New Economy Rules for Recruiting

SAN MATEO (07/03/2000) - A revolving door spins in a crowded office building at lunchtime. It's an apt metaphor for how managers feel about hiring and retaining employees in the Internet economy: The rate of turnover is out of control, employees are always one step ahead, and the way out gets rapidly confused with the way in, so that eventually you feel you are just along for the ride.

Welcome to the world of e-business. For staffing managers, it's an unforgiving environment that differs from the traditional economy precisely because of that dizzying, uncontrolled pace. The same e-business forces that shift power from sellers to buyers and employers to employees also reassign power from recruiters to candidates.

Today's job candidates are in the driver's seat. They know more about the opportunity, they are better informed about their value in the marketplace, and they are more demanding on every level. The best candidates have multiple offers and are well aware of the costs of signing on with a company that has a suspect business model. To protect themselves, top candidates today want to know how well the opportunity you are offering is aligned with the macro forces shaping the networked economy.

The following seven organizational rules have been made possible by the growth of the Internet as a business tool. As a whole, these rules define the direction of the networked economy today. Your company should be able to foresee how each rule will change its business proposition and its target market and should be able to explain to prospective employees how the company will adapt to the changing business landscape.

1. All advantage is temporary

Job candidates are no longer impressed by technological advantage because they know how easy it is to duplicate. For example, OnSale originated the auction model for selling surplus electronic equipment but quickly lost dominance when eBay Inc. and others used a similar dynamic pricing auction model.

How does one create advantage in the networked economy? As organizations entered the Internet Age, their mistake was to assume that the Internet by itself could drive sustainable competitive advantage. It doesn't work that way, even though some Net initiatives have created enormous value.

Relying on technology to generate competitive advantage is counterproductive for many reasons. The practice places far too much emphasis on technology at a time when technology can be duplicated quickly and easily. And aiming toward competitive advantage misses the point. Competitive advantage should be the result of something much more basic: offering customers a product or service that saves them time, makes their lives easier, or enriches their relationships. Companies derive advantage from doing those things well.

Job candidates today want to work for companies that create competitive advantage by ongoing innovation (Cisco Systems Inc.), multiple revenue streams ( Inc.), and customer intimacy (Charles Schwab & Co.).

2. Transcend the physical

Whole industries are cropping up that don't require physical goods or services, obviating distribution channels and eliminating commercial storefronts. Job candidates shy away from business models that are limited by geography or by the constraints of the Old Economy. They want to see opportunities that exploit the unique attributes of the Internet.

By eradicating the distinctions between the tangible and the intangible, the networked economy eliminates geographic and physical boundaries. Here are some examples.

E-tickets. We used to make a trip to the travel agent's office and receive a paper airplane ticket, which we presented to the boarding agent at the airport.

Today we visit a Web site and receive an electronic ticket and possibly an access code that lets us generate a boarding pass from a kiosk at the gate.

Software sales. We used to distribute software on disks and CD-ROMs.

Increasingly, software is downloaded from Web sites.

Reference works. We used to visit libraries to consult tangible reference books: encyclopedias, dictionaries, and so on. Now these resources are available online, where they are always accessible and always up to date.

3. The personal touch

The most attractive job recruits understand that every business is a service business. Customers expect an unprecedented level of personalized service, whether they're using your Web site or calling customer service representatives. Job-seekers may look for evidence of those capabilities in the recruitment team.

Personalization is the organizing principle of business in the networked economy, just as mass production was the organizing principle of the traditional economy. Mass producers dictate a one-to-many relationship.

One-to-one personalization takes advantage of information technologies that create products and services that cannot be compared to a competitor's. Why?

Because these products and services are the result of an ongoing, one-on-one dialogue with each of its customers.

Personalization allows organizations the power to give every customer a unique view of the organization. Services such as My Yahoo or My eBay allow each user to establish a unique relationship with the company, based on the unique interests and desires of the customer. Literally millions of people enjoy customized encounters on the Web that conform to their preferences and interests.

4. Beware of disintermediation

Your best recruits are going to look at your organization from the point of view of potential competitors and ask themselves the Big Question: How vulnerable is your enterprise to being disintermediated? Because if another company can come in and insert itself into the organization's value chain, it almost certainly will.

Disintermediation means eradication of a layer or function that exists between two other layers or functions. One of the most durable myths of the Internet economy is that the Web systematically eliminates all intermediaries by squeezing out the inefficiencies that middlemen such as brokers now exploit.

The Internet truly opens up new avenues of communication and commerce to your business partners and customers, and ignoring online intermediaries robs you of a chance to identify new value-added services or pain points in your target market.

Although some intermediaries may disappear, job recruits understand that the very nature of the Web opens up new niches to add value. Organizations such as eBay and eLoan Inc., perfect intermediaries, have had a huge impact on how people search for goods and information. The most successful intermediaries add value by creating more intimate relationships between the partners they serve.

Companies quick and agile enough to detect opportunities in complex markets will prosper as intermediaries.

5. Converge

The hottest business opportunities today are created by the convergence of technologies. Convergence is not a new dynamic; it has been going on as long as human beings have been developing and refining technologies, roles, and markets. For example, the convergence of broadband Internet and traditional media creates value-added services with rich career opportunities.

The more you can show that the opportunities you offer are spawned by the convergence of complimentary technologies, the more attractive your opportunity will be to recruits looking to move their careers to the cutting edge.

