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The Changing Face of Business

Aired February 19 and 20, 2000

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This is Internet On The Air. I'm Joan Silvi. How have businesses - both online and offline - changed over time? Details in a moment.

Funding Credit: Internet On The Air is a production of the University of Michigan School of Information and Michigan radio, made possible by a grant from the W.K. Kellogg Foundation.

E-commerce is booming. Dot-com companies, with no stores and no inventory, have changed the face of business. But brick-and-mortar retailers, so called because of their physical store locations, have also joined the rush to the Internet in order to keep up with the competition.

Mall booksellers such as Borders and Barnes & Noble have created extensive Web sites to compete with the undisputed leader of online booksellers, Amazon.com. For example, Borders' NetCafe features interviews and online chats with authors. At homedepot.com, users can find instructions and a list of materials for their do-it-yourself project, then search all Home Depot locations for the nearest store.

Elizabeth Collet is Senior Director of Business Development & Strategic Planning at the Internet media company Yahoo! She says that only in the past year have major businesses begun to use the World Wide Web as a means of selling their products. But these companies have been changing the way they do business offline, as well.

Collet says in the traditional business model, companies could expect fairly stable metrics as they were planning for the future. But the focus on modelling, forecasting, and spreadsheets may not be relevant in today's fast-moving world. "You don't have the time to do that kind of analysis," says Collet. Instead, businesses are re-evaluating how to plan and how to sell in a partially virtual economy.

To learn more about how companies have changed the way they do business, and to hear an interview with Elizabeth Collet, visit our Web site at www.iota.org. For Internet On The Air, I'm Joan Silvi.

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Related Links

For further information, try these Web sites:

• Elizabeth Collet recently participated in the FuturTech conference, sponsored by the University of Michigan Business School. She was a panelist on the New Age Media and Alliance Economy discussions.
  
  
• A number of online publications discuss and analyze Internet developments that affect businesses.
  • Tasty Bits from the Technology Front alerts you weekly by email to bellwethers in computer and communications technology, with special attention to commerce on the Internet.
  • The Tweney Report provides Internet business news and analysis from an industry columnist, updated at least weekly.
  • Techdirtdiscusses business related to technology, media, the Internet, and online information revolution. It includes newsletters, articles, and stories.
    
    
• Professional organizations also exist to connect business professionals with each other.
  • The Decision Analysis Society, hosted by the Fuqua Business School at Duke University, promotes the development and use of logical methods for the improvement of decision-making in public and private enterprise.
  • The Public Agency Risk Managers Association was formed for the purpose of facilitating the exchange of ideas and innovative approaches toward risk management programs in governmental agencies.
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• The Information Economy contains resources and links related to economics of the Internet, information goods, intellectual property, and more. Compiled by Hal Varian.
  
  
• Ernst & Young Center for Business Innovation is a source of knowledge, insights, and frameworks for management fueling development of new strategic consulting services.

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The Interview

IOTA interviewed Elizabeth Collet in February 2000.

What do you do at Yahoo?

I run business development for our commerce group here at Yahoo! So I oversee our partnerships and strategic planning for all of our commerce-related areas: shopping, auctions, classifieds, small business, careers, autos, real estate, and Yahoo! finance.

Has e-commerce really developed and changed in the four years you've been with Yahoo?

Absolutely. I think it's changed dramatically. Four years ago, people were thinking about [the Internet] as a commercial medium and a place for commerce to be transacted, but they weren't really doing it. The people that were thinking about it, I think were focused on the wrong issues. There were a lot of companies starting up that were focused on building the infrastructure for secure payments, people who were thinking people wouldn't feel comfortable putting their credit card online, so coming up with all sorts of gimmicks and workarounds so you could pay via something other than a credit card.

That turned out to be focused on the wrong thing, because consumers don't have a problem putting their credit card into the computer...

Also back then, you didn't see the major offline retailers embracing the Internet as a way to sell their products. The people who were selling online were primarily startup companies. Back then it was Amazon and some of those folks...

