I3 UPDATE No. 38 - Internet Performance

I³ UPDATE / ENTOVATION International News
No. 38: March 2000

Internet Performance: The Bottom Line - David J. Skyrme
The Trapeze Parable - Debra M. Amidon
Internet and Ecommerce Opportunities - Jan Wyllie
A Reader Replies: There is No Knowledge Economy? Bo Buma
Snippets - New books, Knowledge auction site
Events

Editorial

Welcome to this edition of I³ UPDATE / ENTOVATION International News, a free electronic briefing giving insights into the evolving knowledge economy and its implications for executives, policy makers and professionals.a free electronic briefing giving insights into the evolving knowledge economy and its implications for executives, policy makers and professionals. This month concludes our series The 7Ps of Internet Marketing with Performance: The Bottom Line. Debra provides an insightful trapeze parable - how we swing to and for, a pattern familiar to many of us. Jan Wyllie introduces a new Internet and ecommerce briefing and analysis service with some extracts from his latest synthesis. We are grateful to reader Bo Buma in stimulating our thinking with the notion that perhaps there is no knowledge economy after all. If you want to respond to this notion as well as any of the other articles, please send us your comments and feedback.

Back issues of I3 UPDATE can be found at http://www.skyrme.com/updates/. I³ UPDATE is also available by email. See the administrative information page for how to join or leave the mail list.

David J. Skyrme
Managing Editor

Internet Performance
The Bottom Line

David J. Skyrme

This is the last in our series of The 7Ps of Internet Marketing, which started with Portals in Issue No. 31. All of the previous 6Ps contribute to perhaps the most important P of all - Performance: Performance for the customer in terms of online experience and satisfaction; and Performance for the Provider in terms of service delivered and Performance for the owners (share/stock holders). Too frequently the urge to create an ecommerce site and the need for speed means that many things we take for granted in the real world fall by the wayside in cyberspace. The most important lapse by most online providers is that they have not altered their conventional business processes to match. Orders, processed after a couple of mouse clicks arrive late or never at all (one survey at the end of last year claimed that 10 per cent of cyberspace orders fail to arrive at all). A heavily promoted site keels over with the volume of traffic generated by the promotion. A techno-wizard site for consumers is unaccessible to Mac users and PC users must have the latest browsers and several plug-in (boo.com being a recent high profile example). Cyberspace touches the real world of people and products and achieving performance means attending to the essentials at these interfaces.

What's the Same, What's Different

As hinted above, customers expect to have a good buying experience, get their goods in a timely fashion and be satisfied with the results. What the Internet does, as well as extending richness and rich , is to raise expectations - e.g. a customer expects competitive prices (since the company does not have many of the overheads e.g. stores, of a conventional business). When people can order in an instant from your desktop, they expect delivery and responses to queries to happen in a timely fashion as well. Customers should be the first focus of your performance efforts, since it is they who will ultimately determine your success. What you need though is a Performance Measurement and Management System. Having such a system in place will allow you track levels of customer service, the impact of changes in your approach, and having some indicators that can be used as a focus for management efforts and objective setting.

Performance measurement systems (such as the Balanced Business Scorecard or the European Foundation for Quality Management model) are increasingly used to drive a business forward. But are they suitable for relatively new cyber businesses? Some of the main differences are:

A cyberbusiness has more intangibles (e.g. intellectual capital)
Things change so fast that any long-term tracking of changes may be difficult
There are so many unknowns that the link between cause and effect is not at all clear
Different indicators need to be monitored than those with which managers may already be familiar
New methods of data collection are possible (e.g. online surveys and statistics)
Your performance is dependent on the performance levels of others e.g. ISPs, PTTs, software suppliers.

However, these are difference in detail rather than fundamentals. What is the same is that:

A good performance system can help you pinpoint problems and improve your business results
To achieve improvement measures should be linked to gaols, from organization to individual
It is more important to collect the right information rather than that which is easiest to collect (i.e. it is better to be roughly right than precisely wrong!)

Above all, the general approach is the same - clarifying objectives, developing indicators, initiating the system, data collection and analysis, initiating change.

