The answer in my opinion is yes! So what was it. As early as 1984 Tesco was delivering online shopping. According to Wikipedia:"In May 1984, in Gateshead, England, the world's first recorded online home shopper, Mrs Jane Snowball, purchased groceries from her local Tesco store in the world's first recorded online shopping transaction from the home".
From 1996 Tesco brought retail shopping on a larger scale to the web with its Tesco direct service. In 2001 Tesco was already profitable and in those days it was the only company doing so. One of the factors that was the key to this success was the fact that Tesco didn't stop with just offering to deliver groceries online.
An extract from the case reveals what other services they delivered via Tesco online: "Tesco created virtual storefronts, or superstores, that allowed it to sell books from its book warehouse, electrical appliances from its electrical warehouse, as well as videos and many other products. Tesco also added many online services: Price Check, for instance, designed to allow customers compare Tesco's prices against those of leading supermarkets and retail chains. Also included were financial services, where customers can trade shares and interact with their Clubcard Plus account; a shopping service that remembers a customer's last shopping list; and many online features all supported by an extensive help facility that thoroughly answered all customers questions".
There was no other competitor in the market that delivered these combined services online. Part of Tesco strategy was to develop and diversify itself in many sectors. While around the turn of the century the competition was struggling with its online services that required cash injections, Tesco direct had "750,000 registered customers and Tesco.com generated 70,000 orders per week on an average basket size of £85 that produced a turnover of £176 million (a 77% increase)".
Although the online division of Tesco was only good for about 1,5% of the total turnover, Tesco had a competitive advantage. It might not have been so much in the local GB market, where they will try to prevent cannibalizing their physical outlet channels as much as possible, but moreover in their expansion abroad where they could compete with local grocery companies that thus far (at the time of the case) had been unsuccessful in setting up profitable online sales channels.
And the best thing of all, if they would be very successful in doing so, they could have a global presence without having to fight the fierce competition of local physical competitors and avoid the huge overhead of having traditional shops.
Tuesday, June 22, 2010
Monday, June 21, 2010
Casa del Libro.com
What would have been my decision if I were the management of Casa del Libro in 2002? Would I opt to keep using the previously developed UNIX platform, or would I opt for the cheaper Microsoft version.
In hindsight it's always easy to make a choice. A traditional "management trap" is to keep hanging on to previous made decisions, especially if the company has invested heavily in it. Seeing the situation in which Casa del Libro found itself in 2002, a thorough investigation of the alternatives was more than justified. If I would be there in 2002, I would choose to stick with the expensive and complex solution, which would provide me a robust solution once internet sales took of. The cheaper version could only support low volumes and needs to be replaced when the market takes off.
Why would I do that. Most important for me is the objective Casa del Libro wants to achieve. The wanted to be the leader in the Spanish book market. Of course "catching the Internet wave and improving the market capitalization of the Planeta group as a whole was a strong motivation to launch an online initiative (at the time, all market analysts were severely punishing all firms with no presence on the Internet)". And that wave had mostly disappeared in 2002, or so it seemed.
But at the other hand, internet was the future and in a mature market there were no obvious alternatives for Casa del Libro to further expand and carry the costs of their investment in the huge database and the delivery of all those books. "The online initiative was an available way to achieve world leadership in the Spanish books market".
A second most commonly made management mistake is to cut costs in time of economic downturn. Casa del Libro "made cost control and loss reduction urgent and prior objectives in the short term, moving all the former strategic objectives to a second level". What a company should do, especially if their long term goals depend on it, is invest in times of economic downturn. They have to invest wisely and keep budgets under control. But abandoning the strategic long term goals will lead them to lose whatever advantage they might have had and lose the momentum to gain more headway. Competitors will not start investing in new technologies. Casadellibro.com already made a huge investment in an earlier stage. Once the market for online sales would pick up, casadellibro.com would be able to fully profit from it and expand their position in the market.
Would they use the cheaper Microsoft version, they would have to reinvest in new technology at the moment when they need a good working system the most to stay ahead of competition. If they need to change they will most probably lose their competitive edge (if they were able to achieve any with a cheaper less good functioning system).
Would it have been 2010 I would probable advised the company to invest in putting their database in the cloud and invest in applications to sell these books via Mobile OS of Smartphones and social websites.
In hindsight it's always easy to make a choice. A traditional "management trap" is to keep hanging on to previous made decisions, especially if the company has invested heavily in it. Seeing the situation in which Casa del Libro found itself in 2002, a thorough investigation of the alternatives was more than justified. If I would be there in 2002, I would choose to stick with the expensive and complex solution, which would provide me a robust solution once internet sales took of. The cheaper version could only support low volumes and needs to be replaced when the market takes off.
