Forster N. - Maximum performance (2005)(en)

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information about their organizations out of the office and into the field, thereby enabling more on-the-spot deals. In 1996–7, cutting-edge small and medium-sized companies started linking these systems into ‘Customer Relations Management Systems’ (CRMS) and ‘Automated Customer Response Systems (ACRS), to enable fast responses to customers’ queries or complaints. Today, this system, and a myriad of associated offshoots, are at the forefront of the ‘Enterprise Application Integration’ (EAI) revolution. EAIs do three things. First, they can make sense of and integrate previously incompatible or different software packages, so that they can communicate with each other. Second, they can assimilate and distribute large amounts of information within organizations and, thereby, integrate different operating functions. Third, they can now do this in real time, with minimal delays between information inputs and outputs (Darroch, 2002).

General Electric was the first company to develop a fully integrated system of this kind in the late 1990s and many more companies have followed their example. A survey in The Economist revealed that GE’s chief information officer, Gary Reiner, has a monitoring system that could tell him, instantaneously, what is going on anywhere, at any time, in any part of the company’s global operations. He is able to do this because all of GE’s companies, divisions, processes and systems are now interlinked in a systemic web-based operating system (ibid.). Administrative automation continues to revolutionize the control of accounts, inventories, billing and salaries in many organizations although, as we will see in Chapter 12, these have not prevented unethical and corrupt organizational leaders from misusing these systems for ‘creative accounting’ purposes.

There has been a continuing revolution in employee portability and mobility, through the use of smart phones and technologies that have integrated mainframe databases with mobile PCs, email facilities and remote-satellite systems. The first Personal Digital Assistant (PDA), launched by Apple in 1993, led to an explosion in the manufacture of PDAs in the 1990s, combining fax, email, memo and organizer capabilities. A decade later, many employees were not just connected; they were tethered to wireless technologies, armed with pagers, laptops, PDAs, Tablet PCs and mobile phones. These technologies mean that employees can ‘carry’ the entire knowledge base of their organizations on the road when they visit customers and clients, and their ‘offices’ are wherever they happen to be. Ericsson predicts that this working revolution will continue, with up to half of their employees now working away from the office on a regular basis. In financial services, advertising and consulting, working away from the office may become more widespread, because communication in the Information Age no longer

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requires employees to be in physical contact with each other, or the companies that employ them (Ericsson website, 1 December 2003).

The growth of Internet e-business has continued unabated throughout the world over the last decade. In Australia, for example, this doubled between December 2000 and mid-2002, in spite of the postApril 2001 technology slump. During this period, online revenues grew from around $A21 billion to $A43 billion, while the number of people using the Internet to make purchases almost doubled to reach 2.7 million. More than 70 per cent of Internet e-commerce was business to business (B2B), which grew by 522 per cent over this period. Business to consumer e-commerce also grew strongly, with an overall increase of 878 per cent since the beginning of 1999. Worldwide, there has been a revolution in home shopping via the Internet. In December 2002, more than 200 million people worldwide were using the net for shopping on a regular basis. This was an $US88 billion a year industry in the USA in 1999 and is expected to grow into a multi- trillion-dollar worldwide industry by 2005 (Chong, 2002). More established and traditional companies have also been using e- commerce as a relatively cheap way of entering new markets. For example, in 2001, BP (Australia) signed a distribution deal with the Melbourne-based online retailer, wishlist.com.au, and customers can collect their on-line orders from BP stations when they go to buy petrol. This neat example of lateral thinking, and the effective use of another company’s e-technology, means that BP can build a tighter connection with its five million annual customers and, perhaps, encourage them to make more use of their petrol stations than those of their rivals (Beilby, 2002: 61).

Computer-aided design (CAD) and robots are now used routinely in automobile construction and many other manufacturing industries, particularly in component manufacturing where electronic designs can be transmitted directly to the robots making the products. DaimlerChrysler, Ford, General Motors, BMW and Peugeot all purchased supercomputers during the late 1990s and early 2000s, in order to help with vehicle design, analysis and verification. What used to take weeks or months can now take just a few hours. Instead of having to build an expensive prototype from scratch, carmakers can use these computers to simulate tests and make changes before the car is built. In a matter of hours they can run thousands of complex, noise, vibration and airflow tests. They can even simulate the effects of crashes on the vehicle (Bennett, 2002).