Clarifying Objectives

We site are often created for a simple reason - "we have to have one" (i.e. our competitors have one, ebiz is the wave of the future etc.). However, your whole approach depends on how the website fits into your overall business plan and objectives. Is is to create awareness, while still using conventional sales channels? Is it to sell low cost items directly 'off-the-page'? Is it for reputation building? Is it to reduce the cost of telephone support? Usually there is a hierarchy and network of objectives. Having these explicitly agreed and prioritized (not an easy task when many senior managers have different perspectives) will at least give you a head start in developing a suitable set of indicators.

Illuminating Indicators

The selection of indicators should be based on your objectives and should be balanced across customers, internal processes, intellectual capital etc. A useful tip is to make sure you distinguish Input, Output and Outcome. Here's some potential indicators for an information provider:

Inputs: number of sources used; time and resources to generate new material;
Outputs: number of pages; quality of information; results of user searches; number of queries answered; speed of response
Outcomes: customer satisfaction; impact on their business.

Usually the earlier indicators are the easiest to measure, and the latter the most important. That's why it's important to work back from the customer in. Listen carefully to your customers - and observe their actions. Thern consider how your service can help them. For example, some of Reuters new services e.g. to agriculture, provide a mix of non-business information (e.g. weather and sport) alongside the business information, and also integrate it into customers processes e.g. by giving data in spread-sheet format.

The measures will be a mix of 'hard' and 'soft', more and less precise. Here are some specific examples, for some generic information services that you might offer:

Online Databases: availability (up time); accuracy of information; currency (how up to date);
Email Alerts: amount of content; daily on time delivery; time to resend after user notifies non-delivery; accessibility to archived alerts
Ad-Hoc Queries: Time to acknowledge; time to respond in-depth (histograms); standards for fulfillment.

For a web site in general these might be suitable indicators:

accessibility, availability, external referrers
response: of site and of human replies to queries (many large companies fail this latter test, with as many as 30 per cent in a recent survey not responding to email queries made from their web site)
user experience (no 404s!), readability, ease-of-use
conversion ratios - hits to enquiries to sales
front/back-end integration (business processes)

Initiating the System

This is like any other new system being introduced. It requires involvement of all stakeholders, understanding how a new system interrelates with existing practice and measurement systems, and not - as frequently happens - underestimating the need for training and for time for the new system to become embedded (many months if not a year of more in a large organization). Above all, it must be woven into the management decision making fabric of the organization. If it isn't, your Internet presence is a 'bolt-on' or a 'side-show'. If marketers, operations mangers, new product developers and others do not act on the results and just carry on by their own with 'top of the head' or 'seat of the pants' decision making - why bother with a more systematic approach? (Of course you could do it in background mode, and come out with your analysis once they have tripped up).

Data Collection and Analysis

One of the most useful sources of hard data is an analysis of transaction logs. Typically provided as a weekly or monthly report this shows number of user sessions, no of pages accessed (therefore you can tell how many pages users read at your site), proportion of unfulfilled requests. Most packages showed a ranked list of popular pages and directories (hence having a good directory structure can help your analysis), countries and individual accessors (by domain name), and perhaps most useful of all - referrers (i.e. where did they come from - a search engine, another site, a business partner?). Analysis of logs will help you see important trends, what users want to read (usually 'how tos' and links to other resources are popular) and who referred them. Other hard data is that provided through online forms and emails that are generated by your pages - but do you track and log their content? You may also get hard data from your service provider on their availability and response times (if they don't, and even if they do, you may find some of the comparative testing done by some monthly magazines such as Internet as very helpful).

You might think an online survey would provide useful hard data. However, it often does not. The respondents are self-selecting and you miss out on the added information that might be revealed in a face-to-face or telephone interview. Therofre, unless your online respondents are truly representative of the sample you wish to survey, or you need quick input from anyone, consider very carefully if one of the softer methods (below) could tell you more.

With such abundance of hard data, it is easy to dismiss soft data. However, soft data usually reveals more qualitative information about what users are thinking and what their needs are. Conventional soft methods include customer visits, telephone conversations, use of feedback forms etc. Much of this will be ad-hoc and therefore you will need to be alert for patterns. More effective sources of useful insights are observation and focus groups. These can be combined in an online focus group. Have a small group of users e.g. your customers or potential customers, come as group (or synchronous videoconferencing as a second best) to review your web site (or better carry out a task they have to do anyway) and work in a small room with one terminal each. You can structure their review to some extent or pose questions to which you seek answers e.g. does this help you make better buying decisions? Encourage participant to talk and comment while they are surfing. They will also prompt each other with things they like and don't like and point out competitor sites that do things better.

