Forster N. - Maximum performance (2005)(en)

450 MAXIMUM PERFORMANCE

could make any money from these. So, I asked one of the guys if he made any money from running these on his website, and he told me that just from running a banner he made a couple of hundred dollars a year. I thought, ‘That’s nice – money for nothing, just for putting up a banner.’

So off I went and searched on the Internet and came across a few companies who offered ‘pay-per-click’ payments if you ran their banners. Initially, because I knew nothing, there were only a few clicks on the banners I set up, so I didn’t make much money – maybe five or ten cents a day. But, it was a start. I started adding other banners, through which people could buy products from other companies, and then I’d start getting commissions on those referred sales. Unfortunately, nobody bought anything!

So I started looking for other sites that might have similar set-ups, and found one to do with book clubs. This showed me what their usual click-through and conversion rates were. So then I was able to do some calculations which showed me that, if I could get enough traffic through my sites, this could work and I would make some money, if I could get enough people visiting my banners. I had a strong technical background, and had worked as a computer programmer for a while, so the IT aspects were all quite natural to me. I’d also spent some time in games programming, so working with computing, web design, graphics and images all came quite easily to me.

Then I started to pay for people to visit my site, by liaising with sites that deliver web-traffic to you. A few months later, my first referred sale took place. This was my first sales commission! I was jumping around like a goof, realizing at this point that I could make some real money from this. I started to build on this idea, calculating that, if I knew what the click-through and conversion rates were for particular sites, I could pay for this traffic, and then make money. This is called affiliate marketing, and you get a commission from the companies that are actually selling the products. This works through something called affiliate programming, where a third-party server passes on the information that a buyer has bought a product via one of my sites, and from this I get commission payments. So, in theory, I could get commissions from any company that sells goods on the Internet which had these affiliates.

That was the start of it, and from there I searched for other sites that had good conversion rates – sites that people actually buy stuff from. Then I went professional, which involved getting a domain name, getting proper web hosting systems set up, and that got the whole

LEADERSHIP AND PEOPLE MANAGEMENT 451

ball rolling. I had to learn more about the marketing aspects, the generic principles of persuasion, sales techniques and so on. I also had to find out how to set up systems that would enable me to rank well in global search engines and get more traffic coming through my sites. Although there is a lot of free information out there, I paid for much of this, and also subscribed to on-line services that provided information about search engines, read e-books and so forth. I came across a lot of useful stuff on the psychology of e-selling: how people react to certain site designs and slow downloads and so on. These all have an impact on whether people use a given site to actually buy something.

You have to be able to gather a lot of information. The success I’ve had is really based on a long, long period of reading and studying and trying things out, to find out what does and doesn’t work. You have to do this because it is unbelievably competitive and cut-throat out there and you don’t share your knowledge with anyone. You keep your cutting-edge by keeping on the ball, reading the news, keeping up-to-date with every new development in search engine algorithms, spotting new products coming onto the market and so on. This is information that anyone could access, if they have the time, energy and persistence to do it, but it really does require great self-belief, because it took months before I started to see good results. You also have to be simultaneously pragmatic and have the ability to grasp new opportunities as soon as they arise – intuition based on experience if you like.

From there, I was then able to create new, customized programs that enabled me to display whole product databases of a merchant, not just a single banner or link, but sites that automatically interact with all the servers of all the companies that I’m linked to. That is a very specific piece of software that I created, which I can now reuse as a template for every new site that I create and, once set up, they update and manage themselves automatically. It also means that all of my sites are linked to each other, which can further increase the volume of traffic.

I believe that the value of my sites is based on two simple ideas: the visitor is looking for a product in the search-engines. My site is optimized to rank highly for the keywords they type in. Thus the visitor lands on my site first and gets detailed product information without any distracting clutter. In my opinion the visitor wins, and the merchant also wins because a very large site cannot possibly optimize a page for each specific product that a given individual is looking for.

