Organizing a business for success on the Internet requires a rethink from ground up.
One of the most frequently asked questions I get from clients and potential clients is, "How can my business succeed on the Internet?" The answer varies for every client and every kind of business. But the approach to answering this question is often the same.
Clients start thinking about this by looking for ways that they can include the Internet in their existing businesses. For example, a magazine publisher thinks about ways to use the Internet to secure new subscriptions or deliver electronic versions of the publications. Their thinking is often limited to business models they understand deeply.
To really find success, they must step out of the box and think about new ways to deliver value from their existing assets. They must break their businesses down to their core components. They need to look for possible Internet business models that could take advantage of these core components.
For example, a magazine publisher focused on the plastics industry would have current and historical content about the industry. It has relationships with its readers, advertisers and story subjects. Readers are looking for content about the plastics industry. Advertisers are either in the industry or suppliers to the industry. These assets could be the cornerstone for developing an Internet portal for the plastics industry. Industry portals are often called vertical portals or "vortals". A vortal is a Web site where a broad range of information can be found on an industry of interest.
Creating a vortal requires investment and focus, but look at the head start that is afforded by leveraging existing assets. To create traffic to the vortal, it is promoted to the readers through the publications at little or no additional cost. The initial content for the vortal is the current and historical content of the hard-copy publications. New content generated for the hard-copy publications can be placed on the Web to keep the site fresh. This content can be made even more valuable if it is catalogued for browsing and easily searched. Initial revenue streams are sought by selling advertising and sponsorship to the publication's advertisers using the publisher's sales force.
Through using the core assets, a new business is born that leverages these assets. The only significant net new investment is building a Web site to house the content. There is a huge competitive advantage over a new business starting from scratch to build a comparable vortal. A new business would have to make investments in purchasing or creating content, promoting the vortal and identifying advertisers and sponsors. The publisher needs only to expand its focus to include the vortal in its content generation, advertising and promotion plans.
For this vortal to really become successful, it needs to expand the range of related content that it makes available to visitors. Complementary and supplementary content should be sought. Plastics companies, often the publisher's advertisers and story subjects, could be invited to make product information and white papers available through the site. A capability could be developed to allow visitors to communicate with each other through the vortal and capture their exchanges. This is a nifty way for the vortal to expand its own content systematically.
Lastly, the publisher could consider inviting direct competitors to make their content available through the vortal. This is an area of difficulty for most business people. The thought of including direct competitors in a new business venture is often disturbing. But think about how much additional value is created for the visitor to the vortal and for the vortal itself. The visitor gains access to expanded current content. The vortal can make a deal to promote the competitive publication in return for the competitive publication promoting the vortal. This results in a bigger, better vortal with more visitors and, very likely, greater revenues.
The trick is to see the vortal as a completely separate business from the publishing business. It needs its own management that is focused on the success of the vortal and incented to grow it. This focus on the vortal as an independent business will significantly increase its opportunity for success.
Tom Atkins is a Certified Management Consultant and is Director, e-Commerce Strategy, in the Toronto Office of Sierra Systems Group Inc. He can be reached via e-mail at TomAtkins@SierraSystems.com.