A robot, developed by Dyson in 2000, with 50 inbuilt remote sensors is now used in thousands of organizations around the world, cleaning

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floors at night. The company’s SC06 robotic household cleaner, launched in 2002, requires no programming. It has 70 sensors and can make 600 decisions a minute while it learns and vacuums its way around its environment. Thousands of robots are now used to transport documents in large buildings. Husqvarna launched the first selflearning robo-mower in 2002. The appearance of the first generation of self-learning robots included the first robot dog called ‘Aibo’ who appeared in 2001, costing $US3000. It was described at the time as ‘a cross between Robocop and the Tacho-Bell Chihuahua’. It has selflearning and adaptive growth capabilities built into its programming, responds to verbal and non-verbal stimuli, makes its own judgments, expresses pet-like emotions and can recognize forms and colours. It has more computing power than the first spacecraft to land on the moon. A gastrobot, named ‘Chew-Chew’ made its debut at a robotics conference in Hawaii in July 2000. It had a microbial ‘stomach’ that was fed organic matter, which it then converted into electrical energy. A robowaitress made its first appearance in a Japanese restaurant in Tokyo in 2001 (AFP, 2001a). This was soon followed by the launch of the first ‘guard-robot’ in Japan, on 12 November 2002. In the same month, Sony announced that the world’s first ‘Small Biped Entertainment Robot’, SDR 4X, would be launched in 2004. Looking like Astro-Boy, a popular cartoon character in postwar Japan, this is able to walk, speak, sing, gesture and learn to recognize its owner (Lewis, 2002: 70).

On 3 May 2002, scientists at the State University of New York announced the creation of the world’s first cyber-rat, the ratbot: this unfortunate rodent was fitted with newly developed brain implants and a radio backpack to control its behaviour. Scientists working on this project had discovered that implants could be used to stimulate areas of the rat’s brain responsible for food, sex and drink responses. The rat quickly learnt to respond to this stimulation, even if this involved climbing up and down stairs or moving into the centre of a brightly lit room, things that rats would normally avoid. The goal is to use ratbots to find earthquake victims, detect landmines and even to spy inside enemy installations with the use of miniature video cameras. Less than two months later, on 23 June 2002, scientists revealed that they had combined the DNA of a goat and a spider, to create Spidergoat: this fusion has resulted in a goat that can produce wool that is five times stronger than steel. This could be used to make lightweight body armour and other forms of protective clothing in the near future (World on Sunday, 2002). The world’s first transatlantic remote operation was carried out successfully on 7 September 2001. Three French surgeons in New York, using remote-controlled robot arms, removed the gall bladder of a woman in Strasbourg Civil

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Hospital, 7000 km away. This was removed in an hour, and the 68- year-old was discharged from hospital 48 hours later (Von Radowitz, 2001). In late May 2003, it was announced that the surgical robot, Da Vinci, had performed its twentieth successful heart bypass operation (The Weekend Australian, 24–5 May 2003).

In other areas, we have seen the emergence of ‘cynthespians’ and the first fully digital ‘actors’ in the 2001 movies, Final Fantasy and The Spirits Within. The world’s first synreader (synthetic newsreader), ‘Anova’, was launched in 2000. In October 2002, it was announced that games featuring interactive Sims (simulated humans), became the bestselling type of home computer game in the world (Kampert, 2002). We have also witnessed the emergence of language/speech translators. Philips launched the first commercial version of these in 1998, but the early ones were somewhat unreliable. For example, a web advertisement for the launch of a new Fashion Café advert in Rio de Janeiro in 1998 announced that it would be opened by, ‘supermolecules, Nomoi Compile, Cloudy Scoffer and Else Metaphors’. More recent iterations have become more reliable, as they are driven by smart software that learns to respond to nuances in their users’ voices. Fuji Spinnin has developed a textile that contains ‘pro-vitamin’: this is a substance that turns into vitamin C when it comes into contact with the skin. In the form of a T-shirt it can be washed up to 30 times. The company is also planning to introduce vitamin-laced underwear for women (AFP, 2001b). The world’s first electronic paper was launched in May 2003. The UK company EIink announced that its scientists had created the first super-thin (0.3mm), semi-flexible electronic-ink display screen, capable of displaying black-and-white and colour text using wire technology. This has paved the way for the first commercially available generation of portable/downloadable e-newspapers and wearable computer screens (Reaney, 2003).

