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Different Leadership for Different Kinds of E-Commerce

Spencer Stuart is a global executive search firm. They took a look at 55 well-known companies at what they describe as "different stages of leverage in the Internet." From their in-person and telephone interviews, they developed the idea that there are two kinds of companies using electronic commerce and that these companies required different kinds of leadership.

They described the two types of companies as web-enhanced and web-centric.

The web-centric companies are those whose primary business is on the web. They include companies such as Amazon.com, Ebay, etc. According to Spencer Stuart, leaders in web-centric companies, foster cultures that encourage risk taking and rapid decision making.

By contrast, leaders in the web-enhanced companies see the web as a way to do things they're already doing. Consequently, they focus on the brand's name and value, product mix, cost reduction, etc.

WALLY'S COMMENT . . .This is an interesting take on the management of Internet companies issue, but I think it's descriptive, and should not be taken as prescriptive. Further, I think it's a snapshot of a river, which will look very different in just a little bit.

One reason that the web-centric companies are flatter and more likely to encourage "risk taking" is that they are younger and smaller and than the companies cited as web-enhanced.

The bigger, older companies developed their culture over time, in part to meet the challenges of size. That will probably happen to many of the web-centric companies as they grow.

Other management issues derive directly from the amount of time that the companies have been in business. Companies such as Kodak or W. W. Grainger already have things which they need to conserve. They have established distribution channels, relationships, and brand identities. Newer companies, like Amazon, are developing these as they go. This is unrelated to whether they are net-based or physical-based companies.

I don't think there is a lesson to be drawn in terms of leadership models here, but I do believe there are lessons to be learned from this study.

A key strategic choice when a company looks at moving to electronic business is whether or not they see the addition as an organizational equivalent of facilities which exist or whether they see the addition as something that enhances operations going on in the physical world. Here's an example.

When we worked on developing the strategy for Samuel Music, we decided that the web store (note not website) would be effectively a new branch store. Once we had decided that, it determined the answers to a number of issues about budgeting, stocking, etc.

The danger in studies like this one is that they were taken to be prescriptive. The challenge for CEOs and other Senior Executives in business today is to look at ways in which the digital and Net/Web technologies are transforming the very basis of the ways we do business. Then, they can make decisions about what their company needs to do to meet the challenges, seize the opportunities, and neutralize the threats.

Date Published: 1 November 1999

Reviewed: 2/15/03

Wally

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