It's only been in the last year that you're starting to really see the major offline brands, the major retailers start to do anything seriously on the Internet

How have the emergence of portal sites and e-commerce crossed paths and influenced each other?

The emergence of commerce on the Internet has allowed even small merchants, whose audience has typically been only people within a 10-mile radius of their storefront, allowing those people to now sell online for the first time. But people who live across the country from them have never heard of them and don't know anything about them and wouldn't go seeking them out. The role of the portal is to aggregate all those merchants together and add a layer of value that helps users go into one front door and find the products they're looking for across a whole bunch of different merchants...

We're the place the consumer comes to do their search, find out what they're looking for, and get referred through to any one of ten thousand merchants to actually make the purchase. We're very symbiotic, if you will, between the roles that we play.

Is there a differences in strategic planning between online and offline companies?

No, I don't think so. The truth is that the Internet world moves very quickly. It feels like the industry changes every day. You have to be very nimble and you have to be able to be very flexible and you have to be able to do your strategic thinking in the context of uncertainty when you don't where the world is going. And that's probably a difference from the traditional model - offline retailers who have a fair amount of certainty about where their business is growing and some fairly stable metrics to look at as they were doing their planning. But that's no longer the case for them either, because they're living in this world where things are changing rapidly, and they're impacted by the Internet. They're having to operate in a world of uncertainty as well.

So I think the change is more a change over time as opposed to differences between online and offline planning.

What sort of strategic thinking is involved in how Yahoo! decides where to compete and into what markets to expand?

We want to be the only place someone needs to go in order to find and buy a product. We want to offer lots of different ways to make that you can make that purchase. If you come to Yahoo! and you want to buy it from a brand-name retailer, great. If you want to buy it from a small merchant, we make that available. If you want to buy it from another user through classifieds, you can do that. If you want to auction for it, you can do that. The thinking was to round out the suite of purchase opportunities and purchase methods in order to meet all the needs various users may have.

That did happen to have us competing with eBay in auctions, it has us competing with the classifieds people in the classifieds space, it has us competing with other shopping aggregators in the shopping space. Each of our businesses competes with the vertical players that are in that specific niche.

In what directions is Yahoo! still growing?

We are continuing to grow in three major areas. We're focusing on continuing to grow our commerce efforts, to make it easy for users to find a wider variety of products and to purchase them in a wider variety of ways, whichever meets their needs. Continuing to evolve and grow our media efforts - media being traditionally text-based, but more and more as the world evolves and more bandwidth becomes available, extending that into broadband-type content. Our acquisition of Broadcast.com is a major piece of that. And then the third is trying to grow the community aspect of the site - providing more ways for users to communicate with each other and find each other and share interests.

How have business schools had to adapt to the needs of the online business world?

I think business schools are changing in what they're teaching. Four years ago, Internet and technology was not a very big piece of the curriculum in business schools. Most of the case studies were about more traditional industries. While they're applicable, and they certainly help you think about strategy issues and how to form partnerships, learn about marketing, what they weren't applicable for was the rapid pace of decision-making that has to happen and the uncertainty in which you're making those decisions. But that's because I came to the Internet four years ago after being in business school back then. I think most of the top schools have really changed and evolved from that and are integrating Internet issues and themes into their courses, because that's what the students are demanding.

Are new hires at Yahoo! adequately prepared by their business school education?

As with any company, there's a lot of learning once you get here, but the skills that people need are the ability to think quickly on your feet. The emphasis that a lot of the schools have on analysis and spreadsheets and modelling and p[rofit] & l[oss] and forecasting is not very relevant in this world. You don't have the time to have the luxury to do that kind of analysis. You have to be able to make gut decisions ask yourself what makes the most sense and go with it. By the time you analyze the thing, it's too late. We have to move more quickly than that.

Please direct questions or comments to iota.webmaster@umich.edu.

Last Updated February 18, 2000