New technologies are enabling intelligent organizations to re-engineer themselves continuously to meet new commercial challenges. They will continue to revolutionize all manufacturing processes and businesses, and will play an increasingly important role in the management of employee knowledge and intellectual capital. They may contribute to the globalization of trade and commerce, to greater international political, social and cultural integration and, possibly, help us transcend the ancient tribal, religious and ethnic conflicts that continue to plague humanity. Some commentators on the Information Age also believe that new technologies will make structured and hierarchical organizations, in their present forms, redundant in the not-too-distant future. The impact of these developments on organizations will be profound, and the challenge for leaders and managers now is to anticipate and plan for

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the impact of these changes. However, there has of course been a major hiccup in the development of the much-hyped technology-driven New Economy: the collapse of the dotcom bubble in April 2000 and the subsequent elimination of more than 90 per cent of the companies launched under the dotcom banner. Below we look at the practical insights that business leaders can draw from this event and its aftermath.

‘Irrational exuberance’: insights from the collapse of the dotcom bubble in 2000

The Internet: 1) the most important communications technology in the world; 2) an over-hyped bubble; 3) that which changes nothing; 4) of extreme philosophical and even metaphysical significance; 5) just another media channel; 6) all of the above; 7) some of the above; 8) none of the above.

(Jim Rosenfield, author of The Devil’s Directory of Direct Marketing, cited in

The Australian, IT Section, 26 February 2002)

The web bubble is bursting. Has burst. Which means that some of us moving towards on-line glory may instead face that Wile E. Coyote moment when you look down and realise that you have just sprinted off a cliff. Sigh. Back to our cramped cubicles. New economy, my ass.

(Michael Keen, Editorial Director, Keen.com, cited in Time, 17 April 2000)

The first and most important insight that can be drawn from the dotcom crash of April 2000 is that it came as no surprise to anyone with an understanding of economic history. Since the emergence of modern capitalism in Europe, stock market booms and slumps of this kind have occurred regularly over the last 400 years, and this one was predicted by some commentators before it happened (for example, Shiller, 2000; Elliot, 2000). As long ago as 1630, prices of tulip bulbs soared to levels that would have made investors in dotcom companies in the late 1990s sit up, take notice and dust off their wallets. At the peak of the boom in the winter of 1636, the rarest and most sought-after bulbs cost as much as a house in the trendier areas of Amsterdam. In February 1637, the market collapsed, leading to thousands of bankruptcies and penury for those ‘tulip speculators’ who had borrowed money to pay inflated prices near to the peak of the boom. Later, in 1720, when all of London was clamouring for shares in the South Sea Company, Sir Isaac Newton sold £7000 of stock in the company and later bought in at the top of the boom. When the bubble burst soon afterwards, he ended up losing £20 000 – a huge sum of money at the time. He later commented, ‘I can calculate the motions of heavenly bodies, but not the madness of the markets’ (Gleick, 2003).

Similar speculative booms occurred throughout the 18th and 19th centuries with canals, railways, shipping and electricity. In the 1920s,

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the late 1990s. For example, one-half of all adverts at the Super Bowl in February 2000 featured 17 dotcom companies, each paying $US2.5 million for 30 seconds of screen time. Only three of these were still trading in June 2002. In 2001, three dotcom companies advertised at the Super Bowl. One of these, computer.com, spent $US2.2 million for a 30second slot, which at the time was 60 per cent of the money it had in the bank. This company went out of business soon afterwards. At the time, CBS’s advertising manager commented, ‘We knew a lot of the dotcom companies wouldn’t be back next year so immediately after this year’s Bowl we went back to our more meat and potatoes clients’ (cited by Romei, 2001). Another sign of the times was the customized car number plate, ‘The Web’, which was sold at Goodman’s Auctioneers in Sydney, Australia, for $A200 000 in January 2000. In January 2001 it was put in for auction again and there were no bids for this item. The top selling number plate was ‘8’ (a Chinese lucky number).