Why would I do that. Most important for me is the objective Casa del Libro wants to achieve. The wanted to be the leader in the Spanish book market. Of course "catching the Internet wave and improving the market capitalization of the Planeta group as a whole was a strong motivation to launch an online initiative (at the time, all market analysts were severely punishing all firms with no presence on the Internet)". And that wave had mostly disappeared in 2002, or so it seemed.
But at the other hand, internet was the future and in a mature market there were no obvious alternatives for Casa del Libro to further expand and carry the costs of their investment in the huge database and the delivery of all those books. "The online initiative was an available way to achieve world leadership in the Spanish books market".
A second most commonly made management mistake is to cut costs in time of economic downturn. Casa del Libro "made cost control and loss reduction urgent and prior objectives in the short term, moving all the former strategic objectives to a second level". What a company should do, especially if their long term goals depend on it, is invest in times of economic downturn. They have to invest wisely and keep budgets under control. But abandoning the strategic long term goals will lead them to lose whatever advantage they might have had and lose the momentum to gain more headway. Competitors will not start investing in new technologies. Casadellibro.com already made a huge investment in an earlier stage. Once the market for online sales would pick up, casadellibro.com would be able to fully profit from it and expand their position in the market.
Would they use the cheaper Microsoft version, they would have to reinvest in new technology at the moment when they need a good working system the most to stay ahead of competition. If they need to change they will most probably lose their competitive edge (if they were able to achieve any with a cheaper less good functioning system).
Would it have been 2010 I would probable advised the company to invest in putting their database in the cloud and invest in applications to sell these books via Mobile OS of Smartphones and social websites.
Monday, June 14, 2010
Adjust your company to ERP or adjust ERP to your company?
I thought about this question while watching the Dutch football team win from Denmark today. Should a company adjust to an Enterprise Resource Planning system or shouldn't it? Yes indeed, the game was that boring!!
So what exactly is an ERP system? The Wikipedia definition of ERP is: "Enterprise resource planning is an Integrated computer-based system used to manage internal and external resources including tangible assets, financial resources, materials, and human resources. It is a software architecture whose purpose is to facilitate the flow of information between all business functions inside the boundaries of the organization and manage the connections to outside stakeholders. Built on a centralized database and normally utilizing a common computing platform, ERP systems consolidate all business operations into a uniform and enterprise wide system environment". Best known ERP systems are SAP and Oracle.
So why do companies implement ERM systems? Well mainly for two reasons;
1) Because there has been a major malfunction in the old systems running in the company. Usually these types ERP implementations are focussed on specialized parts of the entire organization.
2) The company needs to integrate all the separate data stored in a multitude of instruments in the different silos in the organization.
So who needs to adjust to whom? Implement the Vanilla version of the ERP or create a tailor made version? I think it all depends on what kind of company we are talking about. For instance, I have been working for a large international bank where, in accordance with new regulation, the implementation of an ERP and CRM system was a very high priority on the project list for many years. In this project it became clear that the company's processes were very complex, used a number of different and often outdated systems and in some cases were not even programmed in the same code. On top of that some of the processes could not be changed because they connected with systems of other organizations (like for instance clearing systems) or could only be changed marginal because they were required by law or regulation to be conducted in a certain way. In a situation like that, it will be unthinkable that the company changes all its procedures and way of working to adjust to an ERP system. It is in most cases not a feasible option. At the same time, ERP systems become very complex and expensive in situations like mentioned above. In sub parts of the ERP where the company can adapt to the system and where this would otherwise be too expensive/impossible to implement, the company will most likely adjust. In other words, it is both at the same time; yes they will adjust for a part and no for another part it is the reverse.
Companies that are less complex and are less regulated will most likely have less problems with adjusting their processes in technical/legislation terms. In those cases changing their processes might be a cheaper option than adjusting the ERP system to their organization. Most likely these companies will also be smaller in size and will have less "fat on their bones" to invest in an tailor-made ERP system. However, this does not mean they want to change the way the do their business. They might have devoted themselves on working this way, invested heavily in training personnel or there way of working has all to do with their competitive advantage. So for less complex organizations it can also be both; some companies will adapt to the ERP system others will definitely not.
So what exactly is an ERP system? The Wikipedia definition of ERP is: "Enterprise resource planning is an Integrated computer-based system used to manage internal and external resources including tangible assets, financial resources, materials, and human resources. It is a software architecture whose purpose is to facilitate the flow of information between all business functions inside the boundaries of the organization and manage the connections to outside stakeholders. Built on a centralized database and normally utilizing a common computing platform, ERP systems consolidate all business operations into a uniform and enterprise wide system environment". Best known ERP systems are SAP and Oracle.
