Executive Thought Leadership

Thriving as Leader in Internet Economy

Sue Bostrom, senior vice president of the Cisco Internet Business Solutions Group, outlines three ideas to help executives transition to a new form of leadership.

The Internet, with its ability to speed up the pace at which information is communicated, has brought about many changes to the world of business. Most notably, it has created a more sophisticated customer—one who demands innovative, personalized products and services delivered at their convenience. The Internet has also expanded the very definition of the word "customer," so that it now includes employees, distributors, suppliers, business partners, and shareholders.

To meet the needs of these new types of customers, the traditional solutions of more salespeople, more paperwork, and more factories no longer work. What this means for business is that new products and new factories are no longer at the heart of innovation.

Today, innovation is about developing and implementing creative solutions to the challenges the Internet poses. Raw brainpower—in the form of ideas and information—is the currency that will fund the new economy.

A New Form of Leadership

With this shift from products to ideas comes a need for a new type of leadership. Under the old rules, top-down leadership and focusing on economy of scale and market position was enough. In the new world, companies operating under that type of leadership will not survive.

Executives must transition to a form of leadership that is in sync with current demands. As Cisco Systems has learned through years of innovation and research, there are three key tenets for leading in the age of the Internet:

Empowerment and Execution: Leaders must inspire and empower everyone in the organization to brainstorm about new ways of doing business, and then execute them quickly.
Brainpower: Leaders must realize that intellectual, not physical, property is a company's most valuable asset.
Information and Influence: Leaders must understand that information and influence are bigger advantages than position and politics.

Employee Empowerment

If the old leadership style could be represented by a pyramid, the new organization looks more like a large spider web. In today's marketplace, people are a company's most valuable assets, and leaders must foster a creative, supportive, and rewarding work environment that allows ideas to germinate and grow as naturally as orchids in a hothouse.

Empowering employees to solve problems, and inspiring them to look for problems that need solving instead of simply passing time in their cubicles, is the only way to ensure survival.

But good ideas are useless unless they are executed quickly. Implementing an enterprise network powered by Web-based technologies will ensure that the best ideas are acted upon with the greatest speed and efficiency.

Brainpower

Consumers are no longer simply buying products, which quickly become obsolete. They're buying the creative idea—which endures—behind the products.

Case in point: When consumers buy a personal digital assistant (PDA), they're buying much more than a piece of hardware. They're purchasing the convenience of having a calendar, address book, memo pad, and Internet appliance bundled in a case no larger than a wallet. They're buying the ability to make and change appointments speedily. They're paying for the chance to pass a letter to a colleague across a room in nanoseconds. Ultimately, they're purchasing intangibles like ease of use and customization.

People and Partners

Since people are the source for the creative ideas that ensure success, their brainpower has replaced the warehouse, the truck fleet, and other "bricks" as the indispensable asset in the new economy.

Executives today must look for brainpower at every level within their companies and from their partners, suppliers, and vendors. To help harness this brainpower, they must create an interdependent "ecosystem" with their partners, in which all players are wired together, share information, and have a joint stake in each other's success.

That way, host companies can add to their web of idea-generators and problem-solvers. When partners see a problem—say, a bottleneck in the manufacturing process or a flaw in the packaging—they will have an incentive to dream up a creative solution.

Information and Influence

Today, the old power relationships have been reversed: Customers, not big companies, hold the power and dictate demands. And the digital marketplace means that a single good idea can make a centuries-old business obsolete in a matter of months.

A company's survival in this environment depends on its ability to gather strategic information about what customers want, and to use that information to fulfill ever-changing needs. Moreover, executives need to ensure that this information about customers influences the decision-making processes at every level within the organization.

Information about what customers want can come from a number of sources. Hence the importance of a network of stakeholders that shares information about internal processes and needs. These stakeholders can also bring their collective idea-generating talents to bear on any problem that arises concerning customer satisfaction.