Fourth, the dotcom collapse confirmed the age-old adage that there are indeed fools born every day. For example, Jonathan Lebed, a schoolboy, became the youngest person in history to be charged with stock market fraud by the US Securities and Exchange Commission. Working from his bedroom, he made nearly $US800 000 by ramping up shares on bulletin boards. He bought shares at low prices and then posted ‘buy’ recommendations, which many people in ovine fashion duly did. Lebed handed back most of his ill-gotten gains after he was prosecuted, but was still left sitting on a tidy profit of $US50 000. Subsequent investigations revealed that many of his schoolmates had also got in on the act, and virtually (no pun intended) the whole school had become involved, with parents and teachers also asking for advice on stock market investments. Another example was the ‘Number One Legal Adviser’ on the Internet during 2000. This turned out to be a 15- year-old boy, who had never read a legal textbook in his life, but dispensed advice on the basis of the day-time American TV court shows he had been watching. He had won a huge and loyal following by the time the police caught up with him (The Times, 2001c). There were also many instances of truly idiotic ventures at this time. For example, Pryce Corp, a property company that owned a chain of Philippines cemeteries, closed down its net-sales operation after failing to sell a single burial plot over the Internet to the five million or so Filipinos who live overseas (McCann, 2001).

‘I went along to 10 Downing Street to brief Tony Blair on e-commerce ahead of a European Summit in Lisbon.’ This was the founder of boo.com, which tried to sell clothes on the Internet, thinking of itself as a virtual Harvey Nichols, only global. Already the National Portrait Gallery was showing a picture of him in its new exhibition, called Business Leaders of the 21st Century.

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Two months later, with the century less than a year and a half old, boo.com was bust. Of the $US140 million that had been sucked into it, nothing remained – nothing that is but a book named Boo Hoo, which seems to have been written rather as boo.com was run, by a committee of humourless Swedes with intermittent hangovers.

(Cited in The Spectator (UK), 11 November 2001. Boo.com managed to blow $US140 million of investors’ money in just 18 months, and went into liquidation in May 2001.)

Fifth, the belief that virtual or e-commerce would quickly take over the world in one fell swoop was flawed and naive. With the benefit of hindsight, we can see that the whole e-paradigm was massively overhyped. There was little solid evidence that most of the new e-compa- nies were offering anything that was truly innovative, in terms of the goods and services they provided. Many were financed simply on the basis of ’future market projections’, with no assurances that they would ever actually achieve these. Some didn’t even bother to publish business plans or financial forecasts for their fledgling companies, and yet people still invested large amounts of money in these companies. Furthermore, even at the height of the bubble, dotcom companies still only accounted for a tiny proportion of national gross domestic production around the world. Many lacked the essential combination of ‘high tech and high touch’, and an understanding of the need still to provide good products and services, and maintain good relationships with their customers and clients. Many of the darlings of the first wave of dotcom companies, such Liberty One, One.Tel, New Tel, Boo.com and Lucent Technologies, had either gone bust, or were experiencing serious financial difficulties during 2002–3. George Sheehan’s company, webvan.com, was one of many other dotcom companies that also went bust during 2000–2001. There is even a website in the USA, run by Philip Kaplan, that predicts the imminent demise of dotcom companies (www.business2.com). Up to December 2003 he had enjoyed a 95 per cent success rate with his predictions.

Sixth, the dotcom exuberance of 1997–2000 reminds us that all current technologies, amazing as many of them may be, are still essentially passive. For the next decade or so, it will still be people with good ideas who drive business. Anyone who still thinks that e-business is simply about investing in the right technology and software is deeply, deeply mistaken. Not surprisingly, the vendors of Internet and other technologies sold these in the 1990s as if they were not only capable of making all businesses more efficient and more profitable, but were also a conduit to instant riches for new start-up businesses. However, e- business is definitely not just about electronics, computers or the Internet. These are simply portals or add-on devices that can help businesses to do what they have always done, namely to bring into being that which was not in the marketplace before, and delivering value

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products and quality services to their customers and clients as efficiently and profitably as possible. The Internet and all the technologies associated with it will not make a business efficient if it is already inefficient. If a business is slow now, technology will not make it faster in the future. If its customer service stinks now, technologies will simply highlight how bad this is (think, for example, of customer call services at most utility companies). Technology – even in high-tech companies

– has limitations, as this next tongue-in-cheek example suggests.

