The first paragraph of the article provides a brief summary of the content. It discusses the common tendency among businesses to make minimal changes to their annual plans, often merely updating the dates and financials. The article then delves into the reasons why businesses should consider more significant changes, particularly in relation to the internet and the concept of inertia.
In most cases, businesses tend to make minor adjustments to their previous year's plan, changing only the dates, title page, and financials. This approach, however, overlooks the transformative potential of the internet. The internet has revolutionized the business landscape, offering new ways to reach, service, and communicate with customers. Despite this, many businesses struggle to incorporate a well-executed internet strategy into their plans.
For instance, e-commerce is a significant aspect of the internet's impact on business. While high-profile online retailers like Amazon.com and Priceline.com may first come to mind, they represent only a fraction of the total e-commerce business. The majority of e-commerce revenue comes from B2B transactions and companies that have leveraged the internet as an alternative distribution channel. Dell Computer, for example, generates over $6 million in online revenue daily.
Another example is Milacron Inc., a manufacturer of metalworking products. By utilizing the internet, Milacron was able to tap into a previously unreachable market segment, resulting in higher profit margins. According to Forrester Research, e-commerce revenue is predicted to exceed $1.3 trillion by 2003, with nearly 70% of all businesses engaging in some form of electronic commerce activity.
However, the internet may not be the right fit for every business. To determine if it should be part of your future plans, consider the following questions:
If the answer to any of these questions is yes, then an internet strategy should be part of your business plan.
Inertia, a concept originally defined by Galileo, states that objects moving in one direction tend to continue moving in that direction. This concept applies to businesses as well. Strategies developed years ago often continue to be implemented, not because they are the best strategies, but because they are familiar and comfortable.
K-Mart serves as an interesting case study. Despite dominating the discount/general merchandise category for many years, K-Mart failed to adapt its strategy in response to the rise of Wal-Mart. Wal-Mart's strategy of targeting smaller markets with standalone stores selling brand merchandise was in stark contrast to K-Mart's approach. Today, Wal-Mart is the largest retailer in the world, while K-Mart has struggled to maintain its relevance.
The lesson here is that it's rarely beneficial to have a new strategy forced upon you. A business plan should provide ample warning of potential threats and changes on the horizon. However, it's crucial that the plan is not relegated to a middle management function with inadequate visibility. The planner should be able to ask tough questions and work freely, unencumbered by company politics or organizational issues.
In conclusion, while a business plan can't guarantee the right decision every time, it can ensure that decisions are informed and based on the best available information.
