Leading Change

“The harder you push, the harder the system pushes back” is the 2nd law in The Laws of the Fifth Discipline.  These laws are the core of a process called systems thinking and the concept is that it’s “best to manage the system, not just the individual processes.”  (West & Cianfrani, 2004, p. 69)  Corporations have a tendency to look at the “direct linear cause and effect relationships,” rather than looking at “interactions.”  (West & Cianfrani, 2004, p. 69)  Peter Senge’s book The Fifth Discipline identified 10 laws that defined systems thinking.

The 2nd law in The Laws of the Fifth Discipline can be interpreted as “Compensating feedback.”  Senge defines this as “when well-intentioned interventions call forth responses from the system that offset the benefits of the intervention.”  (Senge, 1990, p. 58) In other words, the more effort exerted to change or improve the current organizational processes, the more effort it requires.

Organizations have experienced this process when, for example, a product or brand suddenly begins to lose its popularity within the market.  When organizations begin to push new marketing strategies aggressively it often turns out that more revenue is spent on the marketing efforts with only a temporary pay back.  This process is not only limited to the business market, it can also be illustrated in personal experiences.  Senge uses the smoker as an example – if a person who is a regular smoker suddenly quits he or she might begin to gain weight, become frustrated with personal appearance and then suddenly begin smoking again.  (Senge, 1990, p. 59)

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As humans it is natural for us to get drawn into the process of compensating feedback.  We push harder and it’s exhausting and we often “glorify the suffering that ensues.”  (Senge, 1990, p. 59)  When our efforts to produce change fail initially, we push harder and often have the belief that our hard work and effort will overcome all of the obstacles in front of us.

However, compensating feedback is a process where we become blind to the fact that our efforts are actually contributing to the current obstacles we are facing as well as creating others we must overcome. (Senge, 1990, p. 59-60)

Over the past two decades information and communication technology has continuously evolved and has empowered small businesses and large corporations with new emerging markets and tools.  The Internet has become the information highway and has impacted both social and economic relationships in various sectors such as education, health, government, trade and tourism.  (Waddell & Singh, 2003, p. vii)

In order to maintain its impact on society the information technology must continuously evolve to compensate for future needs for both local and global societies.  (Waddell & Singh, 2003, p. VI)  Focusing on one idea or concept that does not elicit long-term success consumes time and effort that is imperative to online success.

The consistent evolution of technology and the platforms provided are numerous and are impacting our society regularly.  These newly emerging technologies affect the way we do business, communicate with others, daily entertainment, study and do research.  (Waddell & Singh, 2003, p. VI)  Ecommerce is the largest growing platform of the World Wide Web and it has provided a “new momentum of doing business in the digital economy.”  (Waddell & Singh, 2003, p. VI)

In order to compensate and adjust to the constant change through the internet environment we must be able to identify the implications. At the end of 2004 it was estimated that 750 million users represented the Internet community worldwide.  (Waddell & Singh, 2003, p. VI)

The e-marketplaces consist of various products and services that market their products both from Business to Business and Business to consumer.  These products and services provide value for both buyers and sellers.

In order to create a successful ecommerce venture processes must be transformed from the traditional ways of doing business to modern Internet transactions that are efficient to both the buyer and the seller.  The biggest challenge for internet businesses is adapting to the virtual environment and integrating their current business processes into the e-marketplace. (Waddell & Singh, 2003, p. 97)

The Internet environment has its benefits as well as disadvantages, or threats.  On a local business level it immediately provides “easy and fast entrance to new markets,” 24/7 business hours, less physical structure maintenance, and the possibility of sales increasing.  (Waddell & Singh, 2003, p. 99) For buyers this offers more selection of products and services, 24/7 business access and easy comparison between the various seller’s offers.   (Waddell & Singh, 2003, p. 99)

Threats for businesses as a whole are the loss of direct customer face to face relationships, increased competition and the extra funds required for consistent upgrading of products and platforms.  (Waddell & Singh, 2003, p. 99)  For buyers there is the same lack of direct face to face relationships, the unknown reliability of the seller and lack of trust in products and services.  (Waddell & Singh, 2003, p. 99)

E-commerce is about “rediscovering the individuality of the customers and their needs, and the creation of frictionless modes of commercial interaction with them.”   (May, 2000, p. 4)  Businesses must approach change in an internet environment carefully, as in the traditional business model the direct interaction allows the consumer to feel important.  Ecommerce does not provide the close interaction; therefore it is imperative that the online business practices allow the consumer to feel like a person, not a type.  (May, 2000, p. 5)

A great example of ecommerce success is Amazon.com.  This company has proven its ability to implement change and business growth without affecting its customer base or falling behind the competition.  The vision of the “Earth’s biggest bookstore” (May, 2000, p. 52) was to offer a range and large quantity of products that would dominate traditional booksellers and to “achieve market ubiquity without acquiring retail real estate.”  (May, 2000, p. 52)

Jeff Bezos identified books as an ideal product for selling online because the number of books the traditional bookseller could offer was limited; therefore, if these products were offered online the number available would be unlimited.  In a sense the book trade has always been “virtual” – any customer can enter a traditional bookstore and order any book in print.

