networking, internet, intranets, extranets, IT

It's not only what you know, but how you use the information that makes the vital difference. And that depends crucially on two-way, open exchange. Intranets and Extranets are the latest means of bringing together all parties to the business system - including all the key outsiders and every last employee.

No wonder that a business magazine ran a special report on 'The Networked Corporation' and 'making it work for you', with the powerful advice that this is 'a necessity'. It reported that from 'making widgets to posting Internet ads, businesses are going on-line, or trying to'. This might have been published in 1999: but it actually appeared in a Business Week in June 1995. Four years on, most businesses still could not answer Yes to two question posed:

• Does your legal department let you accept a contract that has been sent by e-mail?
• Can your employees fill out their expense forms on PCs, then get them approved and filed electronically?

Those may seem minor details, if conventient ones: but No answers are symptoms of a much wider malaise. The No company will surely lack these wider and far more significant powers:

• Does information flow freely throughout your organisation to wherever it's needed, rather than up and down the hierarchy?
• Can customers dial into your computers to check the status of orders - instead of trying to find somebody in your sales department by phone?
• Is the company saving money by electronically linking with suppliers in a just-in-time inventory network?

The managers of 1995 had an excuse for non-compliance. They were told that linking up was 'hard to do'. The magazine supplied a beautifully drawn 'anatomy of a network' which showed on one side a Wide Area Network (WAN) connecting through groupware to factories, warehouse sand mobile workers: on the other side an Integrated Services Digital Network (ISDN) gave access to a World Wide Web server, and a Network Server which led to the outside world. There sat a central phone office 'where switching equipment completes local calls and passes long-distance calls to the fibre-optic lines of long-distance carriers'.

In the centre of the anatomy sat the Local Area Network (LAN) which linked all the computers in a building via groupware, connected the computers with the external phone network and the internal private branch exchange (PBX), and gave access to e-mail and voice mail systems. You can understand how dismayed the manager of 1995 must have been, surveying this complexity, lacking several of the mapped elements, being told that networking was a necessity, and at the same time warned that it was hard to do.

Today more of the elements will be in place. The network architecture, anyway, has been simplified. And in the Age of the Internet installing the right technology with the right applications is no longer difficult, but routine. That only strengthens the 1995 warning that getting wired to speed up internal processes and reach out to others electronically is an imperative. George Shaheen spelled out why:

'The ability to do more and more commerce over a network is at the forefront of everybody's thinking. What's going to happen - because we want it to - is that the network is going to take time, distance and space out of the equation'.

These statements have become truisms. So what explains the continuing lag? Look back at those five questions, and you can't imagaine any manager who wouldn't want his or her organisation to answer Yes. The difficulty is not new. Each advance in communications technology has profoundly affected the way in which managers manage. Today's extraordinary array of communication tools is like Pandora's box. Open it, and the world will never be the same.

The 1995 article spelt out one especially awkward aspect of change. Management had to take another great step forward on the long journey from order and obey to advise and consent. Christine Arntz correctly perceived that 'getting the most out of the network means giving up control':

'A key difference between companies that make the net work for them and those that don't is their approach to information...until a company is willing to share information with workers at the sales counter or the shop floor, the most sophisticated network technology won't help the bottom line'.

MAKING THE NETWORK WORK
Making the network work is not optional. Mobile phones, E-mail, voice mail, the World Wide Web, video-conferencing, call centres, portable computing, etc. have either become as commonplace and essential as the fax machine or will rapidly equal its ubiquity. The impact on management is already clear. Group working, supplier partnerships, horizontal or flat organisation structures, empowerment and the other guru-blessed elements of the new order have all been facilitated and encouraged by the telecommunications boom - and that, in some respects, is still in its infancy.

The examples are mind-blowing by the conventions of quite recent times. A successful American challenger to a Japanese world-leader in high technology operates from a base in the Philippines over a network of PCs and telecommunications. A fast-growing computer services company is based in London, but hooked up to its low-cost programmers in India and Ireland. A plastics business and its largest customer marry their computer systems to share invaluable information in real-time.

A European multi-national locates all its accounting services at one location - but its customers dial a local number in their own country and speak to somebody in their own language. For another multi-national, not of British origin, customer service enquiries world-wide are handled from a single site in Scotland. Task forces composed of several nationalities and functions in several locations never meet face-to-face, but share files and discussions over the network. A mid-West manufacturer finds out by electronics exactly why his sales have slipped in Germany without speaking to a soul.

But speaking to people, and listening to their responses, is the essence of communicating. There are worrying signs that the amazing increase in the technological efficiency and sheer breadth of communications may not lead to better understanding. Most major firms these days boast a 'vision' and a corporate strategic plan designed to turn that dream into reality. But few firms, hand on heart, can boast that the strategy has been effectively communicated throughout the business. Without real understanding and cooperation throughout the firm, how can the strategy be carried through to success?

It can't. Managers are very familiar with the concept of the 'strategic gap', the distance between where the business wants to be, and where it is now. But there's another strategic gap in many cases: between the ambitions of top management and the understanding of those plans among the vital parties - customers, suppliers, and employees. The last and most important category doesn't just mean the shop-floor or the counter staff: managers are just as likely to share alarming ignorance about the policies which they are expected to implement - that is, to judge by a major Ernst & Young survey.

It found that in most organisations suppliers had no understanding of the strategic plan; customers had only a little understanding; while among middle managers knowledge was only partial. Yet, as the examples given above show, the means exist as never before to communicate with all these groups by the combination of voice, text and images - which, as every public speaker should know, is vastly more effective than using any of the three elements on its own.

