What Does it Take to Lead an E-Commerce Venture?Published: June 07, 2000 in Knowledge@Wharton
Rick Berry, CEO of ICGCommerce.com, often feels he is "driving a Ferrari with a cinderblock on the accelerator." Ask him why, and he will explain that his colleagues and he are slogging around the clock to build an Internet-based procurement businesswhich should take a decadeand trying to do it in six months. The reason Berry is racing like crazy is simple. "E-procurement is a $10 trillion market worldwide, nearly 30% to 40% of which is not bidand that is our untapped opportunity," he explains. To grab a chunk of that market before the competition moves in, ICGCommerce.com has set a blistering pace since its launch last October. It already has 350 employees and offices in London and Toronto. Little wonder Berry feels he is speeding down a highway. "You go as fast as you can," he says. "Just don't crash."
Berry is hardly alone. As more and more companies try to seize opportunities in today's volatile Internet environment, they are forced to move at great speed down uncertainoften experimentalpaths. This poses enormous leadership challenges for dot-com companies as well as traditional bricks-and-mortar businesses trying to develop e-commerce initiatives. What exactly does it take to lead an e-business effectively in today's fast-changing, technology-driven world? Are traditional leadership skills enough? Or do CEOs and other top executives need to cultivate new capabilities in order to move as fast as possible without crashing?
Answers to these questions and more were discussed at a session on "Transformational Leadership for eCommerce Initiatives" at a meeting of the Wharton Forum on Electronic Commerce on June 1. Moderated by Michael Useem, director of the Wharton Center for Leadership and Change Management, the session involved presentations by Berry, William Kelvie, chief information officer of Fannie Mae, and two MBA students, John Joseph and Kelly Jo Larson. "Leadership is especially important when the future is uncertain," says Useem, who conducted an informal straw poll before the session. He asked: If you were a venture capitalist looking at investing in an enterprise, how much weight would you place on the business model, and how much on the talent of the management team? The response: 50-50. "To succeed in e-commerce, the business model is key, but talent is key as well," says Useem.
Talent must take specific forms to provide effective leadership in e-commerce ventures. According to Berry, the most important quality such leaders must possess is the ability to build a team. Paradoxically, the humilitysome might call it egolessnessthat is needed to manage a team must go hand-in-hand with the drive and confidence that stems from a strong ego. Leaders of e-commerce ventures must have the ability to attract teams of talented risk-takers. "You have to find people who are willing to put some skin in the game," Berry says. "At ICGCommerce we attracted people who left millions of dollars on the table to join us, and so all of us had a stake in the company."
Dot-coms typically have a very direct communications style, Berry explains, and leaders must equip themselves to deal with that. In traditional companies, criticism of a colleague's or subordinate's actions often takes what Berry calls an "oreo cookie" approachyou first say something positive, then slip in your criticism coupled with a suggested change, and end by saying something positive again. The fast-paced e-commerce world, however, simply doesn't permit the luxury of such a leisurely approach. "You communicate directly, and you must build a team that can cope with that," he says.
The speed at which everyone works in an e-commerce venture also means little time is available to train anyone. "Your team members must come with a set of skills and deliver," says Berry. "You need people with lots of experience who know how things are done, and go out and do them." A corollary, he adds, is that team members must have confidence bordering on arrogance. In addition, they must have enormous amounts of energy and staminabecause the environment often requires 18-hour days and weekends that blur into the work week.
Leaders of e-commerce ventures must strive to create a specific type of work culture, Berry notes. This culture is high-energy and result-oriented. It doesn't allow time for studies or leisurely thought-processes. It fosters decision-making based on incomplete information. "We have an aggressive culture," Berry says. "We always ask ourselves, 'So what?' And we have a culture that is highly solution-oriented. If you have a problem, you've got to come up with at least three solutions."
While the work culture must emphasize hard work, it must also be fun. "People love to win," he adds. Among other things, the work culture must be athletic and competitive. It must be driven by people who hate to lose, who will fight every battle to the end, and who will be prepared to die for the cause." They must also be driven by a sense of urgency. "There's a time window within which we can do something, and it is closing," says Berry.
Another crucial capability of Internet leaders, Berry notes, is that they must be constantly upbeat and uplifting. "It is like being on stage all day long," he says. "Your work has to be a constant euphoric event." ICGCommerce uses a method to sustain the euphoria. Everybody in the company regularly gets an e-mail about "Five Great Things that Happened Today."
Other panelists agreed with Berry. Fannie Mae's Kelvie points out that leaders of e-commerce ventures must be visionaryin addition to being as tenacious as shelty dogs. He adds that a vital aspect of leadership in e-commerce ventures involves the ability to attract and retain talented staff. "I used to draw upon talent in other companies, and now I'm getting raided," he says. "I live every day with the war for talent."
Joseph and Larson, who have been working with Useem on a website about leadership in the Internet age, based their presentations on interview with leaders of e-commerce companies as well as those in traditional companies. Quoting David Perry, founder of Chemdex, a B2B site for the life sciences industry, Joseph says that leadership often entails developing a virtuous circle of "raising money, so you can hire good people, so you can make and sell good products, so you can raise more money." He adds that other leaders of e-commerce ventures emphasized the importance of nurturing a strong culture, which begins with hiring the right kind of peoplewho are enthusiastic, passionate, and share the organization's values.
Larson points out that the speed at which the Internet world moves has often made it difficult for traditional companies to compete effectively with dot-com companies. The reason is that leaders of dot-coms often do things "that are probably corrector correct directionallybut may also turn out to be wrong." This requires a mindset in which the organization views failure as the tuition for success. Traditional bricks-and-mortar companies, however, are not built to tolerate failure. "You need leaders who are willing to be taught as they lead," she says.