Gnmuejitmii

Will You Survive

"""Servjces
Revolution?
by Uday Karmarkar

A huge wave of change bearing down on the

services sector should make you rethink your
strategy and revamp your organization.

P
ICK UP JUST ABOUT ANY MAJOR NEWSPAPER in t h e plays out for good-as it did in the United States in the
United States these days, and you'll find the o words 1980s, when companies went into competitiveness over-
somewhere on the front page. Articles about off- drive and the economy rebounded brilliantly. Sometimes,
shoring lament the movement of labor to foreign coun- it plays out for ill, as it did when the 1930 Smoot-Hawley
tries, and outsourcing headlines decry the loss of middle- tariff on imported goods exacerbated the Great Depres-
class jobs to contractors. Of late, the o words have been sion. Then, as now, society and business have no choice
confiated to suggest that a corporate cabal bent on "ex- but to confront the economic facts on the ground.
porting America" has handed high-paying, white-collar In my opinion, the worry about outsourcing and off-
American jobs to well-trained but less expensive workers shoring distracts from the point. Even job loss is not the
in India and other locales. issue. As painful as it truly is for people who struggle to
The brouhaha over the loss of service jobs, which cur- find work in a restmcturing economy, the unemployment
rently account for over 80% of private-sector employment situation will eventually be taken care of by baby boomer
in the United States, is not merely an American phenom- retirements and job creation. (Fortuitously, many jobs
enon. Service jobs are at risk in all developed countries. In opened by boomer retirement will not be subject to off-
the UK, where some claim that as many as 50,000 jobs shore movement.) The real issue then is the loss of ser-
moved offshore in 2003, the issue is just as prevalent and vice competitiveness. We are now riding a tidal wave of
just as contentious. Countries like Germany and Sweden change that we can think of as the industrialization of ser-
are feeling political tremors as well. vices. Global competition is on the rise, and some service
Nor is any of the noise new. Protectionism raises its markets are being invaded by foreign firms and new en-
ugly, if discredited, head whenever economies undergo trants. Automation is also transforming the services sector.
a major transformation. Sometimes, the political process New hardware and software systems that take care of

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Will You Survive the Services Revolution?

