Tuesday, April 11 2000
Quality – the next big thing in the dot-com world!
Why?
Two reasons:
First, the internet bubble may be about to burst – or at least subside towards market fundamentals. “There's a gnawing anxiety now in Silicon Valley,” says Joe Costello, ex-CEO of Cadence Design (not everyone agrees though, see 'What bubble?” below). Facing increasingly urgent priorities to perform and to survive, dot-com companies will be looking for lifebelts to keep them afloat. Quality can throw them one.
Second, all internet markets will be much more crowded in the near future, and riskier for customers. One indicator – an explosion in domain-name registrations. Another – “We're getting to the point where the frauds are going to come in,” – Bill Joy, founder of Sun Microsystems.
Standing out from the crowd will become harder. Dot-com pixie dust and first-mover advantage will no longer be sufficient. An increasing focus on the elements of a quality organisation won't be an option, it'll be essential. As in the old economy, 'quality' will be a key differentiator.
The new economy is different
True. There's only one economy, and that's the internet economy.
“Today the internet is changing the rules in every market and every industry, creating a new breed of businessperson. They are driving a new economy, creating explosive opportunity, arousing excitement, passion, and fear,” says Business 2.0 editor in chief James Daly (forwardslash@business2.com).
“This networked economy – decentralized and antihierarchical – is the most important force shaping commerce. It radically transforms business, careers, and lifestyles.”
What is 'quality' in this new economy?
It's about both what you do and what you deliver. Means and ends. Brilliant leadership, effective strategy, unrelenting attention to customers and markets, the recruitment, training and retention of exemplary staff, process superiority, good use of data, and great results.
According to Patrick Folliott, co-founder and CEO of realityclick.com, “… the rules of the web … have nothing to do with the mechanics of ecommerce, tech savviness, and image control. The game is quickly becoming all about connecting and respecting, listening and understanding, empowering, sharing, promising and delivering ... In a word, relationships” (Business 2.0, March, 2000).
And in the same issue Jim Avery of JR Avery and Associates of Richmond, MI, says “Web quality and usability will be key factors in differentiating companies doing business on the Web … for every dissatisfied customer who complains, there are nine who leave the site, shop somewhere else, and tell 10 other people about their bad experience.
“Each day more people join the web community. These people do not have the tolerance that the early adopters have for poor quality. If the web is going to be a viable sales channel, then the next wave of development must address quality.
“Our experience suggests that companies have been slow to react to issues of quality and usability on their sites. The web is unforgiving, and I expect the winners will quickly realize that getting the customer to their site is just the first step, but that quality and usability will be key factors in getting them to return.”
We agree. The more things change, the more they stay the same. Customers still want service that delights, and products that deliver more than they promise. Transaction costs still matter. The market will once again worry about P/E ratios, even if the e-boom seems to be sending many investment beliefs into a spin. The Securities and Exchange Commission (and its international equivalents) is taking a hard look at the numbers, and some of the aggressive, and creative, accounting practices are being reined in (Business Week, April 3, p70).
The top five elements of dot-com quality Let's cut to the chase. If we were white-boarding the 'quality' issues you need to pay attention to right now, what would the top five be? Here's our list:
Customer experience. Great customer experiences develop your brand, increase loyalty and grow revenues. Many customers still find the internet an intimidating, foreign environment where “pages are a jungle of links, buttons, forms, blinking graphics, and baffling jargon. Accusatory error messages leap out at any time” (Ziff Davis Studios, White Paper One, 1999). What's your customer experience like? How do you know? Is it getting better or worse? What about your principal competitors? What's industry best practice? Benchmarks?
Leadership. And strategy – “At the core of any business has to be a purpose. Otherwise you're building a house of cards” (Jim Clark, of Silicon Graphics, Netscape, Healtheon). Great leaders are rare. Great dot-com leaders even more so. Those we know about are endlessly dissected in the business and internet literature, and some general principles are beginning to emerge. The need for and nature of leadership changes as dot-coms scale up from good ideas to real businesses. In many cases, and yours will be no exception, leadership will be an essential component of success. It'll be as much about teams – leadership as a contact sport – as about profile and stature. So what are your 'leadership' processes?
Mobility. The need for speed. 'Internet time' may be a cliché, but moving quickly is a core capability. Think in half-life terms. Here's US credit card company Capital One's co-founder Rich Fairbank on his firm's half life: “Fifty percent of what we're marketing now did not exist at this company six months ago [which means that] 50% of what we'll be selling six months from now doesn't exist yet.” Will that sort of innovation happen by mistake? No. It'll need robust fast-track processes and bullet-proof new product introduction. How good are yours? How do you know? Could you do better? How much better? Is this a core 'quality' issue? You bet!
Ethics. And privacy. Getting 'ethics' wrong can cripple your business, and may soon expose you to government regulation and severe legal sanctions. Are you ready? Are you safe? How do you know?
Results. Sure, investors are suspending their disbelief for the time being. But as soon as the longest bull market of all time falters, as it surely will, 'market fundamentals' will come roaring back. The central question is the same – are you ready to report the results that an insecure and nervous market will demand?
How does our list compare to yours? You don't have one!
What net bubble?
According to the editor of Business 2.0 (www.business2.com, 'the magazine of business in the Internet Age,' April issue), “Every time the Nasdaq hiccups, Net investors see their life flash before their eyes and the cry of 'The Internet bubble is about to burst' is once again raised.
“It's all a bit ridiculous,” he says. The new economy is not a bubble. It's the “greatest restructuring of commerce in decades. Its effect on everything from the ways companies are created and organized to the way they develop markets and serve customers is long-lasting.
“There is no question that these are unsettling and risky times. Companies increasingly employ new business models, which push the boundaries of traditional controls. What's more, the Net Economy is producing a whole set of different risks – from new transitions and new markets to new technologies, new competitors, and new relationships.
If editor Daly is right, and he may well be, then an urgent re-think of the established notions of quality is overdue.
What will an e-quality model look like?
With a small, but expanding, international team, we're working on some new ideas (soon, we hope, to be available at www.dot-com-quality.com), and other people are wondering as well.
At a new list site (the worryingly similar dotcom-quality.com), correspondent Lydia Leong writes “The key characteristics of a quality process for a dot-com should be:
Quick. Must accommodate the highly compressed time schedules of the dot-com world.
Flexible. Capable of coping with a very high rate of change, including frequent changes in requirements.
Lightweight. Easy and fast for new employees to learn. Requires minimal personnel resources.
Supported by freeware or inexpensive tools [which] must be easy to use and accommodate the needs of the engineers – they cannot be cumbersome or they will be circumvented.
“I don't believe I've seen a quality model that fits all of these criteria,” she says, “or comes anywhere close to doing so.” She's thinking QA. We're thinking much more holistically, sort of stripped-down e-Baldrige without the 'B' word.
Watch this space!