Old-fashioned Managers Step Into Dot-Coms

Computerworld - Quick - what do George Ball, Tim Koogle and George Shaheen have in common? Well, they used to be poster children for high-tech success, with high marks for guiding their companies to great heights.
Now unfortunately, it seems technology expertise hit a management brick wall, and each of them is now an ex-exec, a victim of profit woes, withering investor confidence and an outrageously different business landscape.
Ball has given up the reigns at broadband access provider Excite@Home to telecommunications industry veteran Patti S. Hart. Koogle passed the baton at Yahoo to former movie executive Terry Semel, and Webvan, the online grocer, is still combing the aisles for someone to replace Shaheen.
This is quite a switch from the days when magazine covers and industry analysts extolled technology professionals as management gurus, lauding them for New Economy insight and ability.
Now, it turns out, you really need tough, old-fashioned management smarts to clean out excess inventory, cut bloated staff and focus on making some of that green stuff. "There was a false sense that because technology could transform business, it could also transform business management," says Raj Sampath, an analyst at executive headhunting firm Heidrick & Struggles. "It turns out, you need orthodox traits in business management in addition to technology expertise."
Webvan, the company created to revolutionize the grocery business using the Internet, snagged Shaheen from Andersen Consulting back in 1999, when Webvan stock went public at $15 per share. In November 1999, investors valued the company and its tech-savvy management at $11 billion. Obviously, they were shopping on a different planet than the rest of us, because Albertson's - a competing brick-and-mortar grocer (with $37 billion in sales, $3.5 billion in earnings, 2,500 stores and 235,000 employees) was pegged at the same value. Did Webvan's management really believe it had a company of comparable value when it had sales of just $4 million and no grocery store expertise?
Did Shaheen, his team and investors believe Webvan had a real business model? Or was everyone dazzled by the mania for Internet stocks?
Even though the deployment of IT skills throughout business ushered in new practices such as e-commerce and customer relationship management, the fundamentals of business didn't change. Purchasing servers and software isn't a substitute for traditional management practices, nor is the ability to write good code a mandate to run a unit with profit-and-loss responsibility.
Experienced management does the following:
• Stops the technohype about transforming business.
• Sticks to nuts-and-bolts expertise and focuses on what makes money.
• Hires people who have an affinity for the business - not just the financial rewards.
Investors in Hewlett-Packard and Cisco Systems, which are feeling the pinch of slower sales, know that relying on technology systems to predict and track business is like driving forward while looking in the rearview mirror.
Seasoned executives with a comprehension - but not a love - of IT may be required.
Pimm Fox is Computerworld's West Coast bureau chief. Contact him at pimm_fox@computerworld.com.

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