back-room and front-office tasks such as counter opera- automated; other G7 countries showed a similar pattern.
tions, security, billing, and order taking are allowing firms An ongoing research project at the Center for Manage-
to dispense with clerical, accounting, and other staff posi- ment in the Information Economy at UCLA confirms with
tions. And self-service is having a major impact: Why use current data that, in absolute terms, roughly lo million
a travel agent when you can book your own flight, re- service jobs could be lost to all causes. This study encom-
serve a hotel room, and rent a car online? passes surveys and interviews with 300 senior IT manag-
To survive the revolution, service firms of all stripes ers and case material from more than 100 companies in
must start defending themselves, just as their manufac- several countries, as well as analyses of data from the U.S.
turing cousins did a generation ago, by putting them- Department of Commerce, the Bureau of Labor Statistics,
selves through competitiveness boot camp. The work and the U.S. Census Bureau.
ahead will require proactive, far-reaching, often draco- The loss of service jobs is not the result of some whim-
nian changes, focusing on customer preference, quality, sical and unprecedented love affair with the 0 words. Out-
and technological interfaces. Specifically, companies will sourcing and its complement, vertical integration, have
need to rewire their strategies to find new value from ex- been part ofthe standard repertory of business practice as
isting and unfamiliar sources; deintegrate and radically long as there have been shopkeepers. The primary change
reassemble their operational processes; and restructure driver behind the service revolution is technology. For-
the organization to accommodate new kinds of work and get about the information highway, Moore's Law, and
needed skills. In this article, I will suggest specific ways the wonders of wirelessness. Rather, think of technology
that companies can prepare themselves for the dramatic as creating an information assembly line - information
changes ahead. But first, let's take a closer look at the driv- today can be standardized, built to order, assembled from
ing forces behind the service transformation. components, picked, packed, stored, and shipped, all
using processes resembling manufacturing's. Industrial-
ized information becomes steadily more efficient, less ex-
The Industrialized pensive, and more highly automated. The costs of logistics
Information Chain and storage are minimal; only labor and intellectual prop-
To understand what's happening in the services sector, we erty matter.
need only review the transformation of manufacturing in Consider what's happening in one information-intensive
the United States, a bellwether due to its economic heft business, the diagnostic imaging industry. Born in the
and the pace of change it has experienced. In the early 1980s, when CAT scans, radiography, ultrasound, and fax
twentieth century, manufacturing moved from the local machines first came into widespread use, diagnostic imag-
shed to large-scale, mass production facilities. By 1950, ing involved multiple discrete processes and people, all of
the manufacturing sector employed 34% of all workers which were located together, typically in a large hospital.
in the United States. A doctor referred a patient to the radiology department,
Fifty-three years later, the picture was vastly different. where a technologist performed a scan on a machine.
By 2003, manufacturing accounted for just 12% of U.S. The film image passed to the radiologist, who inspected
jobs. In the three years from 2000 to 2003, more than it for anything suspect. The radiologist recorded his or
2 million U.S. manufacturing jobs were lost to offshore her interpretation of the image on an audiotape, which
outsourcing and global competition. Corporations that moved to a medical transcriber while the physical X-ray
showed flexibility and adopted new strategies, such as was shipped to a football-field-size film storage facility.
IBM, GE, and Intel, have survived and succeeded. Com- The transcribed report was subsequently faxed or mailed
panies like Zenith, American Motors, and RCA, which re- to the physician.
mained entrenched in old positions, have gone away. With today's technology, however, the entire process
Many others, like GM and Xerox, are still struggling to re- can be reconfigured. A patient can be scanned at a conve-
cover from past inertia. nient location by a technologist operating a machine out
Service firms are now subject to a similar fate. In a pre- of a storefront or even a mobile trailer. The images can
scient study done for the World Bank using employment be sent electronically to the diagnosing radiologist, who
data from 1990, Uday Apte of Southern Methodist Uni- may be in a clinic many miles away, or directly to the re-
versity estimated that about 10% of U.S. service sector jobs ferring physician. Voice recognition software transcribes
had the potential to be outsourced, moved offshore, or the diagnoses, or the transcriptions can be performed off-
shore. Intelligent software tools are being developed to
Uday Karmarkar ([email protected]) aid in the actual diagnosis, and one day they may even
is the LA Times Professor ofTechnology and Strategy and is supplant the radiologist for certain problems.
the research director at the Center for Management in the Who wins? Certainly the customer, who enjoys greater
Information Economy at the Anderson School of Manage- convenience and lower costs. The outsourced imaging
ment at the University of California, Los Angeles. company enjoys the benefits of economies of scale, easy

102 HARVARD BUSINESS REVIEW

 Will You Survive the Services Revolution?

Choosing Your Industrialization Strategy

Simple Process Complex Process

is important in this segment. Firms delivering stan-
dardized services using simple processes (retail bank-
automation
insourcing, onshoring ing, data management, telemarketing, billing, and so
self-service
Customized deinteg ration, decoupling on) will want to look at outsourcing or offshoring all
Service end-to^nd service
selective automation or some of these services to cut costs. But a key strate-
captive offshoring
selective outsourcing
selective outsourcing gic direction for them will be to provide complete,
end-to-end services in a one-stop shop. These areas
ofFshoring, outsourcing captive offshoring may see global competition, and companies must not
Standardized globalization in-house automation only defend against it, but must globalize themselves.
Service one-stop shop selective outsourcing Businesses whose processes are complex and require
end-to-end service globalization customization (such as personal financial planning,
expert medical diagnosis, relationship marketing,
engineering, and design) will want to keep their work
THE STRATEGIES that service Organizations select will in-house and localized, but focus on decoupling and
depend on the work they do and whom they serve. deintegrating their processes and selectively automat-
Companies whose business processes are relatively ing or outsourcing where feasible. Finally, companies
straightforward but tailored to customers'specific whose work is standardized yet whose processes are
needs (retail sales, Web design, travel and tourism, complex (credit analysis, technical research, content
and technical support, for example) should consider management, software development, routine medical
shifting portions or all of their businesses toward diagnosis, tax preparation, and so forth) should con-
automation, self-service, or providing end-to-end sider captive offshcring, capitalizing on their exper-
services; they may also want to consider outsourcing tise through in-house automation, and outsourcing
those portions of their businesses that are not very selectively where they need to fill capability gaps; they
profitable. They might want to think about opening may also want to think about globalizing their busi-
their own plants or offices overseas (captive off- nesses, especially if they have unique expertise with
shoring), since keeping close tabs on the customer complex processes or have automated such processes.

