Cyber-guru stays true to well-worn saying

By RICHARD BRADDELL


He now admits to doing something bad, but the inventor of the cliché "paradigm shift," Canadian Don Tapscott, still uses it to sum up the prosper-or-die environment of the internet communications revolutions.

Mr Tapscott, by virtue of a telecommunications link to Canada, and American John Sifonis were two of the keynote speakers at the E-Commerce Summit in Auckland yesterday.

Both were in no doubt that the winners were going to be the companies, individuals, cities and countries that grasped the new paradigm and became net ready.

Described by US Vice-President Al Gore as one of the leading cyber-gurus, Mr Tapscott condemned to death the vertically integrated company that served past luminaries such as carmaker Henry Ford so well.

If Ford found it cheaper to make the glass and generate power as well as build the cars that were its core business, he said, that vertically integrated model was now being obliterated as the cost of communicating with outside suppliers plummeted.

The outsourcing rage of the past 10 years was just the beginning and, as he and Mr Sifonis pointed out, it was not just production but also the management hierarchies that had to change if companies were to survive.

"The person at the top cannot learn for the organisation as a whole anymore; it's just getting too complicated," Mr Tapscott said in describing a new breed of companies in which information can no longer be hoarded because of the power it bestows.

He and Mr Sifonis identified leadership as vital.

And just as the invention of the printing press ushered in parliamentary democracy, the web would have just as profound an impact on workplace and political democracy.

Companies and countries had to change their cultures, and that began at home and in schools.

Mr Sifonis, a director of internet business solutions with Cisco, set four conditions vital to corporate net readiness: leadership, governance, technology and organisational competencies.

Surprisingly, many of the companies that had achieved internet success did not have that as an objective at the outset.

Often they had the good fortune to simply drift into it, in part because they were relentlessly customer-focused and that drove the decisions that pulled them in the right direction.

Cisco, for instance, discovered almost by accident that it could improve customer satisfaction by getting customers to serve themselves.

Eighty-four per cent of customer calls were answered automatically and 90 per cent of orders were taken without human intervention.

Just as telling, Mr Sifonis said, Cisco never touched around 65 per cent of the products it sold because it owned and operated just two of the 35 production facilities it used around the world.

In the end, he ventured, it was a research and development company.

He said that to date, few companies had set out to transform themselves.

IBM did, and it was one of the few of the old computer names still around, even though the transformation had been described as wrenching.

In five years, it might no longer be a hardware maker, deriving all its income from software and services.

But the reappraisal that companies would be forced to make was profound.

The music industry was in trouble if it continued to try to turn the tide of free distributors such as Napster and MP3.

Mr Sifonis said Lego was an example of the opposite approach.

Discovering that 7- to 14-year-olds were inveterate hackers of the software behind its Mindstorm robotic packages, it open-sourced the code and turned the efforts of several thousand unpaid developers to its advantage.

But, he said, success could inspire fear and loathing. Enron, 10 years ago a near-bankrupt oil company, applied its trading skills in setting up an oil market.

Gas followed, then electricity, turning US utility companies on their heads.

Long-haul telecommunications companies became the most recent victim after Enron introduced standardised terms and conditions and set up an electronic market for trading bandwidth.

Even Wall St fears Enron because of its capacity to take over markets.

But how could an old oil dinosaur such as Chevron, for example, transform itself?

Mr Sifonis said that 18 months ago, Chevron and rival Texaco scored indifferently on his measure of net readiness.

Governance was hierarchical and he gave Texaco only three years as an independent company.

Chevron's management, fortunately, had the vision to realise that it needed to respond to a changing world and set up a separate new company, a Chevron e-business which applied completely new skills and mindset to transacting over the web.

The skills were then translated back into the parent organisation.

Two weeks ago, Chevron took over Texaco.

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