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Life is often described in black and white. People are good or evil; solutions are right or wrong. Business, it would seem, works this way, too. We talk about incumbents vs. challengers, traditional business vs. e-business, wired vs. wireless communication. These extremes simplify our world by creating a sharp distinction between opposites. But the extremes are terribly simplistic and can even be harmful.
When we focus on the extremes, we lose sight of the fact that there is unity in opposites. The
15th-century German mystic Nicholas of Cusa called it coincidentia oppositorum. He believed
that by discovering a deeper principle that reconciles the extremes, we can reach higher
levels of understanding. The truth inevitably lies somewhere in the middle—in the myriad
shades of gray between black and white. BREAKING THE CHAINS The very terms "wireless" and "wired communication" betray the bias in our thinking. The word "wireless" is literally the antithesis of "wired," and the words encourage people to think about mobile products and services solely as wired applications without the wires. We may be talking about wireless technology, but we still are tethered to the wire! As Mark Twain observed, "History doesn’t repeat itself, but it sure does rhyme!" We continue to repeat our mistakes of seeing the future through the lens of the past. Remember banner advertising? It was simply billboards on the Internet. Remember PointCast’s "push" technology? It was television broadcasting reinvented for the Internet, as the term "Webcasting" suggests. Now we have WAP (Wireless Application Protocol) cellphones, a deeply flawed attempt to take Web pages designed for desktop computers and jam them onto a tiny phone screen. To break free from wires, we need to think about the new possibilities of mobility, without harking back to the past. We need to think about services and applications that never existed before and are made possible only by mobility. Early examples abound. Spanish clothing retailer Zara has given workers wireless devices in retail stores around the world. These devices link to Zara’s design center in Spain so workers can provide real-time information about what people like and hate, what people are interested in looking at but not buying, and what is flying off shelves. Zara is harnessing the possibilities of mobility to build a real-time link between designers and customers and making the first steps toward "Just-in-Time Design." Smartbunkers Ltd., an Internet site for buying marine fuels, says it may move to make constantly updated fuel prices available to ships on the high seas through mobile devices. Shippers could decide more effectively where and when to buy fuel. Cellphone maker Motorola Inc. and paper and pulp concern International Paper Co. are developing a mobile inventory tracking application that uses sensors embedded in cardboard cartons to pinpoint the locations of packages as they move from the manufacturing site to the store. International Paper hopes to cut down on the amount of inventory lost, stolen, or spoiled, which the company says ranges between 3% and 5% of all goods produced. Networkcar Inc., an intriguing start-up business, installs mobile devices in automobiles to monitor performance and diagnose problems before they occur. Potentially, car dealers could send notices to remind drivers that they need to come in for service or order any parts that are needed for repair even before the customer arrives in the shop. In Finland, companies are selling mobile phone ring tones as a fashion statement. In the U.S., teenagers use the wireless "inter-tainment" device Cybiko to chat and send messages to their friends. A whole new shorthand language, "cybish," has sprung up in the process.
The common theme among these examples is their attention to time, place, and people to
create products and services that simply aren’t possible in the wired world. Many
companies will treat mobility unimaginatively, much as they did the Internet, which
many saw as just another point of sale. Very few will create truly innovative killer
applications like eBay Inc. did in the world of e-commerce. Those that
succeed will do so by going beyond the wired/wireless extremes and creatively exploiting
the new possibilities of mobility. THE ANALOGY OF THE FRUIT TREE Should an e-business organization be separated from the main business to gain focus and speed? Or should it be integrated into the main business to give it access to lots of resources and a certain amount of discipline? This debate stymies e-business initiatives in many companies. The answer is to exploit the advantages of both strategies, by learning from the metaphor of grafting a fruit tree. When grafting two types of trees together, a sapling of one tree is attached to the root of another. The combined tree has the strength of old roots and the dynamism of new shoots. The result is tasty fruit. But timing is critical. If the gardener waits too long, the sapling will give off its own roots, and the graft won’t take. In business, as in gardening, it is better to graft together the best of both worlds, creating an organization that is both inside and outside the main business. In the corporate world, that means initially setting up a separate e-business organization that serves as a focal point for catalyzing change and centralizing expertise. This organization should be nurtured to the point that the initiatives gain some momentum and maturity, but no further. Eventually, the initiatives should be driven into the operating units, and the e-business organization