic mindset of companies to exploit the vast market potential, earlier unavailable. The major challenge of this dynamic business world is to run durable profit-earning venture in this competitive environment. Here comes the importance of formulating a strategy relevant with the progressive business environment. Traditional methods can’t succeed because of the global transformation brought about by the advancement in IT field. New approaches demand the application of Outcome-Base Logic, offering a panorama of strategic solutions in line with the changing times (Anthony, 1999). How has the environment changed? What are the key challenges? The business environment has changed with the advent of WWW from a traditional approach to business strategy development that includes creation of whole lot of data to analyze different customer groups, approximate market share and competitive threats. In traditional approach to strategy formulation, emerging technology is also utilized along with traditional strategy to carry out business plans. It leaves a blind hole in strategy formation. The advance business strategy, on the other hand is market-specific, shifting the focus on information and communication based electronic environment run by latest technologies based on computer, telecommunication and digital solutions. The very matter of transaction – the information about a product, sometimes, replaces the product in today’s environment. Electronic screen has taken the place of man-to-man talk. The supporting infrastructure of finalizing a deal is not traditional but computer and communication through Internet have replaced it, providing a digital format. There are no limits of space, time and place in today’s market place. An entrepreneur provides information to its customer on demand and does business as well with the customer from any corner of the world. Amazon.com is an example of the way modern business is strategically designed to cater to customers in 24x7 format (Singh, p.4). The challenges of e-commerce require Outcome-Based Logic although no such formula exists to formulate a strategy. Strategist Gary Hamel (2002) has stated in “Killer strategies (1997) that “the dirty little secret of the strategy industry is that it doesn’t have any theory of strategy creation.” Innovation is the mantra of success in the changing times. Research and development are not sufficient. R & D provides quality and makes a product better than before by offering line extensions but innovation makes your product unique and rare, making it difficult for competitors to imitate, providing sustainable growth to the company. Innovation creates new market opportunities for growth besides delivering better than before to existing customers. Products speed on time-to-market and remain in trend. It is not possible in traditional business strategy of planning annually. America’s third biggest insurance company Progressive is an example of innovation driven strategy. In 1997, it offered its customers to purchase an auto-insurance policy online in real time and was also first in receiving wireless payment on insurance. Companies revised their business strategies and found new markets to be exploited, which were earlier non-existent. To quote the example of Cemex, an international cement supplier, caught hold of the opportunity by showing insight when it saw costly equipment not being used due to late deliveries of cement. It cut on time from three hours to 20 minutes to reach the destination by using satellite-tracking technology and advanced scheduling software. Herb Baum, 2004 Innovative companies don’t follow the rule of scales. Unlike other companies, innovative companies deliver profits at a lower scale point or gain scale advantage that didn’t exist earlier. They search new business models to have an upper hand in competing with other businesses (Moran, 2006). Some common themes help in creating the right business environment helpful in innovation. The basic inputs of innovation are people, processes and technology – the factors of strategy formation (Moran, 2006). Companies revise strategies continuously to find and fill gap between the obsolete and latest and update technology accordingly to remain concurrent. Operating environment changes more frequently than historical strategic planning cycle. Companies customize and process their management structures to get ahead in emerging business opportunities. Innovation helps companies to keep abreast of time as they know better the pace of change and maintain a diversified portfolio of innovations to make use of some out of all with the emerging waves. Their approach is customer-centric and they assimilate technologies with business models to remain favorite provider of services. Sustainable growth is not possible without innovation. Some other challenges the emerging technologies present according to Day, Schoemaker and Gunther (2004) to survive and succeed in IT enabled competitive e-commerce are: Managing doubtful and complex environment, keeping pace with speeding change and evolving new competencies. All this requires a different approach and set of rules and structure beneath. Difference in traditional and emerging technologies The traditional approach of established technologies in the domain of environment says that risks and uncertainties can be managed as they can be forecasted, are linear and structured, players are known to one another and channels are clearly defined. Emerging technologies are ambiguous, uncertain and formative in nature. The traditional approach to organizational strategy is based on accepted rules with rigid and well-defined