new B2B: back to basics
keeps pace with the digital economy while still teaching the
© Nathan Mandell
Paul Conley '01 and friend are headed to a Fortune 500
isn't opting for the uncertain life of a dot-com entrepreneur.
After he graduates from Kellogg in June, he'll join a Fortune
500 company, and he couldn't be happier about it.
always been a fan of big companies," says Conley, who
will start at 3M in a marketing management development program.
"You can distinguish yourself and develop your network
within the company. Some of my friends want to be entrepreneurs,
but I'd rather be entrepreneurial within a bigger company.
I'll be getting valuable experience at 3M, just as someone
would at a start-up."
Conley, a railroad operations manager prior to enrolling at
Kellogg, never questioned his aspirations. As he and his like-minded
classmates watched the Internet craze reach a peak last year,
they found it hard not to wonder whether they'd made the right
a while there, we were asking ourselves if we were really
missing out on something," he recalls. "The equity
was a draw, and the stock market was insane. A lot of us thought
that maybe we shouldn't be in school; maybe we should be out
there making a go of it. But as time has told, maybe that
wasn't the thing to do after all.
entrepreneurial venture might give you more of a chance to
be your own boss," Conley concludes. "But I'd rather
have the security and a steady salary than face the risks
that come with a purely entrepreneurial activity."
Conley would have been the exception to the rule. B-school
students across the country stampeded toward careers in technology,
regardless of whether such work had been their life-long dream.
Who could blame them? The compensation packages dangled by
well-funded dot-coms and Internet consulting firms were too
tempting to pass up.
difference a year makes.
the tech-stock plunge in the spring of 2000, dot-coms have
been folding left and right. B2C and B2B, once shorthand for
the "business to consumer´┐Ż and "business to business"
Web sites students planned to create, today have a more prosaic
translation: "back to consulting" and "back
many Kellogg experts say, "back to basics" -- real
sales, real profits, real people, real cash.
interest in technology and e-commerce was at an all-time high,"
says Kellogg Professor Anthony Paoni, who teaches technology
and e-commerce. "At the same time, executives were trying
to rationalize the market interest in new business models
versus their business model. Many of them said 'We don't get
it. We have an established company and create real value and
show measurable profits.' These executives ultimately figured
out that it wasn't about business models; it was about how
technology was changing their business model."
graduating before the mid-1990s would have recognized the
atmosphere at Kellogg until recently. It was a time when students
could realistically hope to start and even sell companies
before graduation; when plans for new e-businesses could easily
earn not only an "A" from a professor but thousands
of dollars in venture capital.
and entrepreneurship classes were filled to capacity. Students
were stuffing the mailboxes of entrepreneurship professors
with business plans for the next eBay or Amazon.com. Many
were turning down solid job offers at established corporations
to join a hot technology firm -- or to start their own.
Professor Barry Merkin remembers the mood at Kellogg and elsewhere
as one of "euphoria," inspiring many to take chances
they might never otherwise have considered.
students and even older people were saying, 'It looks like
a crazy time, but why don't I jump in and take advantage of
all the craziness? We know it's a bubble and bubbles always
burst, but this bubble doesn't seem to be bursting,'"
spring's tech-stock collapse, the air began seeping out of
the dot-com balloon. "The market expected too much,"
Paoni says. "The signals that something was going to
happen were very clear. When the market goes up 100 points
a day, something is not right. Alan Greenspan called it îirrational
exuberance,' and was he ever spot-on."
time school started again last fall, it was clear that students
were operating in a much more subdued reality.
needs to do to confirm that things have changed is look at
his mailbox. "A year ago, I was receiving three or four
business plans every month from students who wanted to start
their own businesses -- most of them Internet-related,"
he says. "Since the beginning of this school year, I
haven't received any.▓
traditional employers, such as consulting firms and investment
banks, found it difficult to compete with dot-com upstarts
offering graduating students stock options potentially worth
millions. That's no longer true, according to Career Management
Center director and assistant dean Roxanne Hori. "Traditional
companies are definitely back on students' radar screens,"
still a healthy interest in the technology arena, but it's
the people who understand what they're getting into,"
she adds. "The people who've exited the arena are those
who pursued it because it was the 'thing to do.' They've realized
that some companies might not take off, or they could be downsized,
so they've opted for a more traditional job search. People
who are now taking the technology jobs are the ones who really
want to do it."
Internet is here to stay
|© Nathan Mandell
Josh Daitch '01 looks forward to a dot-com future.
is one of those people. Daitch, who is graduating in June,
has accepted a job as manager of business development at Walmart.com.