maintenance, and volume purchasing. Who loses? The (For more on the global movement of service jobs, see the
transcribers and all but the very best radiologists. Hospi- exhibit "Mapping the Service Migration.")
tals, too, lose revenue, though they save some money by The industrialization of services raises critical ques-
outsourcing a complex service. tions that executives in service organizations must ask
Thus we see that the same phenomena that forever themselves: What is the potential consequence of reorga-
altered services like simple data entry and credit card pro- nizing our business proposition? How would a redesign
cessing are now affecting more interactive, complex busi- and commoditization of our service affect different play-
ness services (IT, market research, and content manage- ers in the information chain? Is there an opportunity for
ment) and administrative work (accounting, tax returns, us to become involved in a new area? What could realis-
data management, billing, and customer services). Other tically come to pass for our sector? How can we remain
information-intensive fields such as engineering, man- relevant and competitive in a transformed industry?
agement, publishing, financial services, and education are To avoid the fate of many manufacturing companies,
not far behind. As technology turns information services service firms must reject business as usual and face up to
into industrialized components on an assembly line, jobs the fact of change. They should take a good, hard look at
will become ripe for the plucking by global competition their strategy, beginning with a careful scan of their own
and offshore outsourcing. Meanwhile, jobs in the physical end-to-end information chain. Eor just as mastering the
services - nurses, construction workers, bricklayers, jani- supply chain is key to achieving manufacturing efficiency,
tors, restaurant and hotel workers, mechanics, and so o n - having command of the end-to-end information chain will
will remain localized and buffered from the disruption. give service firms a competitive advantage. In particular.

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W i l l You 5 u r v i v e t h e Services R e v o l u t i o n ?

companies can race ahead ofthe competition by focusing Where should service companies begin to look to gain
on the neglected or overlooked links in the chain. They a competitive edge? They should start with customers -
should gather helpful hints from their customers, who particularly underserved or poorly served ones. Though
are clamoring for greater choice, more control, lower cost, we all know that customers want companies to anticipate
higher touch, and higher-quality service than they are cur- their needs, doing so is particularly important for service
rently getting. firms. That's because the mechanics of consumer behav-
ior play a much bigger role in information chains-where
customers are directly involved in service processes-than
Reconnecting the Customer they do in supply chains. By taking apart an information
As technology affects the basic economics of service in- chain-deintegrating it-we can see all kinds of opportu-
formation, the balance of power and the distribution of nities for enterprising firms.
profits in an industry can change quite radically. Creative Customer Behavior. Companies that spend time and
destruction is the name ofthe game. A clever change that money in understanding customer preferences and devel-
one company makes from seemingly far away can ripple oping specific services for niche customers will do well.
through the system, leaving formerly large players in de- This becomes even more important as firms move ail or
clining backwaters. some portion of their businesses to the Internet.

Mapping the Service Migration

WHILE STILL MiNiscuLE in absolute terms,

global trade in data and knowledge is
growing rapidly. Surprisingly, this infor-
mation trade does not follow the pat-
tern of manufacturing trade. Instead, it
echoes the older paths of colonialism.
The reason? Language and culture
rather than economics play a powerful
role in the migration of information-
intensive service jobs.
Manufacturing work has tended to
migrate from countries with high labor
costs to those with low costs, regardless
of cultural or linguistic differences. But
in information industry sectors, lan- The language footprints of English-, Spanish-, and Chinese-speaking countries
guage barriers may well remain hard show the different opportunity levels for service trade for each language group.
to cross for many years, especially in
English El Spanish •Chinese
consumer services. Thus, the informa-
tion trade will occur primarily between
countries with linguistic and cultural group, the income distribution is less largest linguistic group in the world,
similarities. The greatest opportunities extreme, the majority of countries for instance, China's language, culture,
will be in linguistic groups whose being relatively poor. That means fewer and income distribution is confined to
wealth distribution is highly bimodai. companies (in Spain, primarily) are the Asian continent. For those reasons,
For example, the English-speaking looking to outsource services offshore, China will probably not be a big global
world contains some ofthe most devel- though the supply of poor Spanish- player in the information-based service
oped economies {the United States, the speaking countries in Meso and South trade. Ironically, linguistically isolated
UK, and Australia) along with some of America able to provide the services is countries like Italy might be spared
the poorest (India and Pakistan); the plentiful. some ofthe intense competition - and
poorer countries have opportunities At the other end of the service trade the attendant job losses-ofthe global
to supply services to the richest in the spectrum are countries with languages service world. Given the current pres-
group. Among Spanish-speaking coun- that are geographically and economi- sure on Italian manufacturing sectors,
tries, the world's third-largest language cally concentrated. Despite being the this could be a welcome respite.