Initating Change

If you have successfully embedded the Internet into your normal operations and have introduced an effective performance measurement system you have already achieved the mind-set of the need for change (the why) and some practicalities of how to change. However, your performance measurement system should help guide you on what to change. It is very tempting to want to change incrementally all the time or revamp your web-site totally every 100 days (A typical time span for the introduction of a new Internet service). But one thing that most loyal users seek is some sense of stability. If their favourite pages suddenly come up not found, and they revert back to a now unfamiliar home page, you may lose them. I have seen many previously good sites fail their past customers badly when a new project manager or media company wanted to make their mark. It does not take much effort to leave old pages where they are but point to newer pages, or provide 'translation' guides from old to new (think of how you coped with the changes of some menu items from Microsoft Office version 6 to 7). Therefore any change, whether drastic or incremental, should be within the context of a slower changing long-term framework, unless your existing web presence is a total disaster or you desperately want to lose your existing customers!

The Bottom Line

Performance (unless you are planning an Internet IPO!) is about the bottom line. This means attracting customers (see Portals in I3 UPDATE No. 31), Packaging what they need (No. 32), Positioning your website (No. 34), showing Pages that impress them (No. 35), helping them Progress (No. 36), receiving prompt Payments (No. 37). All these Ps, properly implemented, will make a major contribution to the Perfromance of your Internet presence and ecommerce strategy.

Footnote: This series is based on one module from our Internet Marketing workshop. Since its initiation last yeast we are aware that other Ps deserve similar prominence (we have three in the pipeline!). Do you have one you wish to nominate?

Email: david@skyrme.com

The Trapeze Parable

Debra M. Amidon

It was the PDVSA Knowledge Conference (Caracas, Venezuela) where we outlined the contrast between the traditional and modern management as was outlined in Collaborative Innovation and the Knowledge Economy.

	Traditional/Industrial Financial Capital	Knowledge/Innovation Human Capital
Performance Measures	Financial Static $$$ as assets	Comprehensive Dynamic Relationships as assets
Structure/ Culture	Competitive Market Share Distrust of borders	Collaborative Sets of Alliances Value-adding
People/ Revenue/investments	Cost/Expense Profitability	Leadership Sustained Growth
Cross-Boundary Process	Independence Cause-effect Chains	Interdependence Value-system
Computer/ Communications	Information processing Data/Information Things/warehouse	Knowledge processing Tacit/explicit knowledge Flow/process

The message is that this is not an either/or choice. Companies must manage both simultaneously to be flexible enough to capitalize upon the opportunities afforded a Knowledge Economy. However, as Bruce Bond, CEO of PictureTel, told a recent MIT audience, "We are in a transition period between one era to another in which the old rules do not apply and the new ones have yet to be invented."

To reinforce the imagery, I described the trapeze artist who must let go of one bar before catching the other and for a moment is suspended. For many, this described their uncomfortable uncertainty with this future economy that is evolving.

However, to Frances MacCarty (E-mail: mmcarty@pdvsa.com), one of the conference participants, it touched a chord with a book she was reading in Spanish 'Guerreros del Corazon' (Warriors of the Heart), Danaan Parry, Gaia Ediciones, Madrid, Spain (1996). She took the time to translate the short text into English (the book was originally published in English several years earlier!) which we provide below for those who seek to reconcile the two managerial worlds.

Converting the fear of transformation into the transformation of fear.

Sometimes I feel that my life is a series of trapezes. I find myself swinging on a trapeze, or during a few moments, I fling myself across the space that lies between trapezes.

Most of the time, I spend life holding onto the trapeze bar of the moment. I swing myself at a certain speed and I have the sensation that I control my life. I know the right questions and even some of the answers.