452 MAXIMUM PERFORMANCE

At the moment, I have about 40 000 visitors a day to 10 sites, which will rise to 20 sites soon. The time plan is to sell up in five years and live on the revenue from my investments. By then, I hope to have more than 200 sites, with about one million visitors a day. So the asking price for the business, even now, is one million dollars! (Interview with MW, Perth, Western Australia, 3 December 2002.)

In summary, the rise and fall of the first wave of dotcom companies taught all business leaders and organizations some useful lessons. First, all fledgling businesses still need great products and/or services, backed up with a clear vision, a good business plan, well thought-out strategies and good customer/client relationships. These still require energetic, creative, intrinsically motivated and entrepreneurial staff to deliver these. Second, for now, all technologies are still essentially passive and merely add-ons to methods of doing business that are as old as the hills. Third, from small acorns great oaks will grow. It can take several years to build a successful tech-company from scratch. If an e-business plan looks too good to be true, it almost certainly is. If it promises a fantastic return on investment in a very short period of time, it probably won’t. Fourth, as the MW example illustrates, if you’ve only got an e-business plan, as opposed to one designed for real people in the real world, the chances are that someone will have already thought of it before you did.

So, initially, forget about the technologies, and use your lateral, scenario-mapping and future-casting skills to envision what markets for new products and services may emerge in the near future. If you can spot some of these, and then use technology in an intelligent way to exploit these openings, as MW did so successfully, you may be made for life. For businesses, the intelligent and pragmatic use of appropriate technologies will remain an important component of their strategic planning, because we are already living in what has been described as the ‘on demand era’, where customers, clients and suppliers expect instantaneous responsiveness and flexibility from the organizations they deal with. Furthermore, as Jonar Nader has observed, ‘If organizations are to survive the networked world they need to understand its characteristics. At its core is the imperative to stay away from that which is applauded. Meanwhile, it is advisable to investigate that which is hated, and invest in that which is laughed at. Go in search of the unbelievable. Therein lie the clues to the future. The future has nothing to do with e-business. However, e-business has everything to do with the future’ (Nader, 2003: 13).5

LEADERSHIP AND PEOPLE MANAGEMENT 453

The effects of new and emerging technologies on organizational leadership and people management

Technology is outstripping human capacity to manage it. Even the best technical minds in the world are struggling to come to terms with modern computer systems. If this problem is not addressed, systems will get to the stage where we simply won’t be able to manage them. I hardly know a senior executive who doesn’t feel worried about how much they are spending or whether it is creating value.

(Doug Elix, IBM’s Global Services’ Chief Executive, at the World Congress on IT, Adelaide, Australia, cited in The Australian, 1 March 2002)

Historically, attempts to ‘manage’ technological change have been almost entirely unsuccessful, because technological development has always outpaced the ability of governments or organizations to regulate and control it (Kurzweil, 1999; Warwick, 1998). Witness, for example, the hopeless game of catch-up that government regulators now play in trying to keep up with advances in genetic engineering and computer hacking. And the transition from a nation-based industrial age to a global digital age will require people other than technical specialists to provide input into developing the new leadership and people management skills that will be required in this environment. We’ve seen that two of the most important roles of leaders are to define reality and to envision the future for their followers. The impact of new and emerging technologies on both employees and organizations will be profound and a major challenge for leaders is to help their employees deal with the work environments and new challenges that emergent technologies are already creating. However, at this moment in time, there is little evidence that leaders and managers are being shown how to cope actively with this new environment: most simply react to the emergence of new technologies.

In this section, we will look at ways that leaders and managers can help their employees cope better with emerging high-tech organizational environments. We saw earlier in this chapter that there are many factors driving rapid advances in new technologies. In a symbiotic fashion, these are driving the development of cyberspace, virtual reality and an emerging first generation of self-learning computers which, in turn, will create yet more technological innovations. Even if we are conservative, and assume that only about 30 per cent of current predictions about the future are right (about the average success rate for such future casting in the past), the impact of new technologies on leadership and people management is still going to be profound. There are already clear indications that the Internet and other new technologies are now driving an inexorable transition from second-wave to thirdwave organizational management (Table 11.1).