Use those means, and deeply satisfying results will flow. Raise the strategic understanding of those middle managers from partial to full, by better communication, and, according to Ernst & Young, a significant rise in productivity, quality and profitability will follow. The investigators were so impressed by this improvement in the Holy Trinity of modern management that they declared the communications exercise to be 'a strategy for competitive advantage.' If middle managers are fully informed, of course, they can lead other employees out of what must be even deeper darkness.

Such ignorance is inexcusable. The technology has made possible a quantum leap ahead of notice-boards and printed media. Halifax, the personal financial services giant, is one of many companies that have opted for 'business television.' Organised like a broadcast news programme, it's viewed in the branches as part of the staff meeting. Companies can put out messages from top management, explain breaking news (good and bad) and - if the company is far-flung geographically - reach the whole world via satellite. Interaction between speakers and audiences is technically feasible, which makes the medium more powerful still.

The key word is powerful. One of the more entertaining episodes in IBM's generally gloomy decade of travail came when the former chief executive, John Akers, delivered a diatribe to a group of senior people, attacking the flaccid management reaction at a time when 'the company is in crisis.' A member of the audience was so deeply impressed by the message that he sent his notes to the staff by e-mail - forgetting that the system was open. Within minutes, Akers's rage had rushed round the world, and into the headlines.

That was involuntary use of the technology. But what if Akers had wanted to electrify the company deliberately by awakening everybody to the urgency of its situation? And wouldn't that have been wise? Just as the telephone widened communication, so do the new media. They make it harder and harder to keep unnecessary secrets and to withhold information. That is the time-honoured (or dishonoured) way for managers of the old school to preserve their power. The new communications and the new school of management thus work hand-in-hand to the benefit of customers, suppliers, employees at all levels - and investors.

THE CONNECTED HOME
The network phenomenon is not confined to offices and factories. By 2002 there may well be 24 million homes in the US alone that have more than one computer. Just as in the business world of 1995, home networking has been held back by complex hardware and software. But the geeks are hard at work on simplification. Matsushita has invested in Epigram, a California start-up that aims to link computers, printers and high-speed Internet connections without the need for new wires - all to propagate an industry in 'home networking'.

Small wonder that Microsoft and 3Com are joining forces to tackle this market, which may be worth $1 billion by 2002, and in which at least four other major players are actively interested. When a technology moves into the domestic market, you can be sure of two things. First, the applications are relatively simple, multiple and multiplying fast. Second, the costs are tumbling down. Back in 1989, the cost of a network of 20 workstations using PCs was $95,000 - already a fantastic bargain in those days. Today the price is $xxxxx.

That means that the benefits of networking are available to the small business as much as the great. You have six banking offices, and want to bring in new customers by charging on a sliding scale that gives increasing discounts for large customers. The network will link the cashiers, do the sums, and transform your result. Do you want to eliminate paperwork entirely? The network will save you jobs and money by doing precisely that - and improving processes as it does so. Again, the questions demand only one answer - Yes:

1. Do you want to make it easier for your people to communicate by computer?

2. Do you want to save time (or increase effective employee hours, at no greater employment cost) by reducing the number of meetings and making it possible for several of your staff to work simultaneously on the same problem

?3. Do you want generally to increase the information available inside the organisation, while at the same time making it more digestible - and increasing the company's reaction speed and competitive prowess?

4. Do you want a better return on your IT investment by expanding the combined powers of your computers to grapple with new tasks?

5. Do you want to reduce software costs by stopping people from buying copies of the same programs?

Even though any sentient manager will answer Yes, a surprisingly large number of companies have taken little if any action to get those five extraordinary and easily won benefits. They are the opposite of what was expected by the computer prophets. They believed that the computer would reverse decentralisation as top managers, aided by IT, took back the functions that middle managers and unit heads had usurped. The dream expressed in a Harvard Business Review article in 1988 has come true. The old choice between centralise and decentralise has become obsolete:

'Today there is a third option: technology-driven control systems that support the flexibility and responsiveness of a decentralised organisation as well as the integration and control of a centralised organisation'

THE INFINITELY EATABLE CAKE
In other words, this is one of the rare occasions in management where you can have your cake and eat it, and where trade-offs are not required. But the infinitely eatable cake exists throughout the networked world. The HBR authors speculated further that companies would have the benefits of small scale and large scale simultaneously: that even large organisations would be able to adopt more flexible and dynamic structures; that the distinctions between centralised and decentralise control would blur. The writers had scored three bullseyes - a rare event in forecasting.

It is becoming less rare in IT. In Culture Shock, published in 1990, one of the present authors predicted that by 2018 three of that year's miracles would be commonplace. Managers would have at their disposal very small computers with very great power that can process at very great speed all the information that they are ever likely to require. To all practical intents and purposes, storage capacity would be infinite. And they would enjoy 'computerised communications networks that can handle computer output, text, images and speech over any number of channels and outlets'.

Managers had this forecast armoury of 2018 at their fingertips nearly two decades ahead of schedule. That's why they can genuinely hope to have the best of all possible worlds, whatever the size of their company. The Information Revolution means that the small competitor can now match the giant in the strength of its decision support and communications systems. There is no excuse for anybody to shun the power of the networks. Rather, the imperatives get greater day by day.

Ten years ago, managements in large organisations could still rely on their immensely strong positions in terms of size and customer franchise. They didn't need to behave like small entrepreneurial companies, because they had no small entrepreneurial competitors. They did have a clear need to exploit the often buried talents of the able people inside the organisation. But their sluggishness in adopting networked management has turned needs into urgency. And the Internet, with its globally networked reach and entrepreneurial challengers, means that nobody can escape that imperative.