‘The new business retail craze’

They’re calling it ‘S-Commerce’ or ‘shops’ and it’s being rolled out in cities and town nationwide. ‘It’s a real revelation’, according to Malcolm Fosbury, a middleware engineer from Hillingdon. ‘You just walk into one of these shops and they have all sort of things for sale.’ Fosbury was particular impressed by a clothes shop he discovered while browsing in central London. ‘Shops seem to be the ideal medium for transactions of this type. I can actually try out a jacket and see if it fits me. Then I can visualize the way I would look if I was wearing the clothing.’ This is possible using a high-definition two-dimensional viewing system, or ‘mirror’ as it has become known.

Shops, which are frequently aggregated into shopping portals or ‘high streets’, are becoming increasingly popular with the cash-rich timepoor generation of new consumers. Often located in densely populated areas, people can find them extremely convenient. Malcolm is not alone in being impressed by shops. ‘Some days I just don’t have the time to download huge Flash animations of rotating trainers and then wait five days for them to be delivered in the hope that they will actually fit,’ says Sandra Bailey, a systems analyst from Chelsea. ‘This way I can actually complete the transaction in real time and walk away with the goods.’ Being able see whether or not shoes and clothing fit has been a real bonus for Bailey: ‘I used to spend my evenings boxing up gear to return. Sometimes the clothes didn’t fit, sometimes they just sent the wrong stuff.’

Shops have a compelling commercial story to tell, too, according to Gartner Group retail analyst Carl Baker: ‘There are massive efficiencies in the supply chain. By concentrating distribution to a series of high volume outlets in urban centres – typically close to where people live and work – businesses can make dramatic savings in fulfilment costs. Just compare this with the wasteful practice of delivering items piecemeal to people’s homes. Furthermore, allowing consumers to receive goods when they actually want them could mean an end to the

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frustration of returning home to find a dispatch notice telling you that your goods are waiting in a delivery depot on the other side of town.’ But it’s not just the convenience and time saving that appeals to Fosbury: ‘Visiting a shop is real relief for me. I mean, as it is, I spend all day in front of a ****ing computer. (Spoof e-article that did the rounds after April 2000.)

There are remarkable parallels between the dotcom boom of 1997–2000 and technology booms in earlier times. When the telephone and the internal combustion engine became widely adopted in the first two decades of the 20th century, they speeded up the production and delivery of goods and services that already existed and, in time, fostered a new wave of technological innovation and the creation of new consumer markets. And most older and established companies were quick to start using these technologies. The Internet has been evolving rapidly since the dotcom collapse, into a medium for well-established companies to carry out their business activities with greater speed and efficiency, in what is now routinely described as a ‘bricks and clicks’ fashion. For example, if we look at the world’s most successful economy during 2001–4, Australia, B2B Internet commerce revenue was already worth about 30 billion dollars in 2002. However, this growth was not being driven by new e- companies, but by well-established traditional businesses. One of the country’s biggest companies, Telstra, launched CoProcure in October 2001, the first multi-industry B2B e-marketplace in Australia. This included other major local companies such as Amcor, AMP, ANZ Australia Post, BHP, Coca-Cola Amatil, Fosters, Goodman Fiedler, Orica, PAC Dunlop, Qantas and Wesfarmers. The Commonwealth Bank responded to this initiative by setting up Cyberlynx, which includes Woolworths, Lion Nathan, AAPT, Telecom New Zealand and EDS. In every industrialized country in the world, thousands of companies are developing their B2B and e-market capabilities.

However, the truly revolutionary power of the second wave of growth in the e-sector is its ability to let small players enter and achieve fast critical mass in the marketplace, far more quickly than has ever been possible in the past. An example of this is the story of one Australian Webmaster – MW.

‘It’s a license to print money’

The inspiration for the web master idea came while I was still a university student. At the time, I had a home page with a few links to other sites, and I noticed that some of these had advertising banners. At the time, I was new to the idea of banners, but I did wonder whether you