LEADERSHIP AND PEOPLE MANAGEMENT 455

In traditional bricks-and-mortar businesses the transmission of important ideas and knowledge had to be done face-to-face and in real time. However, if organizations no longer need to ‘exist’, in a physical sense, we may witness a process of organizational deconstruction over the next ten years. There are signs that this is already happening, with the emergence of ‘pancake’, ‘learning’, ‘lattice’, ‘amoeba’ and ‘inverted’ organizations. ‘Anarchic’ organizations, based on loose-knit, shortterm associations and alliances of skilled knowledge workers, and ‘spider’s web’ organizations are becoming more commonplace. People now talk of Generation MM and Generation X, Y and T companies (with the latter staffed by ‘screenagers’). New green technologies and global green Internet groups are driving the emergence of a new generation of ecotech companies (Fussler, 1996). These represent qualitatively different types of organization that replace what they take from the environment, or at least make major efforts to recycle and/or cut down on their use of fossil fuels and other finite resources. A new range of companies has emerged in recent years in response to the ‘greening’ of consumers and organizations (Knowles, 1997). Virtualization will be a common feature of these new businesses, and a very important operational add-on to bricks-and-mortar companies.

What we may be witnessing is the dismantling and reformulation of traditional business structures, because the new economics of information and technology driven evolution are making static organizational structures redundant. The ‘second wave’ of Internet development is starting to revolutionize traditional ways of organizing people and businesses. For most of the 20th century, business was linear and slow. Organizations were mostly centralized, hierarchical, top-down and driven by command and control styles of leadership and management. The new hypercompetitive world of business will be characterized by massive, simultaneous, multitasking processes, made possible by these advances in information and communication technologies. Consequently, over the next 20 years, any organization that cannot cope with these developments will either cease to exist, or be radically different in both form and function. New technologies will create many new types of employment, but will also destroy many thousands of jobs. To cite one example, Kodak (the world’s biggest manufacturer and developer of photographic film and paper) announced on 25 January 2004 that it would be cutting 15 000 jobs over three years: 20 per cent of its global workforce. This drastic step was taken because of the inexorable uptake of digital camera technology by consumers in the early 2000s, and the urgent need to make a rapid transition from manufacturing traditional cameras and reloadable film to digital units and digital photographic support (Bachelard and Crawford, 2004). Organizations will continue to fragment and die with ever-increasing

456 MAXIMUM PERFORMANCE

frequency and unpredictability. ‘Merger mania’ will continue inexorably amongst large bureaucratic second wave organizations that are unable to maintain their competitive advantage in a third wave economy. The pace of change will continue to accelerate and will verge on ‘chaos’ and ‘blur’ in some parts of the corporate world. One example of this change and disintegration has been described by a rather perplexed Michael Kinsley:

Readers have the right to know that TIME magazine will be part of AOL Time Warner. The author of this essay, by contrast, has a day job as editor of Slate, an online magazine published by Microsoft. Microsoft owns an online service, MSN, that competes with AOL. Microsoft and AOL Time Warner will have competing investments in the cable industry. On yet another hand, Microsoft and Time Warner are co-investors in a high-speed cable–Internet connection business called Roadrunner. On a fourth hand, Microsoft owns a chunk of AT&T, which owns a chunk of Time Warner, which means that, after the merger, Microsoft will own a chunk of AOL. Readers should also take into consideration that Microsoft is a partner with NBC, which is owned by General Electric, in an all-new cable channel, MSNBC, which competes with CNN, which is owned by AOL Time Warner.

What’s more, the editor in chief of MNSCM.com, the cable channel’s affiliated website, is my mother’s brother’s wife’s aunt’s husband’s nephew, which obviously makes it difficult for me to evaluate objectively the merits of a merger between a company (AOL) that recently bought the company (Netscape) that makes the Internet browser that competes with the browser of the company that employs me, and a company (Time Warner) that owns a studio (Warner Brothers) that made the movie Wild Wild West, which I saw on an airplane and which is unforgivable. What’s worse, GE has direct links, via co-ownership of CNBC, the financial news cable channel, with Dow Jones, which publishes the Wall Street Journal, whose editorial page is a leading cause of heart attacks among sane people.