But sometimes when I am happily, or not so happily, swinging, I look ahead and what is it that I see in the distance? I see another trapeze coming towards me. It is empty and I know, in that part of me that knows, that this trapeze has my name on it. It is my next step, my growth, life that is searching for me. From the bottom of my heart I know that to grow, I must let go of the old trapeze that I know so well, and grab onto the new one.

Every time that this happens to me I hope (no, I pray) to not have to let go of the old trapeze completely before grasping the new one. But in that place where I know, I know that I must let of the old trapeze completely and, for a moment, cross space before being able to grab onto the new one.

I am always very afraid. It doesn't matter that in my previous flights between trapezes I have always been successful. I always fear failing, crashing against the rocks that I can't see at the bottomless chasm below. But I do it anyway. Perhaps this is the essence of what mystics call the faith experience. There is no guarantee, no safety net and no insurance policy but you do it anyway, because to continue holding onto the old trapeze just isn't one of the options anymore. So, during an eternity that can last a microsecond or a thousand lives, I rise above the dark emptyness of "the past gone by, the future not yet come". This is what is called a “transition”. I have come to believe that true change occurs only in these transitions. I mean true change, not the pseudochange that only lasts until the next time the old buttons are pushed.

I have also come to realize that, in our culture, this transition zone is considered to be a “nothing”, an empty non-place between places. Of course, the old trapeze was real and I hope the new one coming towards will also be. But what about the emptyness between? Is it simply an empty space that should be crossed as fast and unconsciously as possible? NO!! This would be to lose a great opportunity. On occasions, I suspect that the transition zone is the only real thing and that the trapezes are illusions that we create to avoid the emptyness in which real change, real growth occurs. Whether or not this be true, what is certain is that the transition zones in our lives are incredibly rich. They should be honored, even savored. Yes, despite all the pain, the fear and the feelings of being out of control that may accompany (though not necessarily) transitions, these are still the most vivid, full of growth, passionate and expansive moments in our lives.

Email: debra@entovation.com

Internet and ECommerce Opportunities

Jan Wyllie, Trend Monitor

What follows is a sample from the first of a series of products based on Trend Monior's analysis of the content of hundreds of articles analyzed and synthesized each week from the most influential English-language international business and technology publications available in the UK. We hope to provide edited highlights in most editions of I3 UPDATE/ ENTOVATION International News readers, but you can subscribe to the full free weekly Opportunities by sending an email to IEM1a@trendmonitor.com If you are interested in the full picture - risks, strategies, new services, valuations, legislation etc. then please go to the secure Shop at the Trend Monitor Website http://www.trendmonitor.com/sha.htm.

The extracts below are organised under the principal headings of Business, Countries, Technologies and People.

Business

Business to Business (B2B)
--- SMALL BUSINESS (SMEs) BENEFITING FROM THE NEW TRANSPARANCY ---
The new market of Business-to-Business (B2B) is expected to make a "bounty" of information available to small businesses (SMEs), such as finally agreed prices and delivery terms, which hitherto had been "opaque". A new B2B exchange for the chemicals industry publishes trade details, such as price, size and location. This new "transparency" is thought to be "particularly useful" for small companies because it gives them access to knowledge about issues vital in preparing bids.

Business to Customer (B2C)
--- THE FUTURE COULD BE INTERACTIVE DIGITAL TELEVISION RATHERTHAN THE INTERNET---
The findings of research by Japan's MITI and Andersen consulting suggest that B2C could grow "20-fold" over the next five years. However, research by Gallup is published indicating that 42 per cent of people would prefer to carry out home shopping using digital television compared to 26 per cent who would rather use their PC. In the UK, where interactive digital television is now being introduced using the non-Internet based Open secure shopping system, these preferences should be considered in the context of the general expectation that more people will be able to shop through their television by the end of 2000, than those able to connect using their PC. Across Europe, it is predicted that more people will have connected TVs, than connected PCs by 2003.

--- MOBILE COMMERCE (M-COMMERCE) TO BE "AS BIG AS" THE INTERNET ---
A poll by Computer Weekly and Harvard Nash finds that 67 per cent of respondents believe that mobile commerce will having as much impact on B2B trading over next five years as Web-based systems had over the previous five years, if bandwidth and reliability problems are solved. Because Europe is ahead of the US in the mobile phone market, m-commerce is expected to grow fastest there.

