Managing in the Next Society 2

Part I The Information Society
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Chapter 4 E-Commerce: The Central Challenge
Chapter 5 The New Economy Isn't Here Yet
Chapter 6 The CEO in the New Millennium

Interviewed in Business 2.0 magazine (year 2000), Peter Drucker explained various impacts of information revolution. Dotcom failures were mainly because of the dotcom founders were not really keen to build businesses with positive cash flow. They were not more than gamblers expecting money from IPO's or acquisitions. E-commerce businesses should generate positive cash flow even though it might take a very long time. Another major impact of internet is a dramatic change in higher education. More delivered on-line in the future, higher education should focus on continuous adult education. Professionals also need to have even more specialized knowledge. This specialization together with a high demand of technically specialized skills makes technical savvy professionals very expensive.

In the corporation side, e-commerce also has significant impacts. The structure of corporations has to change. The managerial layers should be cut down, and the managers as information relays should be very smart. E-commerce also shapes corporations in a smaller, functionally specialized form. Selling, making, and delivering will be separated in different companies and run differently, although they may be owned by the same financiers. E-commerce businesses will focus on selling, while delivery has to be physically local like in the case of Japanese's Seven Eleven. Making will be more like procurement. Manufacturing like in the case of Ford will be more like assembling.

Peter Drucker also gave advice to confront an ever changing business environment. He said that we need to look at all windows to the outside world to sense any change. Those changes then should be treated as opportunities rather than threats. The unexpected changes are the major source of innovations. Drucker also warned that CEO should balance short-term and long-term interests. Only focusing on short-term shareholders' interest, as gauged by Dow Jones, will not do anymore. That's all folks from Business 2.0 magazine's interview.

The role of CEO is also discussed by Drucker in the book. First, governance and ownership structures should change drastically and permanently. Second, the function of CEO in information processing also should change. External information, like non customer information, should be extracted and used strategically since the change will come from outside of the sphere, while currently corporations' IT solutions are providing more internal information in a concrete form. Strategic usage of information, however, is indeed under served. Third, command and control should be more avoided since there are a trend of temp employment, partnership, and joint-ventures. CEOs need to know when to command and when to partner. Commanding partners to do something never works. You can only ask questions to partners.

Fourth, the source of competitive advantage is not from physical resource, technology, skills, or even knowledge itself. The source of competitive advantage will be from the knowledge workers whom we cannot build overnight. Optimal productivity of knowledge workers will guarantee competitive leadership in the next fifteen years. Fifth, CEOs should have clear visions badly and tie it all together. The future leaders should know when to push, to pull, and to abandon. They need to cope with the high speed of change and focus on fundamental, not charisma, so that others will work productively.