So why do companies implement ERM systems? Well mainly for two reasons;
1) Because there has been a major malfunction in the old systems running in the company. Usually these types ERP implementations are focussed on specialized parts of the entire organization.
2) The company needs to integrate all the separate data stored in a multitude of instruments in the different silos in the organization.
So who needs to adjust to whom? Implement the Vanilla version of the ERP or create a tailor made version? I think it all depends on what kind of company we are talking about. For instance, I have been working for a large international bank where, in accordance with new regulation, the implementation of an ERP and CRM system was a very high priority on the project list for many years. In this project it became clear that the company's processes were very complex, used a number of different and often outdated systems and in some cases were not even programmed in the same code. On top of that some of the processes could not be changed because they connected with systems of other organizations (like for instance clearing systems) or could only be changed marginal because they were required by law or regulation to be conducted in a certain way. In a situation like that, it will be unthinkable that the company changes all its procedures and way of working to adjust to an ERP system. It is in most cases not a feasible option. At the same time, ERP systems become very complex and expensive in situations like mentioned above. In sub parts of the ERP where the company can adapt to the system and where this would otherwise be too expensive/impossible to implement, the company will most likely adjust. In other words, it is both at the same time; yes they will adjust for a part and no for another part it is the reverse.
Companies that are less complex and are less regulated will most likely have less problems with adjusting their processes in technical/legislation terms. In those cases changing their processes might be a cheaper option than adjusting the ERP system to their organization. Most likely these companies will also be smaller in size and will have less "fat on their bones" to invest in an tailor-made ERP system. However, this does not mean they want to change the way the do their business. They might have devoted themselves on working this way, invested heavily in training personnel or there way of working has all to do with their competitive advantage. So for less complex organizations it can also be both; some companies will adapt to the ERP system others will definitely not.
Sunday, June 13, 2010
Dell Hell...what to do?
The main question aswered in this short blog: What to do when a company is confronted with a complaining customer who has a certain level of influence on the public opinion.
After reading the entire story about Dell Hell by Randy Cassingham the answer is clear to me. In a perfect world Dell would have tried to get to the root of the problem rather than to treat the symptoms, meaning try to really help out the customer at the first go with a trained specialist who can make a sound analysis of the problem, give a fair deadline for the solution and deliver an adequate solution on the promised due date. But we do not live in a perfect world and in my opinion this is as valid for Dell as for most if not all big companies. To some aspect I can relate to the cost-benefit model that lies behind these choices.
But once you do make the mistake of getting someone with a certain public infuence ticked off, than try to minimize the damage. Everyone makes mistakes, as in the Dell case. More important is how do you solve them. In my opinion Dell should have put much more effort (and much sooner) into making their unhappy customer a fan of the company again.
As long as the customer is complaining to a company it means there is still a relation between customer and company. This in turn means that there is still a possibility to restore that relationship. In this case Dell should have invited Randy to their company, showing him how their production process works, how come mistakes are made, what they try to do to solve them as good as they can and ask him where in his opinion they can improve this. Of course they need to follow up by also really implementing some of his suggestions.
By making someone part of the process in which mistakes are made and trying to let them create solutions for these problems, they will get involved enough to understand things can go wrong. For instance think about car drivers in traffic complaining about pedestrians and vice versa. In the same person there can be a car driver complaining about pedestrians as vice versa. It depends on where their envolvement lies. Both pedestrians and car drivers make mistakes in traffic, but as humans we tend to blame the ones that are the furthest from where our involvement and engament lies.
In short: Make you biggest critic your biggest fan and Dell Hell will turn into Dell Heaven!
After reading the entire story about Dell Hell by Randy Cassingham the answer is clear to me. In a perfect world Dell would have tried to get to the root of the problem rather than to treat the symptoms, meaning try to really help out the customer at the first go with a trained specialist who can make a sound analysis of the problem, give a fair deadline for the solution and deliver an adequate solution on the promised due date. But we do not live in a perfect world and in my opinion this is as valid for Dell as for most if not all big companies. To some aspect I can relate to the cost-benefit model that lies behind these choices.
But once you do make the mistake of getting someone with a certain public infuence ticked off, than try to minimize the damage. Everyone makes mistakes, as in the Dell case. More important is how do you solve them. In my opinion Dell should have put much more effort (and much sooner) into making their unhappy customer a fan of the company again.
As long as the customer is complaining to a company it means there is still a relation between customer and company. This in turn means that there is still a possibility to restore that relationship. In this case Dell should have invited Randy to their company, showing him how their production process works, how come mistakes are made, what they try to do to solve them as good as they can and ask him where in his opinion they can improve this. Of course they need to follow up by also really implementing some of his suggestions.