The company, which re-launched its Web site in November, is
growing rapidly and playing to win in the high-stakes battle
between Internet retailers.
it's risky," he says. "There's been a huge shakeout
among e-commerce sites, but I think Walmart will be one of
the successes." Daitch worked as an international real-estate
acquisitions manager for a private equity fund prior to enrolling
at Kellogg. His goal as an MBA student was to learn about
technology, and he interned at the dot-com last summer. When
the company offered him a full-time position after graduation,
he didn't think long before accepting.
a great opportunity to get some experience at a start-up technology
company with real resources behind it," says Daitch,
who ultimately hopes to work in early-stage venture capital.
knows he is bucking the trend. "A lot of my friends think
I'm crazy," he admits. One told him, "Haven't you
heard? Dot-coms are dead."
disagreed," he says. "I do recognize the risk, but
the Internet is here to stay, and if anyone is going to win
in the e-tail game, it's going to be a company like Walmart.
My strong belief is that in the long run, this concept will
be viable, and I'm going to take the risk and try to prove
gold rush may be over, but that's not to say the Internet
or technology are dead. Both will continue to create new ways
for businesses to profit and operate more efficiently. So
while many students are shunning the Internet as an employer,
many more are continuing to study how technology affects existing
organizations -- and how they can use it to create new opportunities.
Internet is a tool, not a strategy," says Louis Stern,
the John D. Gray Distinguished Professor of Marketing. "The
marketing concepts of segmenting, targeting and positioning
are still critical. Somehow, a great many dot-commers lost
sight of the fundamentals. When all is said and done, superior
execution of the fundamentals -- which we have taught at Kellogg
for decades -- is essential."
basic ideas have always been the cornerstone of Kellogg's
e-commerce program, says Dipak Jain, associate dean for academic
affairs. "We're not teaching students how to run dot-coms,"
Jain says. "We're focusing on the basic principles of
e-business and on using technology as a strategic tool."
in this area include Building and Leading High-Tech Businesses;
Technology Marketing; and Tech Venture, all of which focus
on organizations that use technology successfully. An executive
education program, Sustainable Competitive Advantage in the
Network Economy, offers much of the same information to non-degree
students and is regularly filled several months in advance.
emphasis has always been on using technology to create value,"
says Mohan Sawhney, the McCormick Tribune Professor of Electronic
Commerce and Technology. A prime focus in this area is large,
established organizations -- the firms that will fuel the
recovery of the New Economy.
in this effort is the school's new Center for Research on
Technology, Innovation and E-Commerce. Co-chaired by Sawhney
and Associate Professor Ranjay Gulati, the center will seek
to illuminate the keys to success in the world of e-business.
the center's current projects: the assembly of a database
that will shed light on the relationship between firms' investments
in e-business and their subsequent financial losses. Another
project seeks to understand what Sawhney calls "relational
equity" -- the relationships, tech-related and otherwise,
that add value to an organization.
an area ripe for exploration, says Paoni. "The real excitement
is around the impact of technology and e-commerce on changing
existing organizations," he says.
New Economy matures
those changes have seeped into the very fabric of business
and society. Though many e-businesses are struggling, the
Internet's legitimacy as a sales channel is no longer questioned.
Online business tools are no longer on the cutting edge --
they are widely used and accepted in even the most established
of a certain size is using technology to do business,"
says Shane Greenstein, associate professor of management and
strategy. "E-mail, for example, is now a routine sales
tool. Similarly, you take for granted in all but the smallest
firms things like Web-based accounting and operations tools.
These are no longer regarded novel -- they're considered basic
tools for business."
many of which promise an even greater magnitude of change,
are here or on the way. Gulati cites several trends that are
certain to open new frontiers for business.
the handheld device, such as the Palm Pilot. Gulati predicts
these portable computers will hugely accelerate the globalization
of the Web, bringing Internet access to regions that lack
the electronic infrastructure of the Western world.
data transmission also will yield new opportunities, Gulati
says. "Audio and video transmission will become easier
and less time-consuming," Gulati says. "There are
a whole bunch of applications in this area that seem very
of the Web is also creating opportunities for managers within
brick-and-mortar companies seeking to use the Internet as
a business tool, Gulati adds. "The key things to learn
are: How do you buffer the 'intrapreneurial' spirit from bureaucracy
and politics? How do you master change-management skills,
leadership skills, entrepreneurship skills?"
who can solve these problems, the opportunities are boundless,
Gulati says. And for those determined to make their mark in
the New Economy, Kellogg experts say the hurdle is higher
than it used to be -- but no higher than it ever was.
money hasn't gone away,▓ says Gulati. "It has simply
become more discriminating, and with more discriminating money,
you have to have more discriminating ideas. The payoffs are
still there. They just won't be quick hits."
not going to be easy, but so what?" adds Greenstein.
"Business never was easy. So we're back to something
we all recognize. You have to use good judgment. Nothing wrong