What do companies need to do to thrive and succeed in the 21st century? Top executives from six highly successful companies recently addressed this question at the New York Carriage House, a building formerly owned by the Rockefellers, a family that knew how to make money in their day.
The evening was organised by Wired magazine to coincide with the first anniversary of the Wired Index Fund.
Last year, Wired chose 40 companies to be part of the fund because it believed they were the ones poised to transform the new economy.
Some 50 per cent of the companies in the fund are in technology and telecommunications. The six speakers on the panel came from companies represented in the Wired Index.
The best performing company on the Wired Index was EMC Corp. A company that Business Week magazine calls "one of the hottest growth stories of the hot-growth 1990s".
EMC provides intelligent enterprise storage systems, software and services. "To thrive, all companies need to be makers of information management and continual reinvention," said Michael Ruettgers, president and CEO of EMC Corp.
Under his leadership, the company has grown from $400 million (€378 million) in 1992 to become a $4 billion Fortune 500 global enterprise. He pointed out that the rate of change inside a company should move faster than the rate of change outside.
He said EMC's success came because it moved from minicomputers to mainframes; from mainframes to open systems; from open systems to enterprise storage; from enterprise storage to enterprise storage networks.
With the Internet, said James Morgan, chairman and CEO of Applied Materials, another Wired Index company, there are no longer time zone advantages or intellectual gaps.
He said: "The old rules of the economy apply less and the rules have changed for how a company interacts with its partners and customers".
Mr Morgan received the 1996 National Medal of Technology for building Applied Materials into the world's leading manufacturer of semiconductor materials. He was named "International Citizen of the Year" by the World Forum of Silicon Valley.
"Our business and customers have taught us to be resilient to change and more open to the realities of the new economy," said Mr Morgan. "Leadership companies will have to develop new rules." Being global, he said, is rule number one. Some 65 per cent of Applied Materials' sales are from outside of the United States, half of which are in Asia.
The new economy is paved with uncertainty, he said, which means there is less time for correcting errors and no time for hesitation. Rule number two is "to create an organisation that is lean and fast."
The new economy is a free market of ideas, and so, said Mr Morgan, an organisation needs to be collaborative and decisive.
"The new economy is knowledge-based. Surviving does not mean abandoning traditional principles," he said. "These companies will succeed because they're built to last and change. They have a clear vision, focused mission, shared value, sense of history and deliver with speed, resilience and courage.
"Choose your own future and then transform yourself completely, was the advice from Ronald O'Kelley, chief financial officer and executive vice-president of State Street Corporation, the 207 year-old firm that started as a bank and now has transformed itself into a technology company. Jordan Graham, managing director of the Internet Business Solutions Group at Cisco Systems, said: "We at Cisco believe the Internet will affect how we play, work and learn." Underlying the technology that powers the Internet are routing networks from Cisco, a company that is growing by 40 per cent to 60 per cent a year and recently announced a two-for-one stock split. Since 1993, Cisco has acquired 30 companies and has put minority investments in many more. Now 75 per cent of its orders come through its Web site and 50 per cent of orders are shipped without touching any Cisco employees hands. "We leverage innovation internally and externally," said Mr Graham. "We're the model for the Internet economy."
Andrew Nibley, president of Reuters New Media, got some lucky breaks when he co-founded the Reuters venture capital subsidiary in January 1994.
He bought stakes in Yahoo, Infoseek, Sportsline and Verisign which, he said, "did well".
Reuters New Media, which was established to explore new markets and technologies, is investing in two companies a week. Mr Nibley said that for a British company that was virtually unknown in the US, its number one quality was persistence.
Now 31 per cent of all Internet users recognise the Reuters brand. Federal Express's original premise was to move electronic and computer parts, said Frederick Smith, chairman, president and CEO of FDX Corp. "We didn't start to do express mail until after seven years of operation."
FDX is a $17 billion global transportation and logistics holding company, formed in January 1998 when Federal Express acquired Caliber System. The FDX companies operate in 211 countries, with 145,000 employees who handle five million shipments a day. With 625 aircraft, Federal Express has the second largest fleet in the world, after American Airlines.
Mr Smith said the company developed a V3 strategy to stand for vision, value and virtual. The vision was to develop a global air to ground network; to add value to customers; and to integrate its information systems.
It was the first transportation company to put in call centres, to have real-time pick-up requests, to deploy a wireless network, to put computers in its courier vans and to have hand-held computers for delivery staff.
"Our competition has taken five years to emulate us," he said. Two-thirds of its transactions are electronic and done on-line today. The Fedex website handles 900,000 page views each week-day. The company invests $2 billion a year on information technology and employs 7,000 in IT alone.
While Mr Smith conceded the US's dominance in IT, he said, "the rest of the world will get it and make it hot for all of us. You can already see the emergence of it with software and manufacturing companies in Scotland, Ireland and Germany."