Countries

United Kingdom
---FIRST COUNTRY TO MOVE FROM PAID TO FREE TELECOMS ACCESS---
The UK is the first place outside the US where free telecoms links for Internet access will be tried. The question is how much pent up demand will be released.

Japan
---B2B AND LOCAL CONVENIENCE STORES TO BENEFIT MOST---
The opportunities for B2B e-commerce are seen as "even brighter" than B2C because the use of computers at work is so much greater than home use. Local convenience stores such as Seven Eleven have a unique opportunity in Japan to play a critical part by acting as payment and distribution centres for online vendors.

---PLAYGROUND FOR NEW GENERATION OF ENTREPRENEURS---
A new generation of Japanese entrepreneurs see the Internet as an "amazing" opportunity that occurs "only once in 100 years" with huge gains expected from applying the most successful US Internet business models in Japan.

Eastern Europe and Russia
---TIME FOR SERIOUS INVESTMENT--
Dot com entrepreneurial opportunities are beginning to reverse Russia's brain drain lead by Yandex, the search engine developer, which is scheduled to receive a "multi-million dollar" capital investment in the next few weeks. "High profile deals" are reported showing that the financial community is now beginning to take Internet projects very seriously. The positive shift in the accounts of the Polish treasury is described as "dramatic sign" of the effects of "Internet fever" in Central and Eastern Europe.

India
---MORE EXPONENTIAL GROWTH RATES PREDICTED---
Villages in India which don't even have telephones will be connected to the Internet using Web-enabled television sets. India's Internet user base is predicted "to explode" from two to three million now to 30 to 40 million by 2004.

Technologies

Software
---OBJECT-ORIENTED MIDDLEWARE IS THE NEXT BIG MARKET---
As the fast increasing number of businesses begin to use the Web for B2B and B2C purposes, they must make secure links between their proprietary legacy systems and data, and the standard Internet-based protocols. The main opportunities thrown up by this new requirement are seen as being with solutions based on standards, such as extensible mark-up language (XML) and standard object-oriented methodologies, such as the Object Management's Group's (OMG) Corba standards, which enable companies to work across boundaries.

---GRID OF ALL KNOWLEDGE BEING PLANNED BY SCIENTISTS---
Scientists are reported devising the successor to the Internet, provisionally known as The Global Knowledge Grid (GKG) or the "Grid", which, according to 'The Financial Times', can instantly access "every piece of data ever collected on the subject" from anywhere in the world and display it in any format required. After the high capacity communications infrastructure is pioneered by academic / IT partnerships, a "huge investment" is expected to be in order to bring its benefits to corporate and home users.

People

Consumers
---INCREASED BARGAINING POWER TO BRING LOWER PRICES AND HIGHER QUALITY---
E-commerce is giving consumers the opportunity of taking collective action to move away from big corporate brands using automated aggregated purchasing power. It is also giving consumers a view of world prices which will bring down prices in high priced countries, such as the UK.

Women
---NET COMMERCE CREATES LEVEL PLAYING FIELD FOR JAPANESE WOMEN---
Women are reported having a fast growing role in Japan's net economy and are described as "the main force" behind the surge in e-commerce which sold $3.2 billion in 1999, up "five-fold" from 1998. The Internet and e-commerce are portrayed as enabling a new generation of Japanese business women to trade for the first time on a "level playing field".

Editors Note: We shall be making special offers to I3 UPDATE readers for these services when we launch our new web-site. Watch this space!

A Reader Replies

There is no Knowledge Economy?

Bo Buma, Stractics

After reading I3 UPDATE I revisited the Entovation Site and still thinking on your article and my response, wrote some related remarks in "share your vision" (it's a bit out of the blue and poorly written - it's a very small box):

I believe there will be no knowledge economy. In that sense. Knowledge will start to roam freely, making its price drop remarkably. Having knowledge will be nothing. There will be so much of it, that the exchange of it will have no price. Helping finding it and helping applying it might be worth something. Companies will lose their grip on knowledge of their employees. Either because employees will turn free-lance or because it will no longer be accepted that the idea of an idea of a "worker" will belong to the company he (accidently at that time) works for. They bought him for 36 hours/week (in Holland that is) of his time, but his brain works 24x7 hours/week. As at the change of feudalism, you can have somebody working for you, but you don't own his body.