104 HARVARD BUSINESS REVIEW

 w i n You Survive the Services Revolution?

One company that has done a good job of understand- repair - that bedevil us all. Financial services firms are
ing consumer behavior while maintaining a unique niche jockeying to offer the customer the complete financial
is Edmunds.com. Founded in 1966, Edmvmds Publishing supermarket. The lesson for service companies is that in-
once sold a well-known series of books aimed at pur- stead of competing over individual links in the chain, they
chasers of new and used cars. Today, Edmunds's publish- should compete for the chain itself, which gives them the
ing business is secondary. Instead, the firm operates an in- maximum opportunity to find areas of profit.
teractive Web site that is a complete information
source for car buyers. In making the leap online,
Edmunds.com hired consumer psychologists to Information today can be standardized,
study the behavior of Web surfers and experi-
mented intensively with Web design and layout. built to order, assembled from components,
While its early sites would have never won awards
for fiashy design, they were carefully constructed picked, packed, stored, and shipped.
to respond to customer preferences for simplic-
ity, ease of use, and customization. Accordingly, over the As competition increases, customers expect service
years, the company has accumulated dozens of awards firms to anticipate their needs and deliver on them more
from organizations such as J.D. Power and Associates. than ever. Some hotels, for instance, do everything possi-
Demographics. Firms should find ways to serve grow- ble to keep repeat customers from having to ask for any-
ing but neglected populations. Consider the case of Wells thing. Everyone from the limo driver to the housekeeper
Fargo Bank, a pioneer in online banking. Since just about knows what newspaper you read, what wine and snacks
every competitor has followed Wells Fargo onto the Web, you prefer in the minibar, and how many pillows you like
the bank is now trying to differentiate itself by experi- on your bed. (For more on using technology to anticipate
menting with some unique programs in the physical customer needs, see "Diamonds in the Data Mine" by
world. For example, in its West Coast strongholds, the bank Gary Loveman in HBR's May 2003 issue.)
has created services tailored to the Hispanic community. Delivery to Screens. In the wired world, the informa-
lntercuenta Express accounts make it easy for customers tion chain ends in an appliance or tool that directly af-
to transfer money to banks in Mexico, and the matricula, fects consumer behavior. PDAs, phones, TVs, personal
an ID card issued by the Mexican consulate, is accepted as computers, and various other boxes and screens will com-
proof of identity to open an account. Wells Fargo even has pete for the customer's attention. Customers will expect
a program for Hispanic customers to host dinners at local anywhere, anytime access to information; simple, possibly
homes to introduce the bank to neighbors, rather like a voice-activated, interfaces; and customization, personal-
Tupperware party for banking. New customers are flock- ization, responsiveness, and flexibility. As telecommuni-
ing to the bank. It opens roughly 22,000 accounts a cations providers, appliance makers, operating systems
month in this underserved demographic. companies, and Internet service providers intensify their
Keeping the Ball in Play. Taking apart and reassem- fierce battle for control of the customer, service compa-
bling the information chain causes some companies to nies have an opportunity to dominate the screen and the
lose touch with their customers. Firms that outsource cus- appliance closest to the customer. The design of the ser-
tomer service, in particular, tend to lose sight of the client. vice and the interface, rather than the appliance or the
Most of us have experienced the sense of disconnection technology, is what confers success.
and helplessness brought to us by myopic companies that One company that has captured the strategic ground-
have tried to save money by outsourcing their call centers, at least in one country-is NTT DoCoMo in Japan. NTT
billing, or e-mail communications. Companies that focus DoCoMo understands how to deliver information to the
on delivering responsive and error-free service will have customer in just the right way. Introduced using a miserly
a competitive edge. Dell, for example, has chosen to re- communication rate of 9 kbps, its iMode handheld device
turn some customer service operations to the United is more than just another mobile phone service. It offers
States from India because corporate customers have a range of low-priced services, including Internet access via
protested against handoffs. NTT data networks and iMode servers, and thus access to
End-to-End and Personalized Service. Customers will a variety of services and content. iMode currently has more
increasingly seek to purchase from firms that offer end-to- than 40 million subscribers. A significant part of iMode's
end service. Companies like Virgin Atlantic Airways, revenue comes from content sold across the iMode plat-
which provides business-class ticket holders with compli- form. Banks and online magazines, for instance, pay for
mentary limousine service and "drive-through check-in," favorable placement of their content on the iMode screen.
have the right idea. Recent years have seen the grovd:h of NTT DoCoMo uses its appliance to claim a dispropor-
hundreds of concierge services that attempt to take on the tionate degree of power and control over other players in
myriad daily tasks - shopping, laundry, yard work, home the information chain, much as Microsoft's hegemony

