CHAPTER 2
HISTORY
L
ESSONS: WHY
C
ONVENTIONAL
B
USINESS
M
ODELS NO
L
ONGER WORK
The Case for Virtual Business Processes
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Philosopher George Santayana is best known for the quote “Those who
cannot remember the past are condemned to repeat it.” Presently, business is
repeating its approach to achieving profitability through aggressive headcount
reductions in the hopes that the results will somehow be different than they were
before the dot-com bubble. For the most part, this return to yesteryear is a knee-
jerk reaction to the collapse of the dot-com market. However, to truly evolve, it is
important to understand the lessons history has to teach us. According to
Santayana, “History is always written wrong, and so always needs to be
rewritten.
This chapter delves into business history and points out the lessons to be
learned by
Examining the process that promoted the rise of a new technological
infrastructure.
Showing how that infrastructure was used, initially, in a way that
virtually guaranteed failure.
Discussing how the current return to basic practices that is taking place
is a reactionary attempt to pretend that the Dot-com Era never took place.
Discussing the implications of the technology already loose in the
market, how technology has made business decisions complex, and why
more data is not the answer.
Introducing a structured decision modeling approach to convert data into
actionable information.
Concluding with a case study that illustrates the application of data to
decisions using Cisco Systems’ call center technology.
The business environment runs in cycles. Presently, we are on the downside
of a boom/bust cycle. Down cycles tend to get labeled, and this particular one has
been labeled the dot-com bomb, or just the dot-bomb. During the height of the dot-
com bubble, in early 2000, nearly 131 million new PCs were sold.
1
In those
halcyon days, technology was king. Technology was going to completely change
the way we did business, from “bricks-and-mortar” to a more enlightened
environment characterized by entrepreneurial types sitting by the pool typing on
a wireless laptop. Volumes were written on the subject, generally concluding that
business would become a wholly virtual pursuit in which all the really hard work
would be done by automation accessed by and manipulated through the web.
Chapter 2: History Lessons
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Of course, this hasn’t happened yet, and to a large extent it is because the dot-
bomb brought the easy-money days of online entrepreneurship to an abrupt end.
As the Dot-com Era came to an end, questions naturally arose as to what had
caused the dot-bomb and, more importantly, what had been wrong with the dot-
com bubble in the first place. At the highest level of reflection, the dot-com model
for business was fundamentally flawed—a result of bad business planning and
poor execution combined with undiscriminating investment.
The dot-bomb sharply illuminated several erroneous dynamics of the existing
economy:
Business leaders assumed that extraordinary improvements in productivity
and revenue growth were essentially activities of the past.
Information technology was a necessary evil of doing business.
Information technology produced nominal value by itself.
Information technology was a means of managing overhead.
The dot-com revolution served as a wake-up call to the business world. Here,
for the first time, was a new vision for technology. It was the notion of the business
as technology. Put another way, it was information technology in place of the
bricks-and-mortar business. The implication was that, instead of people,
buildings, and inventory, all you needed was an Internet presence via a web page
parked on a server somewhere. Best of all, companies sprang up that would
cheerfully provide the server and the web page. The gleam in executives’ eyes
came from thoughts of zero-overhead profit-generating shells. The market’s motto
should have been “Money for nothing!” The reason anyone could take this notion
seriously was partly because of bad business skills but also because of bad
technology skills: Executives were essentially ignorant when it came to leveraging
the power of technology for their business.
The dot-com dynamic illustrated the extent to which the status quo was deeply
entrenched in the business world. Executives could make sense of the new
technology only in the context of that with which they were familiar. This generally
was a model of business as a fixed infrastructure operation. Even though dot-com
promised to change the dynamics of business, the only way most companies
conceived of this change was as a wholesale replacement for existing operations, not
as a complement to them. This explains the phenomenon in which bricks-and-
mortar businesses that engaged in e-commerce activities launched dot-coms as
operations that were completely separate from the existing conventional business.

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