From .com to .profit: Inventing Business Models That Deliver Value AND Profit Abridged Edition

Nick Earle is Hewlett-Packard’s chief strategist for e-services in the heart of Silicon Valley. Peter Keen is President of Keen Communications and the author of 20 books on business and IT.

Until now, all it’s taken to build a successful e-business is the right technology. An online storefront goes up and a company’s market capitalization goes through the roof, despite low sales and no profits. But now the race to get online is over. As the new economy rapidly becomes the only economy, Internet companies must learn how to create sustainable value if they’re going to survive. This book provides the solid business basics companies need to move from the old era of .com to the next era of .profit.Nick Earle, the driving force behind Hewlett-Packard’s worldwide Internet strategy, and Peter Keen, a visionary in the world of business and technology, have been anticipating online trAnds and communicating them to managers for over twenty years. Here they team up to forecast the future of Internet commerce and to lay out the six key imperatives that will determine the difference between successful and unsuccessful e-business in the coming decade.Earle and Keen show managers how to perfect the logistics, cement the relationships, build the brands, transform the capital and cost structures, harmonize the sales channels, and provide the services that are crucial to delivering both value and profits on the Web.Using examples from HP and other top companies around the world, the authors go beyond Internet hype to lay out strategic action in the key areas of technology, finance, and marketing. In the process, they provide all the useful information, timely insights, and practical advice managers need to build business plans that really work in the new economy.

Until now, all it’s taken to build a successful e-business is the right technology. An online storefront goes up and a company’s market capitalization goes through the roof, despite low sales and no profits. But now the race to get online is over. As the new economy rapidly becomes the only economy, Internet companies must learn how to create sustainable value if they’re going to survive. This book provides the solid business basics companies need to move from the old era of .com to the next era of .profit.
Nick Earle, the driving force behind Hewlett-Packard’s worldwide Internet strategy, and Peter Keen, a visionary in the world of business and technology, have been anticipating online trends and communicating them to managers for over twenty years. Here they team up to forecast the future of Internet commerce and to lay out the six key imperatives that will determine the difference between successful and unsuccessful e-business in the coming decade.
Earle and Keen show managers how to perfect the logistics, cement the relationships, build the brands, transform the capital and cost structures, harmonize the sales channels, and provide the services that are crucial to delivering both value and profits on the Web.
Using examples from HP and other top companies around the world, the authors go beyond Internet hype to lay out strategic action in the key areas of technology, finance, and marketing. In the process, they provide all the useful information, timely insights, and practical advice managers need to build business plans that really work in the new economy.

NICK EARLE is president of Hewlett-Packard’s E-Services.Solutions organization, HP’s in-house incubator. Earle and his team are responsible for driving the company’s Internet strategy. Their mission includes forming strategic alliances with innovative companies that are building new business models for the Net economy. Earle was profiled in Fortune magazine as “HP’ s New E-vangelist,” where his role was said to represent “a revival of an HP tradition: embracing mavericks.” PETER KEEN is president of Keen Innovations and Keen Education. He has served on the faculties of Harvard, Stanford, MIT, Wharton, Duke, and Fordham, as well as Delft, Stockholm, and the London Business School. He is the author of twenty books on business and IT strategy, and an advisory board member for a number of Internet companies.

Preface

It’s time – past time – to stop talking about the Internet as the future of business and to start talking about how to manage that business today in order to be effective, as the future becomes the present. Clearly that future will be more and more impacted by the Internet ; ignoring the Internet is simply not an option. It’s time to forget the forecasts and the hype and get down to business, business that includes not just technology but value to the customer and profit for your company.

The question we tackle in this book is “what do we do – and do now – to set our business priorities and competitive direction for being on the web so that we provide value to our customers and generate profits?” To our way of thinking, that’s the only question concerning business on the Internet that is now worth writing and reading about. All the other questions are either already resolved or irrelevant to the shift necessary from simply being open for business on the web to staying in business for the long term – and inventing the value path from .com to .profit. Inventing that path is not simple, for the Internet business landscape is rugged, mostly unexplored, and much of it is in upheaval even as we try to set the maps to paper. It doesn’t fall into any obvious, apparent pattern. That’s what has made it so hard for managers. They get plenty of exhortation, hear again and again about a very few companies that have fast become fables for the Internet age (most obviously Amazon, Dell, and Cisco), and see the business press spend more and more space on news about Internet business. The competitive playing field is overrun with new players – and the game is changing, it seems daily. Business is in transition everywhere, shifting from technology as support to the business to technology as integral to the business.

All this is obvious to savvy business executives; it’s the solutions that are not at all obvious. From .com to .profit aims at helping executives manage the transition and come up with solutions that work. Our focus is not on forecasts of what could, may or will happen in the future. Forecasts don’t help answer the question of what to do now. All we need know about the future is that the rate of change we saw in the last 1990s – what we term the .com era of Internet business – won’t slow down any time soon. Surely executives no longer need to be told that the Internet is going to transform the economy. What they do need to know is what we focus on in our book: the principles for defining the basic blueprint for strategy, for setting priorities, for creating real business value.

We’re not at a point where we can see patterns and derive business lessons from the earliest phases of the Internet . Of course, there will be many new discontinuities and innovations that change the rules of the game. And there will be new games. The technology base is accelerating the business shift from commerce to services. Technology innovation fuels business innovation. Business innovation fuels technology innovation. There’s much more of both to come.

But even though there will be as many or even more surprises ahead as electronic commerce brought to the forefront in the final years of the 1990s, we can already see the technology-independent value imperatives – the must-do requirements – of Internet business. We see common patterns in the diverse experiences of companies that are in very different markets and with very different on-the-surface characteristics. Our goal is to bring these to the attention of business managers to help them cut through the fog (or fantasy) of Internet forecasts and hype and handle electronic business as business.

Our experience and outlook

For several years, we’ve been working to gather more and more and more examples from experience and make sense of them. Our examples come from case studies, company reports, press articles, surveys, research publications, and from our own work with companies. It’s taken us time to tease out what is driving Internet business. Our experience and research from the core of the book.

We lay out what we know from the race to .com, what we can be sure of in the next phase and what all this means for business managers in any type or size of organisation. When we walk about business models, capital, E-services and mobilisation, it is not from an abstract perspective – it’s from the experiences of business participants. Nick, having lived for years in the world of technology-for-business, brings his perspective as a senior executive in Hewlett-Packard, a company that had to go through exactly the same management challenges and dilemmas as most businesses today: what to do about the Internet ? Like many large established companies, HP came dangerously close to being left behind. Now HP is back in the forefront, and Nick leads the enterprise-wide Internet business.

If Nick addresses where the famous rubber meets the road, Peter operates at the helicopter level, scanning the territory. As a consultant, professor and writer, his role in our collaboration is to provide the big picture and to relate both the technology-savvy Hewlett-Packard view and its own powerful E-services business model to the context of the typical company. Peter has wide experience in helping top executives across the world bring together business and technology, a challenge of long-standing and now obviously a necessity that is very high on the management agenda for action.

Together, we answer the question of what business managers everywhere need to do to ensure that, whatever their firm did or didn’t do in the beginning of the Internet story, it doesn’t miss out in the next era, that of .profit.