JUNE 2004 105

 You Survive the Services Revolution?

over the desktop PC operating system allows it to dictate formation, as well as being a leader in scientific and tech-
office computing rules. Other winners in the future will nical data, learning, and assessment.
be those companies that bring experiential and intuitive In this example, we see what happens as new technol-
solutions, along with bundles of services and content, to ogy changes the relationship between sources, services,
screens, interfaces, and appliances. channels, and customers. In Thomson's markets, speed
None of these suggestions pretends to offer a final trumps professional knowledge and processing. Many
remedy. But it's clear that service companies should focus tasks shift to the customers as self-service. Professionals
their efforts on overcoming the feeling of disembodiment lose status and control. Operations and technology be-
and depersonalization that technology has created be- come more centralized, at least temporarily. And as the
tween companies and customers. service becomes commodltized, competition intensifies,
and differentiation grows vital.
Redesigning Processes. As the services revolution pro-
The R Words: ceeds, not only will all companies have to understand
Realign, Redesign, Restructure their information work processes, but they will also want
The company that best understands and anticipates cus- to examine each stage ofthe process: Should it be per-
tomer needs, delivers consistently high-quality service, formed at headquarters or in the field, nearby or offshore,
and connects to the customer via the channel of choice in-house or in some far corner ofthe globe? Processes, in
wins. To meet those challenges, top managers must put other words, will need to be much more specific and care-
themselves through competitiveness boot camp, revamp- fully managed than ever before. In most cases, processes
ing their company's strategy, operations, and organiza- will need to be closely synchronized with those of other
tion in the process. firms as well as with customers, who may routinely col-
Realigning Strategy. In attempting to link with cus- laborate and participate in producing output.
tomers directly, firms will need to overhaul their offer- Los Angeles-based IndyMac Bank, a pioneer in elec-
ings, cost structures, and competitive platforms to align tronic banking, is becoming an online mortgage "factory."
with the shortened information chain and with the chang- The company views the back-room loan origination pro-
ing demands and behavior of their customers. cess as one of information assembly followed by credit
Consider the legal publishing divisions of Thomson, a analysis, underwriting, approval, and closing, in which
global publishing giant. In the days before electronic pub- some 15 discrete parts are brought together into a fin-
lishing, the company printed and distributed paper-based ished product. [ndyMac has distributed some of these pro-
information about U.S. court decisions, new bills, and cesses to different points in the United States; some cus-
amendments. As courts started to publish material elec- tomer contact processes are slated to move to call centers
tronically, the role of the publishing firm began to be abroad. Other back-room processes, such as credit analy-
called into question. Understanding sis, are partially automated. More
that it did not own the legal intellec- complex and judgment-based aspects
tual property, Thomson redesigned of analysis, such as underwriting and
itself into an information packaging acceptance, remain with experts in
and shipping company-an organiza- the United States. All these processes
tionally far-reaching and painful ef- are sewn together on the back end.
fort spanning a decade. Rather than On the front end is an automated,
operating parallel and distinct prod- rule-based platform called e-MITS,
uct lines, the company chose to focus which allows customers and brokers
its operations around central elec- to apply for mortgages online and
tronic document databases; software automates certain tasks of applica-
systems took over tasks from index- tion evaluation, risk-based pricing,
ing to citation. As a result, a whole and rate-lock guarantees.
slew of new specialized products When a customer applies for a loan
could be sliced, diced, and priced out online, the software ensures that all
of the database. While Thomson re- qualifying requirements are met. If
duced its need for lawyers and legal some information is lacking, the soff-
professionals, it added to the ranks ware informs the customer. Prompt-
of technologically savvy and opera- ing customers to input the correct in-
tionally oriented managers. Today, formation greatly reduces work for
Thomson is positioned as one of the IndyMac and avoids multiple itera-
world's dominant electronic publish- tions ofthe application. The clients,
ers of legal, tax, and accounting in- in tum, receive responses in minutes