should get out of the way. As e-business becomes business, the e-business organization should permeate the mainstream organization. It will no longer need to exist as a separate unit. Mary Kay Inc., the manufacturer of beauty and skin-care products, provides a good example of how to do things right. Mary Kay markets through a massive network of approximately 750,000 independent beauty consultants who work part time selling cosmetics. Had Mary Kay thought about Internet-based sales in centralized/decentralized terms, it might have set out to create an online sales channel that would have ended up conflicting with its existing channel. Instead, Mary Kay realized that the sales force was its source of competitive advantage. Its army of beauty consultants has built deep relationships with customers and the local communities. A Web-based channel could never replicate their intimacy with the customer. So, Mary Kay decided to be both centralized and decentralized. It would provide corporate resources to help individual beauty consultants set up their own Web sites. Encouraged by Mary Kay, consultants launched nearly 100,000 "MyMK.com" Web sites by the end of 2000. These sites allow the beauty consultants to serve their customers online. Customers can order online, pay online, and arrange to have products delivered. The Mary Kay sites collectively handle more than $1.5 billion of transactions annually. The Mary Kay corporate Web site does not sell any products directly to customers. Rather, it generates leads for the independent beauty consultants. Mary Kay also has set up a site that is restricted to its own sales force, through which salespeople can place orders, check inventory and order status, and find training materials. Mary Kay’s hybrid model lets the company reconcile the apparently conflicting demands of intimate customer relations and economies of scale by centralizing infrastructure and decentralizing management of customer relationships. THE MYTH OF THE ‘PURE PLAY’ A striking example of limiting "black-and-white" thinking is "pure-play" dot-coms. These companies promised to revolutionize retailing by serving customers exclusively through the Internet and by operating without physical stores and expensive salesmen. The truth, of course, is that customers don’t come in online vs. offline versions. They demand many points of interaction that can be provided only by multiple channels—both physical and virtual. So, a "gray" approach to retailing—multichannel retailers—is winning the game. Such hybrid organizations aren’t easy to design. They must weave together the Internet, a sales force, resellers, and call centers into a seamlessly integrated business system. Still, Herman Miller Inc., a leading office-furniture company, shows how a hybrid can be designed to great success. Herman Miller wanted to target small-business customers, who historically haven’t been big Herman Miller customers. Large corporations buying furniture typically look for high performance, customization, and plenty of options—all of which have long been Herman Miller strengths—but small-business customers prefer simplicity, speedy availability, and affordability. Herman Miller found it couldn’t effectively serve small businesses with either its existing distribution channels or the existing product line. Initially, Herman Miller addressed the small customer by creating a separate business unit, called SQA (Simple, Quick, and Affordable). The idea was that the operation was to be spun off as a separate company. It soon became apparent, though, that SQA would not succeed without being tightly bound to the main business, which would provide manufacturing capabilities, design the software that lets customers specify the configurations of their furniture, and manage supplier relationships. Herman Miller also realized that what was learned in the SQA initiative would greatly benefit the company as a whole—for instance, by teaching everyone how to make products quicker. So Herman Miller folded SQA back into the core business and launched a hybrid called Herman Miller RED. Starting RED required that Herman Miller go through several drastic changes. For one thing, new software was needed. RED customers, who interact with the company primarily over the Internet, use software to select furniture and options that are far less complex than the heavy-duty configuration software the Herman Miller sales force and retailers use for large clients. Product development transformed, too. RED needed a simpler, cheaper product line that provided fewer options and less flexibility but that was easier to buy and install. Knowing that small companies value speed, RED created a manufacturing facility that works fast. It features an assembly line that makes all the furniture for a specific customer order in one manufacturing "cell" with cross-trained workers. The company also redesigned its dealings with suppliers so they could deliver all the components at once for a customer order. Herman Miller was well-rewarded for its efforts in creating a hybrid. It reached an almost entirely new audience—only 5% of RED customers had ever bought furniture from Herman Miller before. GRAY AND BEAUTIFUL While the color gray conjures up the dreariness of a rainy day, it is in many ways beautiful and elegant. It is an apt metaphor for the harmonious nature of reality: that opposites often turn out to be two sides of the same coin. Look closely at the space between the extremes of black and white and find them connected by an expanse of gray. That middle ground is where success lies.
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