mindset, relying on existing capabilities, walking on known procedures and processes with no conflict. Established technologies take advantage of leveraging resources provided by traditional strategies. Modern organizational approach focuses on powerful, adaptive set of multiple strategies, real time, and issues-oriented process Day, Schoemaker and Gunther, 2000. Traditional strategy in the domain of resource allocation is based on set procedures. Emerging technologies are informal. Market assessment in traditional technology provides research in set context while emerging technologies work on experiment, cater to secondary demand and apply probe and learn approach Day, Schoemaker and Gunther, 2000. In the field of Development process, established technologies’ steps are pre-set while emerging technologies are elastic, experimental and offer multiple alternatives. Traditional technologies manage human resource through traditional recruitment, selection, supervision, promotion and compensation. Emerging technologies practice novel methods, provide with new compensation system to manage its people Day, Schoemaker and Gunther, 2000. Of course, with the changing e-commerce scenario, it is not preferable to continue with the traditional approach to strategy. The difference between both approaches is conversely related. Traditional strategists continue to look at technology, people and processes as mere means of executing business plans. This gap in both strategies in current environment has created a huge and ever-increasing blind spot in the field of strategy development, which can be filled by cornering away from traditional approach to strategy formulation and implementation. Companies have to take a fundamentally different approach to planning and growth running on the wheels of innovation based business strategy Day, Schoemaker and Gunther, 2000. Certain paradoxes emerging out of situations also demand and advocate a different new approach to traditional one. Although commitment is required but options have to remain open so that managers could adjust commitment with flexibility. The organization has to be flexible in approach to investments. Another paradox is that winners are mostly pioneers but most of them fail in the end. It requires a lot of patience to increase the chances of success. Day, Schoemaker and Gunther, 2000 Although strategies in traditional approach are built on available competencies but success depends on organizational separation. To let the emerging business flourish in its own way, companies create divisions so that parent company may not come in the way. The paradox appears when same companies become competitors in other field although they are collaborators on an earlier place. To quote for example: Sony and Phillips, IBM and several other companies like Microsoft. Companies have to live with the paradoxes with their ambiguities. There is no easy and smooth road to tread. Thus, new approaches to strategies are must to avoid the dangers of advancing technologies. Wharton Emerging technologies Research Program (Gunther, Day & Schoemaker, 2004) has specified four dangers that put a new company at receiving ends. These are delay in participation, remaining with what is known and not adventuring in new fields, half-hearted effort and approach and not showing perseverance. Conclusion: How can already existing organizations survive in the face of volatile competition in such industries that have changed by advancing e-commerce technologies? This e-friendly transformation is happening mostly banking, retail, airlines, entertainment, financial services and insurance sector. The key challenges faced by senior corporate leadership are how to create an environment of confidence on the latest emerging technologies, creating an appeal to adapt the staff to adjust accordingly, not doubting complexities of the new environment, keeping pace with speeding change and evolving new competencies. It needs a different approach and set of rules and structure beneath. Innovative change is the mantra to succeed. Difference in traditional and emerging technologies in all spheres of corporate management has to be kept in mind, opting for the latter. Corporate leaders have to manage the commercialization of e-commerce technologies with its ambiguities and paradoxes as well as saving from the traps of half-hearted efforts to formulate new strategies and not showing patience with emerging trends. What is required is a multi dimensional, multi level holistic approach for managing the commercialization process and system for the success of e-Commerce technologies. Works cited list Book resources: Anthony, W Ulwick (1999) Business Strategy Formulation: Theory, Process and the Intellectual Revolution. Westport. Greenwood Publishing Group Kalakota, R. & Robinson, M. (1999) E-Business: Roadmap for Success. New York. Addison Wesley Hamel, Gary. (2002). Leading the Revolution. USA. Plume Gunther, Robert E. Day, George S. & Schoemaker, Paul J. H. (2004) Wharton on Managing Emerging Technologies. Wiley Internet resources: Singh, Dr. Mandeep. First Stop Business Information Center. A Primer on Developing An E-Business Strategy. (August 6 2006). http://www.commerce.state.il.us/NR/rdonlyres/3608158F-181F-44A8-BC66-353CA27088ED/0/eCommerce.pdf John Moran Saturday, July 22, 2006. The Blind Spot in Traditional Business Strategies. ProQuest Information and Learning. New Straits Times. http://www.carinsurance.com/news/content1740.aspx Boutaleb, Loubna, Electronic purchasing and the challenges for the supply management strategy (August 6 2006) http://neumann.hec.ca/chaireappro/e_Theses/boutaleb.htm Read More