Amazon.com brought a new online concept to the book trade and improved the efficiency of a traditional process.  However, though this insight was extraordinary introducing the concept into the ecommerce marketplace meant that consistent change was necessary and that customers must receive the same attention and personal relationships currently experienced in the traditional environment.  (May, 2000, p. 53-54)

In order to change the ecommerce impersonal environment Amazon.com had to introduce a new strategy into maintaining and increasing its customer base.  Changing the internet environment is not a simple display creation or the addition of a personable salesperson to physically approach customers.  Amazon.com had to approach this change with a technology based solution that offered a personal approach to its customers.  The applications Amazon implemented offered their customers a positive experience.

Customers are now able to access their portfolios at any time and without interaction with a sales representative.  These portfolios are personalized and address customers on a first name basis, provide purchase history and even suggest similar titles that might be of interest to the customers.  This change provided a personal touch, saved Amazon on staff time and clearly benefits the customer.  (May, 2000, p. 54)

Rick Berry, CEO of ICGCommerce.com, an Internet-Based procurement business, describes leading an e-commerce business as “driving a Ferrari with a cinderblock on the accelerator.”  (Pandya, 2004)  This fast-paced environment requires consistent change, as “E-Procurement is a $10 trillion market worldwide.”  (Pandya, 2004)

Berry states that building a procurement business in the traditional sense would take at least 10 years to become successful; however within the internet environment they are making an attempt to establish credibility within six months.  Their goal is “to grab a chunk of that market before the competition moves in.”  (Pandya, 2004)

Berry believes that talent is what businesses require to provide effective leadership and the ability to change quickly within Internet based businesses.  Leadership must have the ability to “attract teams of talented risk-takers.”  (Pandya, 2004)   The speed of the working environment in an e-commerce structure means that very little time is available to train staff; therefore leaders of e-commerce ventures “must strive to create a specific type of work culture” that is high-energy and results-oriented.  (Pandya, 2004)

Because little time is allowed for training and communication in an internet environment is more direct than others, changing the actions of others as well as effectively communicating the vision of change is difficult.  “You communicate directly, and you must build a team that can cope with that.”  (Pandya, 2004)

If an internet company is to be successful it must begin with establishing a visionary culture with the ability to attract and retain talented staff.  Talented staff members have the ability to effectively introduce change within the internet environment effectively and without disrupting business flow.

David Perry, founder of Chemdex says that creating a successful business with the ability to adapt to the constant change of the internet environment is “raising money, so you can hire good people, so you can make and sell good products, so you can raise more money.”  (Pandya, 2004)  These staff members must be “enthusiastic, passionate and share the organization’s values.”  (Pandya, 2004)

In his article titled The True Value of Change Management, George Spafford quotes “The only constant is change.”  (Spafford, 2005)  He believes that many IT organizations “lack a fundamental understanding of the need to manage change” and that these organizations feel that change management stops at budgetary planning.

When introducing change into the internet environment organizations must understand that this process has huge impacts on business operations – the more complex the change is within the system the “effective change management processes” increase.  (Spafford, 2005)  As most change within the internet environment is technology based, it’s imperative to know that 80% of security breaches have been caused by human error. (Spafford, 2005)

Potential solutions in technology have three parts “people, technology and process.”  (Spafford, 2005)  Most organizations have processes in place where change requests are “submitted, reviewed, planned tested, scheduled and then implemented.” (Spafford, 2005)  The procedures are put into place to ensure that proper thought and planning have been applied and the implications assessed before introducing it within the business structure.

Spafford believes that many organizations lack the resources to implement change and that many simply give up once the implications have surfaced with unsuccessful results.  He believes that companies must learn from their mistakes and work continuously to improve and implement future successes.  Developing one simple model of change in an internet environment can also be devastating.  “The point is to be flexible, keep costs down and remain responsive, adopting multiple change models.”  (Spafford, 2005)

The ability to manage change within the internet environment will always be a challenge for organizations.  Effective leadership is the key to any organization’s success as well as leadership’s ability to attract talented staff members who are constantly looking to the future, rather than traditional one-sided ideas.

Technology is constantly evolving and introducing new competitive strategies into the ecommerce marketplace and little time is available to adapt to the competition.  Looking back at The Laws of the Fifth Discipline, “The harder you push, the harder the system pushes back” we see that it’s imperative to remain open-minded and constantly looking to the future where new concepts and ideas will introduce positive changes to the Internet environment.

References

May, P. (2000). The Business of Ecommerce: From Corporate Strategy to Technology. New York, New York: Cambridge University.

Pandya, M. (2004). Center for Leadership and Change Management:  Leadership in E-Commerce:  What does it Take to Lead an E-Commerce Venture? Retrieved from http://leadership.wharton.upenn.edu/ecommerce/articles/Wharton_ECommerce_Forum.shtml

Senge, P. M. (1990). The Fifth Discipline. New York, New York: Doubleday Dell Publishing Group.

Spafford, G. (2005, August 15). Datamation:  The True Value of Change Management. Retrieved from http://itmanagement.earthweb.com/service/article.php/3527471

Waddell, D., & Singh, M. (2003). E-Business Innovation and Change Management. London: Idea Group Inc (IGI).

West, J., & Cianfrani, C. A. (2004). Unlocking the Power of Your Qms: Keys to Business Performance Improvement. Milwaukee, Wisconsin: American Society for.

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