By making someone part of the process in which mistakes are made and trying to let them create solutions for these problems, they will get involved enough to understand things can go wrong. For instance think about car drivers in traffic complaining about pedestrians and vice versa. In the same person there can be a car driver complaining about pedestrians as vice versa. It depends on where their envolvement lies. Both pedestrians and car drivers make mistakes in traffic, but as humans we tend to blame the ones that are the furthest from where our involvement and engament lies.
In short: Make you biggest critic your biggest fan and Dell Hell will turn into Dell Heaven!
Monday, June 7, 2010
Facebook 2.01, the future!
Started a mere six years ago; Facebook is now the most visited website on the Internet, with over 570 billion page clicks per month according to an article in Australian IT of 30 May 2010. After a huge surge in growth over the last year, they have already passed 400 million of the 1.7 billion Internet users worldwide. And so far there are no signs this will come to an abrupt stop. So where is Facebook going, where will they be in lets say two years time?
In a very nice article in the Guardian online of 14 of March 2010 John Naughton concludes the following: “if Facebook is to continue to grow, then it needs something more than social networking to sustain it” “but it won’t make it too big to fail”.
Listening to their own ambitions it might be a long way from where they are now. In an article on Forbes.com by Reihan Salam dated 26th of April 2010 it states; “Facebook has settled on a truly grand ambition: to serve as the infrastructure that knits together the world's information”. In the same article we can read that Facebook CEO is working on what he calls: “a new open graph initiative, which will make the web more user friendly”. According to the Facebook developers the Open Graph protocol can be described as: “The Open Graph protocol enables you to integrate your web pages into the social graph. Once your pages become objects in the graph, users can establish connections to your pages as they do with Facebook Pages”.
This all sounds great, but as said before Facebook is not too big to fail. Facebook will not be the first company, as Jeremiah Owjang so eloquently said in his article in Web design; “that is a technology supernova, it will grow explosive, then fail to innovate from political tape and sheer size and will fade away". Right now Facebook is renowned for trying all kinds of innovations at the same time. Some will work and some will not. However, there are some voices that say that because Facebook tries to be everything at the same time, it will end up being nothing at all.
What will be important is what direction will it choose. What will be their main focus; a mobile OS like Android; the Open Graph protocol annexing all your favorite websites within your FB profile? Will it remain independent? Can it create a business model that will generate enough cash to develop the new technologies? Will they go public soon, or will they be bought by Microsoft as is suggested as a real possibility in the article by Mark Cuban in SAI on the 23 April 2010.
A lot remains unsure, therefore it is hard to determine with any form of real certainty what will happen to Facebook in the next two years. In my opinion one thing will be sure, it’s going to be a fast evolving story in an ever faster changing world.
In a very nice article in the Guardian online of 14 of March 2010 John Naughton concludes the following: “if Facebook is to continue to grow, then it needs something more than social networking to sustain it” “but it won’t make it too big to fail”.
Listening to their own ambitions it might be a long way from where they are now. In an article on Forbes.com by Reihan Salam dated 26th of April 2010 it states; “Facebook has settled on a truly grand ambition: to serve as the infrastructure that knits together the world's information”. In the same article we can read that Facebook CEO is working on what he calls: “a new open graph initiative, which will make the web more user friendly”. According to the Facebook developers the Open Graph protocol can be described as: “The Open Graph protocol enables you to integrate your web pages into the social graph. Once your pages become objects in the graph, users can establish connections to your pages as they do with Facebook Pages”.
This all sounds great, but as said before Facebook is not too big to fail. Facebook will not be the first company, as Jeremiah Owjang so eloquently said in his article in Web design; “that is a technology supernova, it will grow explosive, then fail to innovate from political tape and sheer size and will fade away". Right now Facebook is renowned for trying all kinds of innovations at the same time. Some will work and some will not. However, there are some voices that say that because Facebook tries to be everything at the same time, it will end up being nothing at all.
What will be important is what direction will it choose. What will be their main focus; a mobile OS like Android; the Open Graph protocol annexing all your favorite websites within your FB profile? Will it remain independent? Can it create a business model that will generate enough cash to develop the new technologies? Will they go public soon, or will they be bought by Microsoft as is suggested as a real possibility in the article by Mark Cuban in SAI on the 23 April 2010.
A lot remains unsure, therefore it is hard to determine with any form of real certainty what will happen to Facebook in the next two years. In my opinion one thing will be sure, it’s going to be a fast evolving story in an ever faster changing world.
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