BT Dot.com: 6 Steps To Organising For e-Commerce

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It is said that invention is 10 per cent inspiration and 90 per cent perspiration. A similar formula may be relevant for e-Commerce success-10 per cent idea and 90 per cent execution. Investors seem to agree. Along with traditional financial models, they are insisting on a review of the organisation that will execute the idea. With pure-play dot.coms, a review of the management's resumes is sufficient. With click-and-brick players, the issue is complicated.

Click companies have grown in an environment of rapid change, where business models are created, destroyed, and re-created between sunrise and sunset. This pace of change and speed of execution are difficult to integrate into brick companies, which have been traditionally hierarchical, with the luxury to consider and evaluate options before executing.

Asian and global companies are succeeding at bringing these two worlds together. That success is built on six principles: vision, organisation design, governance, culture, management process, and external relationships.

Vision is the 'bare necessity' for a new venture. It needs to describe the role that e-Commerce will play in the future of the firm and the industry. It must be embraced, voiced, and championed by senior leaders in all the corridors of the firm. It must also occupy a lion's share of senior management time and attention. In Asia, where hierarchy is the norm, senior involvement is especially critical to ensure the vision is integrated into the decision-making structure.

The design of the organisation should reflect the inherent tension of the click in the brick. This tension can be described along two dimensions-leverage and disruption. Leverage describes the extent to which the click venture will need to use the brick's assets (brand, production, and relationships). Disruption describes the extent to which the click venture will cannibalise and destroy the brick business. If the potential for disruption is high, it is unlikely that the bricks will share or encourage the click. Understanding this can help decide how 'close' the new venture should be to the existing business-as part of it or separate from it.

e-Commerce ventures may call for competitors to collaborate, perhaps for the first time. In Asia, with its history of family-run businesses, this rivalry may include personal enmity. Arbitrating between firms who have been bitter rivals requires strong models of governance and decision-making.

In Asia, companies are characterised by a loose association of independent units. The governance structure must arbitrate between these units and their sometimes overlapping, sometimes competing goals. Firms have found it helpful to create an e-Commerce centre, which collects the firm's dispersed e-Commerce experience and offers it as a whole back to the firm. The danger is that the centre becomes dictatorial.

Many firms have gone outside their organisations to hire those with the requisite skills to build e-Commerce ventures. They have hired 20-somethings in positions of power usually reserved for the most seasoned veterans of the company. Not surprisingly, this can lead to animosity and subtle acts of sabotage. This is true in Asia, where operating managers are concerned only with their unit and not with the corporation as a whole, leaving that concern to the executive suite.

To counter this tension, companies have transferred people from the traditional business, people who have strong networks within the firm and can act as a bridge between the two worlds.

Some of the established management decision processes will be inappropriate for the new venture. For example, the annual budgeting process is wholly irrelevant for the Net venture, which operates in a world that turns itself over every 90 days. Also, the approval process needs to be very fast to take advantage of rapidly changing opportunities. In Asia, neither senior managers nor unit managers are comfortable with devolving decision-making. Well-defined processes and approval 'gates' can increase the comfort level on all sides.

Companies will find it necessary to forge external relationships to help the new venture succeed. These relationships could range from technology and content partners, to on-line and off-line traffic partners, and may or may not involve equity. A challenging characteristic is the frequency with which these relationships form and disband. Net relationships that exceed 90 days are seen as long-term commitments. Those who can negotiate and manage a 90-day relationship are a different breed from those who have mastered long-term relationships.

This is just a glimpse of the challenges in organising for e-Commerce. If these principles take hold in the wider corporate body, our traditional organisational models may become extinct. As a guidepost, consider Silicon Valley. It thrives on an unorganised, ambiguous model of governance, where ventures are born, die, and are re-born in a matter of months. That pace and scale of evolution may soon become a part of our corporate and social lives. Getting ready for this change, maybe even leading it, may no longer be a matter of choice. That's a story for another time.

Rohit Bhagat is the Head of The Boston Consulting Group's e-Commerce Practice, James Abraham is Director, The Boston Consulting Group's India operations and Ralph Heuwing is the Managing Director of the Boston Consulting Group's India Operations.