Organisational Change Management Volume 1

Framework 31 Transformation to a Dot-com

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Most of the dot-coms organisations that operate online businesses are new, ie formed in the late 1990s Their activities are in cyberspace; where most burn cash faster than they make it. On the other hand, successful pioneers, such as eBay, Amazon and Yahoo have transformed the industry dynamics and have contrasting cultures to the non dot-com organisations. For example, the non dot-com organisations prefer "cautious testing" when entering the Web; while dot-coms declare "world domination"

Organisations not born digital face big problems in changing to become dot-coms. It requires more than understanding of the new technology; it is about cultural attitudes that include long-standing internal barriers as some parts of the organisations will feel threatened by the Internet

The fundamental challenge is

"...knowing when to change, how to change, and how to prepare people to live with the consequences of change. Any organisational change is notoriously hard for established companies to bring about..."

Rosabeth Moss Kanter, 2001

The organisations that manage to go digital with relative ease are called pacesetters, ie

"...first movers and fast followers that exhibit organisational curiosity and the desire to innovate..."

Rosabeth Moss Kanter, 2001

These include IBM and Sun Microsoft. Even to get these organisations to change required much hard work over several years

On the other hand, laggards lack the commitment or knowledge about how to change. They go through many different phases along the path to the Web, ie

"... first they are in deep denial about the threats to their way of life. Second, as the need for change becomes undeniable, they shift blame - trying to suit new entrants, for instance, but not playing by the old rules. Third, they begin to take action, but only in the form of insignificant alterations. At this point, the company's leaders have decided they want to play in the new economy but without making any real changes in the way they operate..."

Rosabeth Moss Kanter, 2001

Most wannabe dots are looking at ways to minimize commitments and to keep all options open, ie only interested in cosmetic change

Ten proven ways to impede the change to dot-com

Rather than look at the ways to become a successful dot-com, this framework looks at the activities to avoid, ie

1. Sprinkle Internet responsibilities throughout the organisation; allow it to stay small and innocent, ie every business unit that has an interest can have a web site; at the same time, large scale change is not allowed

2. Form a committee to create a new corporate Internet offering; staff the committee with people from diverse areas who are already over-worked; furthermore, give the leadership role to a loyal executive who has no interest in the Web. This will send a clear signal that the project is unimportant and under-committing resources means slow progress - in E-commerce, slow progress means no progress; use consultants and then reject their advice

3. Find the simplest, least demanding thing you can do on the Web, ie introducing a copycat that does not necessarily represent your business model and processes

4. Build the site by using partners who are most dismissive of your traditional business. Organisations need to learn how to work with these partners productively. On the other hand, the partners need to appreciate the workings of the existing business

5. Duplicate your traditional business assumptions online; as the Internet is just a tool!!!! An organisation's own success lulls it into believing that it should approach the Internet in the same way; but "off-line success" does not foreshadow innovation in cyberspace.

6. Insist that an Internet venture meets every corporate standard, ie cost controls, quarterly earnings, recruitment sources, compensation policies, purchasing procedures, etc; allocate just enough resources to keep it alive but not enough to risk it becoming an innovator. Remember: dot-coms operate by fundamentally different rules, and the standards created for traditional organisations are not suitable

7. Reward each business unit on its own performance and offer no extra incentives to co-operate in cyberspace; keep reminding divisions that they are separate businesses because they are different. Remember: the E-world is highly decentralized but forces organisations to become more integrated, such as

"...presenting one face to the customer, link separate systems for seamless integration that meet the demand outside and inside the organisation for full connectivity. Many organisations don't welcome that kind of togetherness ..."

Rosabeth Moss Kanter, 2001

It requires a more team-based approach

8. Compare your performance with your traditional industry competitors and dismiss online competitors (both inside and outside your industry) as not important. Remember: the Web blurs industry distinctions. Many laggards fall into the classic trap of making themselves feel important by concentrating on their competitors' mistakes but fail to observe emerging competition coming from outside the industry

9. When converting to E-business, supply tools to the rest of the organisation that are unusable and delay the training classes; blame staff for resistance to change, ie botched the implementation

10. Forget that the customer, not the organisation, is the main driver. Remember: the real power of the Web is its ability to give customers a voice, ie communicate directly with the organisation

Some ways to succeed as a dot-com

When in doubt, create small experiments that are most likely to succeed, don't require much change and quickly demonstrate the virtues of changing, ie

"... don't bet the company, don't waste time. Just act, simply and quickly, to have something concrete and positive to use to convert skeptics "

Rosabeth Moss Kanter, 2001

New ventures need dedicated teams, given space and autonomy; they are responsible for understanding business realities and have credible sponsors throughout the organisation to back them

As E-business will require systematic changes in the organisational operations, E-business needs to be connected with the organisation's main strength to handle both the organisational synergies and obstacles. Need to have good relationships across the organisation so that the obstacles are confronted and overcome

Use E-business as an opportunity for questioning existing business models and experimenting with new ways technology can improve businesses

Do not wait for top management's seal of approval but ensure their acceptance and guidance

Need to integrate related initiatives and encourage co-operation from the rest of the organisation

Be prepared to change policies and procedures as the Web will cut across traditional business units

The most common barriers to E-business change

There are 17 barriers to E-business change. The firms that are more than 20 years old face fewer marketplace and technology barriers than the younger ones. On the other hand, they face many more internal barriers - from decision-making uncertainty to divisional rivalries (see table)


"...They begin with curiosity instead of denial, then move to questioning themselves (instead of blaming others), and quickly launch into experimentation...... their way is more ambitious, more likely to lead to systemic change, and more likely to produce further innovations......Internet success is more fundamentally about having the right culture than the right strategy. The keys are not out there on the Internet but inside the company, its own organisational culture and attitude toward change. A pacesetting company is willing to invest, willing to give E-ventures their own territory on which to improvise, and willing to challenge business and organisational assumptions.......about customers, internal and external communication, decision-making, operating style, managerial behaviour, employee motivation and retention ultimately, that's not a technological problem. It's a human one..."

Rosabeth Moss Kanter, 2001

organisational development change management

(source: Rosabeth Moss Kanter, 2001)


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