Strategic Management for the Web

The rapid pace of change not only in the technological arena, but also in the legal, social and economic environments, can render strategies redundant before they've even passed the conceptualisation stage of development.

But although rigid strategies are inappropriate, the need for a game plan, so to speak, is more pertinent than ever. The prevalence of under performing and failed websites is perhaps not so much a testament to poor execution as much as it is a result of poor planning.

Charles W L Hill and Gareth R Jones (Hill & Jones. (2001) Strategic Management: An Integrated Approach Fifth Edition. Houghton Mifflin Company) describe how a company can attain a sustainable competitive advantage through the pursuit of cost leadership, differentiation or focus strategies. A common pitfall has been to give too little thought to how the Web can contribute to those strategies, or how the Web can drive competitive advantage in the areas of efficiency, innovation, quality and customer responsiveness.

Efficiency

The Web offers a fantastic opportunity to increase efficiency by reducing the cost of coordination between the company and its suppliers on the one hand, and its customers on the other. Web-based applications can automate many of the interactions, enhancing functions such as distribution, leading to a decrease in costs and an increase in productivity. The same principle can also be applied to internal functions where Web-based applications can be used to realise cost-savings in a myriad of activities, ranging from reimbursements to the hiring process.

Customer Focus

An obvious and oft repeated point is how the Web has made communication easier and, indeed, websites and email have made communication both faster and cheaper. Whether or not that's a positive thing is still up for debate (the proliferation of spam is just one unfortunate side-effect of cheap, easy communication), but it does make it easier for a customer to let a company know what's on their mind.

Web logs are another vital, and sometimes neglected, way of learning about customers and picking up on trends early. Surprised to see so much traffic going through that tiny page on your site that showcases your vintage lawnmower accessories? Could be a coincidental search engine listing or, maybe, there's an untapped market for them. Best you check it out.

Besides getting a feel for what may be catching customers' attention and soliciting feedback from them, the Web can also be an ideal place for customers to offer customised products (for example, a car dealer website that allows customers to put together their ideal vehicle) and the speed the medium offers can be used to cut down on response times to customer queries and complaints.

Innovation

Depending on how large your company is the Web can be used in different ways to drive innovation. However, regardless of company size, successful innovation usually has several characteristics: it's developed with the customer in mind, it's developed so that it's easy to manufacture, market and distribute and it gets to the marketplace before your competitors can imitate the innovation and steal your first-mover advantage.

Enhancing efficiency and customer focus will help you address all of these. Besides using the Web as a medium to ascertain what your customers want, Web-based applications can also facilitate cross-functional development teams, allowing R&D, marketing, manufacturing and distribution to all contribute to the innovation process helping to make the end result customer-relevant and getting the innovation to the marketplace quickly.

Quality

Quality is a fairly vague concept and naturally means different things to different people, so it deserves a bit of clarification before I get into a discussion on it. In this context, quality refers to the Total Quality Management (TQM) Concept - a philosophy developed by H.W. Edwards Deming, Joseph Juran and A.V. Feigenbaum. In brief, the underlying philosophy is that an increase in quality will decrease costs (through fewer defects and delays and better use of time and materials) and increase productivity, thus giving the company a higher market share, which, in turn, allows the company to increase it's profitability and create more jobs.

To effectively implement TQM requires a company-wide effort. Management need to build a culture that emphasises quality and focuses on the customer, employees need to contribute, functions need to communicate and coordinate with each other, the company as a whole needs to build solid, mutually beneficial relationships with its suppliers and distributors and, above all, quality needs to be measured objectively (based on what the customer values) and defects need to be effectively identified and eliminated. Without going into detail, with a little innovative thinking the Web can be used in a array of ways to achieve those objectives and help a company implement TQM.

And The Point Is...

Naturally, a company's overall strategy choice (cost leadership, differentiation or focus) will ultimately dictate how it approaches efficiency, quality, customer responsiveness and innovation. Regardless, though, the point is the same: making sure your Web strategy is aligned with your company strategy, coupled with a bit of innovative thinking on how the Web can contribute to key performance areas can transform your online presence into a serious driver of competitive advantage.