106 HARVARD BUSINESS REVIEW

 Will You Survive the Services Revolution?

rather than days. As a result of IndyMac's effort to stream- global service delivery, and so on. Second, technology ex-
line the mortgage process, its yield on underwriting loans perts will need to be distributed throughout the organi-
has leaped from 30% in 1993 to more than 80% in 2003. zation, rather than concentrated in a separate IT group.
An adept firm like IndyMac looks quite different from Third, managers of vendor and partner relationships will
the traditional service firm in terms of people, processes, have a significant place in the new structure and will need
and procedures. But overhauling a traditional service de- to learn to deal with new global allies and organizations.
sign is no one-shot, onetime deal. Because technological Finally, because the employees of the new service com-
and infrastructure changes, competition, and industry re- pany may be spread across the globe, management will
structuring are ongoing, service companies need to con- have to adapt to a more diverse workforce. Some of this
stantly experiment and fine-tune their systems if they are is not new to multinational companies. But it may well
to negotiate these changes in a sustainable manner. be very new to traditional service organizations.
Restructuring the Organization. Reorganization of pro- Service firms wilt want to consider hiring executives
cesses necessitates organizational change. Already, online capable of dealing head-on with the increasingly rapid
banking and ATMs have displaced tellers, and e-tickets change that the sector will experience. Managing changes
and automated check-in machines are forcing travel in the executive ranks will be painful, however, since ex-
agents and airline counter personnel to find new jobs. perience can become a liability when the future is likely
But such automation just substitutes technology for peo- to be far different from the past. Many senior managers
ple. Deeper changes are necessary, and leaders will need will be slow to releam how their industries work and will
to constantly redesign their organi-
zations to adapt to new conditions,
while ensuring that the customer
does not get lost in the process.
Instead of competing over links in the chain, service
How can a service company deal- companies should compete for the chain itself.
ing with industrialization realistically
create such an adaptive learning or-
ganization? One common approach is to call in consul- find themselves sidelined. The more flexible the manager,
tants to provide suggestions about the kinds of capa- the better his or her chances of survival. One suggestion
bilities that need to be added. This is not a bad first step, is to hire executives from global manufacturing compa-
but it only works for relatively simple situations. Ongoing nies who wear the scars of the competitiveness wars, as
change management requires internal capabilities. An- banks and utilities did when they tapped managers from
other short-term fix is to shift from individualized job re- deregulated firms.
sponsibilities to a team-based structure - that is, to focus
executive teams and task forces around key issues rather The industrialization of services is here, and outsourcing
than around functions. But over time, this approach is and offshoring are only part of the revolution. Automa-
hard to sustain, because individual performance is harder tion, customer self-service, and global competition have
to identify and responsibility gets diffused. been added to the mix, presenting a threat and a signifi-
A radical, but more sustainable, approach is to build cant opportunity for all service companies. The churn, re-
the organization around the restructured information structuring, and transformation of services will continue-
and value chain. The front office takes responsibility for and even accelerate - for the foreseeable future. Though
the customer experience; the back room handles internal the changes will not be accompanied by significant un-
processes invisible to the customer; and a third organi- employment except during a painful transition period,
zation is responsible for dealing with partnerships (sup- they will certainly mean a radically different landscape
pliers and coproducers). Alt three are likely to be in con- for companies, managers, and workers.
stant flux. Most important, these three groups can and In the end, the survivors of the service revolution will
should overlap; flexibility and constant communication be those who understand that opportunities lie in remov-
among them are critical. Like task forces, these groups ing and supplanting links of the information chain and
have to be able to live with some fuzziness in their task also in understanding how the chain is being restruc-
definitions and be willing to share responsibilities with tured. Once they understand their own information
other groups. chains from end to end, companies must begin reorga-
What kinds of new skills will companies most need? nizing strategies, processes, and people for the challenge
First, they will want to make sure they understand the im- ahead. Surviving competitiveness boot camp will be dif-
pact of new technologies, strategies, and channels on cus- ficult, but the alternative could be disaster. ^
tomer behavior. Management teams may need to include
skilled managers in new areas-a chief experience design Reprint R0406G
officer, a director of experience engineering, a chief of To order, see page 139.

JUNE 2004 107