Perhaps we didn't realize it, but we already lived in a knowledge economy. Tomorrow knowledge will only be worth the medium it is written on.

Why will it have no price ? Because it never had. The price it had was forced upon it. By law mostly. Once communications in transport developed large national and global markets, knowledge distributed itself faster than the products it created. So laws were drawn up to prevent that. This happened at the same time that the "worker" was invented, nations developed and education was institutionalised.

At some time in the future (and it is already happening) knowledge will be free, the distribution thereof will only exact a prices of the distribution itself. What will exact a price is the ability to apply knowledge, to use it. And it has been this ability that we have most neglected as an asset. The coach, the guildmaster, the artisan, will again be in high demand, and he/she will have restricted audiences for coaching is real interaction.

Maybe (as an afterthought) children have been right all this time: we don't need this knowledge, we want to know how it can be used.

Thanks for the UPDATE by the way, it inspires every time,

Bo Buma

(Email: stractic@euronet.nl)

Snippets

Just Published: Developing Knowledge-based Client Relationships

I3 UPDATE / ENTOVATION International News reader Ross Dawson has just completed a lunch tour for his new book 'Developing Knowledge-Based Client Relationships: The Future of Professional Services', published by Butterworth-Heinemann. Although aimed at professional services it contains generally applicable models for structuring customer contacts and considering customer knowledge. ISBN 0 7506 7185 8

Knowledge Auction Site

We have discussed knowledge markets quite a lot in the past. Nick Bontis (a researcher in intellectual capital at McMaster University) first contacted us after our mentioning the demise of a pioneering knowledge market iqport.com in January to say that there was another knowledge market at http://www.knexa.com "the world's first knowledge exchange auction". Now he tells us that he has just been made CKO. Congratulations. So now we have a Chief Knowledge Officer of a knowledge auction company operating a knowledge market in the knowledge economy. How much more knowledge do you need!

APQC Releases Guidebook for Best Practices in Knowledge Management

This is the first of several books to be released as part of the APQCs' American Productivity and Quality Center's Passport to Success series. The book provides mechanisms to gauge current status, understand the components of a successful knowledge management initiative, and determine how to proceed. More information at http://www.apqc.org.

Events

As usual you will find lots of conferences with knowledge in their titles or on themes such as corporate Portals. Many are tecchy in orientation. These are the pick of the bunch of conferences focused more on new insights or with a management focus.

20-21 March 2000. Managing and Measuring Your Intellectual Capital - Account for Your Knowledge Advantage. Walt Disney World Resort, Lake Buena Vista. IIR.
http://www.iir-ny.com

27-28 March 2000. Tacit Knowledge Roundtable - Developing, Capturing, and Leveraging Your Employee's Expertise to Drive Profit. Atlanta. IIR.
http://www.iir-ny.com

3-5 April. Knowledge Straetgy for Oil and Gas. London. The fourth in this excellent series of industry specific conferences. First Conferences.
http://www.firstconf.com

10-13 April 2000. Communities of Practice, SanDiego. Insights and case studies into creating communities and linking communities and organizational performance. IIR.
http://www.iir-ny.com

18-19 May 2000. Knowledge: Management, Measurement and Organization, New York. Ross Institute of Accounting Research, Stern School of Business, New York University.
http://www.stern.nyu.edu/ross/ProjectInt/upcoming.htm

This newsletter is copyright material. In the interests of dissemination of information, forward circulation is permitted provided it is distributed in its entirety including these notices, that it is not posted to newsgroups or distribution lists and that it is not done for commercial gain or part of a commercial transaction. For other uses please contact the publisher.

I³ UPDATE / ENTOVATION International News is a joint publication of David Skyrme Associates Limited and ENTOVATION International Limited - providers of trends analysis, strategic advice and workshops on knowledge management and knowledge innovation^®

Email: info@skyrme.com debra@entovation.com
Web: http://www.skyrme.com http://www.entovation.com

^® Knowledge Innovation is a registered trade mark of ENTOVATION International.

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I3 UPDATE / ENTOVATION International News No. 38: March 2000

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