But wait. It’s not that simple, I’m afraid. CNBC competes directly with CNN/FN, the financial-news cable channel that will be owned by AOL Time Warner. I don’t need to spell out the implications of that for you, do I? Well, perhaps I do. Look: this very article you are reading is in a magazine published by a company that owns a cable channel that compete with another cable channel that is half-owned by a company (Dow Jones) that also half-owns a magazine (Smart Money) that competes with another magazine (Money) owned by the company that publishes this magazine, and halfowned by a company (GE) that also half-owns a cable channel (MSNBC) that is half-owned by the employer of the author of this article, whose CEO (GE’s, that is) nevertheless often appears on the cover of the magazine (Fortune) that competes with the magazine (Smart Money) co-owned by the company that also co-owns CNBC with GE.

(Kinsley, Time, 24 January 2000)

Reading this for the first time can be confusing, but this is what the commercial landscape of the future will increasingly resemble, and organizations, leaders and managers who can’t cope with this fastmoving, intangible, chaotic and blurred world will struggle. Even large, traditional commercial organizations that one might assume

LEADERSHIP AND PEOPLE MANAGEMENT 457

would be less affected by these changes will have to respond. They have already witnessed the stripping out of layers of management, the reduction of both the physical and the psychological space between ‘managers’ and ‘workers’, the emergence of real and virtual teambased management systems, the introduction of groupware and realtime information and knowledge management systems, and increased outsourcing of both peripheral and core functions. The flattening of organizational structures and cultures has been enabled by technology, and the realization that both formal and informal channels of communication between the top and bottom levels of organizations, and with external suppliers, customers and clients, now have to be as short and close as possible. Increasingly, organizations are entering into shortterm strategic alliances, sharing research facilities with other businesses and engaging in other forms of cooperation. It is new technologies that have made all of these developments possible, driving a paradigm shift from doing business in ‘market spaces’ rather than ‘marketplaces’ (Rayport, 2002).

As we saw earlier, the first wave of exuberant e-commerce and the dream that new dotcom start-up companies could challenge conventional businesses died in April 2000. However, conventional businesses quickly adopted many of the new tools crafted during the first dotcom boom, and implanted these into their traditional business operations, and a second wave of e-commerce businesses has been emerging from the wreckage of the dotcom collapse. These two trends will have a profound effect on the way that organizations do business with each other over the next ten years. For example, the Boston Consulting Group has predicted that company spending on e-commerce systems in Australia alone will have risen from $A17 billion in 2000 to $A135 billion by 2005, with ‘at least 22 per cent’ of all transactions between companies conducted online (Beilby, 2002: 60). Companies with Internet-based software systems will increasingly outsource non-core functions such as finance, recruitment and selection and payroll, thus allowing them to dedicate more time and resources to their core business functions. All companies will be linked electronically to their suppliers and customers. The research and consulting company, Gartner, believes that many companies will start to use technology to create shared service groups, in which centralized teams provide specialist functional services across many different organizations (ibid.: 61).

New technologies have enabled employees to work for organizations where the work environment can be at the employee’s home, in virtual reality or anywhere they happen to be, suggesting that more and more employees will be out of sight, if not out of the minds, of

458 MAXIMUM PERFORMANCE

their employers. Managers may no longer have all their employees down the corridor or within the same building, available for unscheduled meetings or briefings. In the recent past, when the office door was closed, business was closed. PDAs and laptops now allow people to conduct work beyond traditional work hours and extend their professional activities to any location and time. Many managers and professionals now have the freedom to work away from the office much of the time, and a clear delineation between work and home is now a thing of the past for some employees. The idea of going to ‘the office’ may become passé for some professionals, with increasing numbers spending their time working at home or in transit. In financial services, advertising and consulting, working away from the office most of the time may well become commonplace (Henderson, 2002a). In the 1990s, some forecasters predicted that 50 per cent of professionals in the USA will be doing this by 2010, marking a return to working patterns that last prevailed in the pre-industrial age (Dyson, 1999). Potentially, this means that you could be a British citizen, live in a ski-chalet in France and run businesses in Australia and Canada.

