The Web and E-Commerce

A new challenge has surfaced. Large organizations today are struggling to better understand how to exploit the Internet and e-commerce. Reluctant at first to consider the Internet a real threat or opportunity, few organizations today have a strategic plan without the Internet as a central component. Much of the public focus is on how to transact business, how to sell and market products and services on the Web; and on stock option-based incentive systems that have created an army of under-thirty millionaires. Virtually no attempt has been made to understand the nature of the workplace attitudes and strategies that aggressive, young, Web-centric companies employ as they seek to attract and retain the best and brightest talent; and then to create the working conditions that enable them to use their potential to its fullest extent.

While most attention has been on smaller and newer Internet companies, in fact large, established companies are energetically searching for ways to incorporate the Internet into their way of working, whether by acquiring, merging, or spinning off Internet companies; or by trying to bring the mindset and energy of Internet companies into the mainstream corporate culture. In either case, large companies need to understand the New Economy and what it means throughout the business enterprise, including its workplace strategies.

Learning from the Web Frontier

Fortune 500 firms talk about wanting to "be big and act small"? Yet how many large companies have actually paid any attention to how startups and young small Web-centric companies actually organize and work; and in particular, how they use scarce resources of space and time in their pursuit of uncommon ideas, products, and services - and the people who make these happen?

What could large firms learn from small Web-centric firms? Aren't these two entirely different worlds? In many ways, yes. But that assumes that what engages the best and brightest youngest employees, and allows them to work in astonishingly productive ways, has no relevance for older employees. We're not convinced this is true. Nor are we convinced that small and startup companies have nothing to learn from large companies. We believe getting these two worlds together in the same room may spark new ideas and attitudes for both.

Large companies' dilemma is that they cannot live with - or without - bureaucracy of immense magnitude. Unfortunately, many of the best young minds of our generation abhor bureaucracy. Bureaucracy's culture depends on standardization and uniformity to coordinate a vast enterprise-rules of when, where, and how to work; complex systems and procedures to marshal and access information; layers of reporting levels to ensure mission compatibility; extensive documentation to provide an internal and external audit trail. Order and control make sense in large organizations, but it is the messy vitality of the small company that creates an agile organization and attracts restless minds, people impatient to make a difference now not later.

Some firms have recognized the problem. Kodak and Sears, for example, have spun off their multimedia and e-commerce units in order to provide them with the space to be themselves, to generate their own culture that senior management understands is at odds with the founding culture and can not be reconciled. Or can't it?

Why should the messy vitality of young and startup companies be foreign to the large corporation? Think about what people wear to work today compared to a decade ago. Ten years ago IBM was still a place where a colored dress shirt raised eyebrows. In companies like Alcoa and Monsanto it was not long ago that men were expected to wear suits, not sport coats and slacks and certainly not today's khakis. Look at a best-seller from an earlier decade, Dress for Success, to see how radical the change in culture has been. Many corporate managers were convinced (perhaps some still are) that wearing khakis rather than a suit would undermine the organization, make it soft and "unbusinesslike." Today, in a sense you cannot be "businesslike" without informal dress. Why? In many industries you will have a hard time attracting the young people you need to succeed. There's also no evidence that wearing cotton rather than wool, or an open-necked shirt rather than a tie, undermines authority or drives stock prices down.

But are the characteristics of startups and hot young firms, whether in terms of dress or workplace, only for young people and young, startup companies? The IWSP research consortium's recently conducted site visits in Toronto with firms manufacturing everything from plastic bottle molds for the soft drinks industry and multimedia advertising for global corporations to firms specializing in e-commerce and entertainment law. All were relatively small and demographically young. They also occupied premises rarely seen in large corporations: Rehabilitated 19th century warehouses filled with an admixture of furniture; firms where every workstation if not every room was a personal reflection of its occupant, including places for dogs, frogs, and fish; high ceilings, rough hewn wood, windows that open.

The reaction from our IWSP sponsor representatives, all of whom are from large companies and most of whom do not worry about having to show ID at a bar, was a buzz of excitement. These were spaces whose place character energized people. Perhaps by adopting some of the workplace practices and attitudes of young companies, just as they have adopted much of their dress culture, large companies might more quickly reinvigorate themselves and their older workforce. Isolating the internal e-commerce or multimedia startup makes sense if the alternative is forcing it to behave like a middle-aged man while its still in its teens. But another possibility is looking hard at what the large corporation can learn from the startup, and then bringing back the relevant elements into the large corporation.

Better yet, we think, is creating the opportunity for startup and behemoth to learn from each other. After all, startups that succeed get bigger, and start to put in place the controls and standardized procedures they derided not many years earlier. Each mindset has value. We need to examine much more closely what elements of each world make sense for the other?

Learning Agenda
Learning Objectives:
1. Document workplace practices of small web-centric firms¹; that is, how they:

1. Plan their space (e.g., role of staff, how much serendipity, decision process).
2. Design, and manage their space, including its furniture, systems, and technology.
3. Allocate and use the space they have (e.g., how many s.f./person; assigned/unassigned; use policies formal and informal; role of status).
4. Accommodate unpredictable organizational change (e.g., increase/reduction/shift in staff numbers, functions, change in organizational structure); and technological change (new hardware and systems).
5. Control costs

2. Benefits they attribute to their workplace practices (e.g., attract/retain staff; boost morale; stimulate flow of ideas and information; easily reorganize; support teams); and indicators they use to assess their achievement.

3. Downside or drawbacks they see to their approach, if any, especially as they begin to grow and expand.

Key Questions/Issues

• Is there a relationship between the degree of formality in planning and design processes and the organizationís ability to accommodate unpredictable change? Do less formal procedures result in greater flexibility and adaptability over time?
• Is there any relation between cost of space and furniture and employee satisfaction/morale? Can inexpensive furniture and space generate high levels of employee satisfaction?
• How do young, web-centric startup firms communicate their identity/image to prospective customers/employees? Is identity gained more from how space is used and allocated than how it is designed and laid out?
• Is the amount of s.f./person higher or lower than in a typical corporate environment? Are higher densities associated with more communication, interaction, and sense of energy and "buzz"?

Data Collection:

We anticipate using in-depth case study methods. These include, as appropriate and feasible, such techniques as:

• Interviews and focus groups.
• Analysis of archival data (e.g., yield of job offers to acceptances, turnover, facilities data about size, s.f., employee population, etc.)
• Published benchmark data (e.g., IFMA Research Reports)
• Photographic documentation of workplace practices.
• Web or email surveys of staff.

Target Population:

• Senior management
• Rank and file staff
• Customers (who visit premises)

Research Design

We will select small, young, web-centric companies that are:

• Located across the United States, on the East and West Coasts and in the Midwest.
• Leaders abroad, whether in Europe, Israel, or the Far East and Pacific Rim.
• At different states of organizational development; i.e., less than 2 year old start up vs. 3-10 year old firm.
• That are spin-offs or wholly owned subsidiaries of large, established companies.

The Organizational Ecology Perspective
The IWSP starting point is to consider the workplace as part of a complex ecological system. As such, we explore not just physical design or technology or organizational culture or work processes, but how these factors interact to produce business outcomes (i.e., products and services, revenue, costs, employee morale, attraction and retention). The ultimate question is how an organizational intervention, in the form of a workplace strategy or approach, affects the companies ability to meet its business objectives.

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Research Themes

1 “Web-centric” is defined as firms whose key product and/or services are designed for use on or sale through the Web, whether alone or in combination with other software, products and services. “Small” refers to firms that have approximately 250 employees or fewer, and revenue of $50 million or less. “Young” refers to firms that have existed for 10 years or less.

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