6. Separate form from function

Recruits today want to align their careers with function rather than form because they understand that functionality can be delivered in various ways using the Internet. Consider, for example, printing. In the Old Economy, perfectly acceptable careers were focused around designing and manufacturing printed work. Today, low-cost printers make it possible for anyone to print his or her own invitations, cards, newsletters, and so on, from home. And dozens of Web sites serve the needs of corporations that print hundreds of custom jobs each year.

Job candidates today understand that the Internet and digitization are radically reshaping careers by transforming the delivery of function, often eliminating its old form.

The ability to represent content such as text, video, audio, images, and so on, in digital form opens up the door to unprecedented opportunities. Digitization and the other themes enabled by the Internet collectively bring society into a culture of speed (compression), marketing to units of one (personalization), a brand-new world that blends products and services (informatization), and manufacturing in lots of one (customization).

Digitization by itself is not very useful. Only when it is combined with one of the other themes does it usually create value. For example, personalization and customization are impossible without digitization. The Internet makes it possible for companies to move data from an online order form to the factory floor.

The biggest implication of digitization is how it enables the separation of form from function. Separation of function and form involves the delivery of function by different means. Digitization enables service companies to separate the functions of their services from their traditional forms, creating new markets and opportunities in the process.

Where does your value-add sit on the form-function continuum? If it is aligned too strongly with the form, your best candidates will question whether they are better off aligning themselves with the company that provides the function.

7. Smart products are proliferating

Call it penetrating intelligence. If you can't find a way to put "smartness" into your products, your competitor will. In the networked economy, products are "informated." Technology is embedded in and around products in ways that facilitate a steady stream of information about transactions and the use to which products and services are put.

Smart products that communicate information to manufacturers or intermediaries will perform better, reduce costs, and expand revenues. The technology and the practice are here today to embed processors into everyday appliances, from big-ticket items such as automobiles and microwave ovens to ubiquitous devices such as air conditioners, hotel door locks, refrigerators, and soft drink machines. The potential services these processors could provide is virtually limitless, from electronic cash to self-servicing appliances to power conservation.

The candidates you are trying to recruit want to be associated with the smartest company selling the smartest products and services. Unless you can demonstrate that every transaction with the customer adds intelligence to the organization, prospective employees will conclude that your competitors may be smarter.

John Kador is a business writer based in Geneva, Illinois, and author of Internet Jobs: The Complete Guide for Finding the Hottest Jobs on the Internet (McGraw-Hill, 2000), from which this article is excerpted. Additional resources are at

The viability quiz

How well is your company aligned with the market forces of the networked economy? The higher you score on this quiz, the more likely you'll be able to attract top-tier talent to ensure the success of your organization. Be honest.

Base your responses on how your organization actually maps to these trends today. Scoring instructions below.

1. My organization's competitive advantage is not represented by easily duplicated technology.

1=Disagree strongly 2=Disagree somewhat 0=Neutral 3=Agree somewhat 4=Agree strongly2. We have moved or are moving our products and services from the tangible to the intangible.

1=Disagree strongly 2=Disagree somewhat 0=Neutral 3=Agree somewhat 4=Agree strongly3. Our repeat customers routinely experience a high degree of one-to-one personalization.

1=Disagree strongly 2=Disagree somewhat 0=Neutral 3=Agree somewhat 4=Agree strongly4. We assume that all constituents in the value chain have access to timely, high-quality information, and we add value by facilitating relationships between parties.

1=Disagree strongly 2=Disagree somewhat 0=Neutral 3=Agree somewhat 4=Agree strongly5. Our business opportunity is the product of convergence and we seek new ways to add value by exploiting the convergence of new technologies.

1=Disagree strongly 2=Disagree somewhat 0=Neutral 3=Agree somewhat 4=Agree strongly6. Our opportunity fully exploits the property of digitization by representing every possible value in digital form.

1=Disagree strongly 2=Disagree somewhat 0=Neutral 3=Agree somewhat 4=Agree strongly7. Our organization is constantly adding intelligence to its products or services.

1=Disagree strongly 2=Disagree somewhat 0=Neutral 3=Agree somewhat 4=Agree strongly8. We continue to eliminate inefficient processes from our organization.

1=Disagree strongly 2=Disagree somewhat 0=Neutral 3=Agree somewhat 4=Agree stronglyScoring instructions: Add up the total point value of all the questions answered and score your responses according to the table below. Use these guidelines to interpret your organization's current alignment with the seven rules for companies operating in the networked economy.

Total score _____________

Above 30: Outstanding. Job candidates are favorably inclined to note that your organization is almost perfectly aligned with the dictates of the networked economy. Your recruitment efforts should be flourishing.

23-29: Above average. The level of alignment with the dictates of the networked economy is impressive, albeit with some important pieces missing. The sharpest candidates will wonder about some of the missing pieces.

16-22: Average. Your organization displays a typical level of alignment with the rules. The groundwork is probably ready, but the work has not been done.

9-15: Below average. The company must rethink its commitment to doing business in the networked economy. Dismantling legacy processes may be required before the company can take on the fundamental groundwork required to get the company in line with the demands of the New Economy.

Below 8: Poor. The networked economy is far from a concern for your organization. Whatever recruitment efforts you are undertaking to attract IT talent will be severely hampered. A clearer understanding of the impact of the networked economy, the organization's fundamental value proposition, and the role of technical recruitment is required to move forward.

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