So how can leaders and managers relate to employees that they may not see for extended periods of time? More than a decade ago Charles Handy argued that high-tech has to be balanced by high-touch in order to build high-trust organizations. He also suggested that the development of trust in virtual organizations would still need active bonding and contact between employees and the leaders of organizations. Trust is important because, if leaders and managers can no longer maintain the levels of control that they have traditionally exercised, they must be able to entrust and empower their employees. This can only be achieved through personal human contact – for now (Handy, 1990). Furthermore, to lessen the possible effects of employee isolation and cyber-stress, organizational leaders need to understand that almost all humans are still genetically hard-wired to be social (Nicholson, 2000; Casison, 1998). It is one of the defining characteristics of human evolution over the last 130 000 years. Research has revealed that camaraderie disappears very quickly when people move into virtual working environments (Berger, 1996). Having a sense of belonging gives meaning to employees and how they fit into their organization. At this moment in time, employees still need physical interaction with each other, and there is growing evidence that cyberworking from home can be deeply stressful for some people (Mitchell, 2002; Sandilands, 1999; Marshall, 1999).

The notion that a desire for human contact remains strong is reinforced by recent research suggesting that teleworking has not reshaped the way we work anything like as much as originally predicted. For example, in

LEADERSHIP AND PEOPLE MANAGEMENT 459

1971, AT&T predicted that all Americans would be working from home by 1990. This has not happened, for several reasons. First, teleworking can be lonely and, as noted above, most humans still need regular face-to-face contact with others. Second, many senior managers have concerns about losing control over workforces they do not physically interact with. Third, it can affect the career progression of employees, because they are not mixing with those who might be making promotion decisions at work. Fourth, it can blur the line between work and non-work, an important buffer to occupational stress (Mitchell, 2002). We saw in earlier chapters that the companies people most want to work for are those that help their employees balance their work and family commitments. One example of a company that was forced to review its policies about homeworking is Iona Technology, a cutting-edge software company with offices in Western Australia and the Irish Republic. This company has a progressive and open organizational culture and, from the mid-1980s, had actively encouraged its people to work from home. However, they found that the majority of people still preferred to come in to work for at least part of the week, demonstrating a continuing need for interpersonal communication and social interaction (Rheinlander, 1999). However, as Generation T enters the workforce in larger numbers, the first generation to be raised from early childhood on computers and the Internet, this need for direct face-to-face contact may diminish (Turnbull, 1996).

The extensive use of virtual-communication technologies in organizations may also cause the health of employees to suffer. Levels of cyberstress do increase amongst employees who make extensive use of computers and virtual technologies. As we saw in Chapter 2, this can have a number of physiological and psychological effects, such as repetitive strain injuries, musculoskeletal problems, tendonitis, eyestrain and blurred vision. ‘Cyber-sickness’, a variant of motion sickness that manifests itself in the form of headaches, double vision, increased heart rates, dizziness, vertigo, disorientation and even vomiting, is also becoming more of a problem for employees. There is also the potential for people to turn their backs on the real world and become contented zombies, roaming synthetic artificial worlds. There are clear indications that this is already happening. Cyber-slacking and cyber-abuse are estimated to cost the US economy at least $US10 billion a year. Surfwatch, a company that provides web-use monitoring systems to employers, estimates that American employees spend about one-third of their work time on the web pursuing ‘personal interests’ – anything from trading on the stock market, gambling and shopping, and accessing pornography. In 1999, Rank-Xerox sacked 40 employees for wasting up to eight hours a day downloading ‘adult’ sites, at a rate