Last Chance for the Old Economy to Win Online

Old economy companies that have lost ground to online competitors were delivered good news and a warning Wednesday at the Comdex Korea exhibition in Seoul.þSpeaking during a keynote address, Stephen McKay [CQ], president and chief operating officer of The Web Connection, a Chinadotcom Corp.-owned Internet consulting company, said that old economy companies, with their history, expertise and brand, have a chance to erase the mistakes and losses of the past few years that have seen them lose ground online. But they have only one more chance to get it right, he said.þThe key to winning this battle, said McKay, lies in control of the relationship with the customer.þ"That's where there's going to be a big dogfight," he said. "That's the next phase of the Internet, which is a fight between the incumbents -- who are going to get their act together, pour a lot of money in and leverage their brand and operations excellence -- and the new entrants, who are much faster and hungrier and are going to be going after the incumbents . . . it's going to be an ugly fight and fun to watch."McKay named as winners in Round One -- the initial battle to gain Internet dominance -- companies such as Yahoo Inc., Cisco Systems Inc. and local companies Daum.net and online stock broker Bestez.com, both of which are Web Connection clients.þThe companies became leaders because they were fast out of the gate, very aggressive in marketing, prepared to suffer losses and obsessive about customer relationships, McKay said. For companies such as Yahoo, that obsession over the customer propelled them into a leading position as a site that customers go to first in order to find other information. Being in that position gives Yahoo a lot of power, and it means that other companies fighting to succeed online are dependent on such gateway operators, according to McKay.þBut all is not lost for the conglomerates and old economy companies, said McKay.þ"The good news for incumbents is that your advantages are as relevant today as they were before. As I was saying to a client last week, if you lost in Round One you are forgiven, because nobody saw this coming. If you lose again, in this round, then you cannot be forgiven. Your shareholders should absolutely sell your stock tomorrow.""If you mess it up in this next one or two years, you should not be forgiven, because it's too obvious, there's no more guesswork. We are in the middle of the most profound economic shift in your lifetime, so if you are a CEO today with these advantages and you blow it, your shareholders should not forgive you."The strong brand, customer relationships, infrastructure and operational experience of the incumbents is something that is very valuable and something that, rather than being obsolete in this new Internet era, can be the key to success online if utilized correctly, he said.þAny company that manages to do that will emerge the winner in the coming battle for dominance between the stars of the new economy and the major corporations in the old economy, said McKay, stressing again that the key lies in controlling the customer.þ"If you can get this relationship with your customers right, you can chase your customers around whether they are on their mobile phones, whether they are using their Palm Pilot or PDA, whether they are calling from their couch or a kiosk in the supermarket or if they have walked into your branch," McKay said.þ"You are able to recognize them as a customer right across any of those channels, and that is where the big winners will lie: being able to own that relationship across all these interfaces."So how do companies succeed? McKay said there are several key things that companies must get right in order to become winners.þThe first lies right at the top of the organization with the CEO, he said.þ"If your CEO is not speaking very convincingly with serious vision and able to articulate your strategy online, you have to be worried about the future of your company. If any of (the online strategy) is being led by your IT department, then you are really in trouble."Another key to success, which is particularly relevant in Asia where major conglomerates tend to dominate each local market, is that companies need to get through the mindset of only working with group companies.þ"Partnerships are vital," said McKay. "It's all about who along the supply chain has the strongest partnerships.""It's crucial that your CEO is looking beyond the boundaries of Korea, this is a global economic phenomenon," he added. Companies need to look overseas and have a business plan that targets other nations and not just the domestic market, McKay said.þFinally, companies need to ensure the entire online push is led by strategy, directly from the desk of the CEO, and not by allowing technology to dictate what the organization does online.þComdex Korea runs until Saturday at the COEX exhibition center in Seoul. More details can be found online at http://comdex.chosun.com/.

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