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talking with Donna Hoffman

Ubiquity, Volume 2000 Issue March, March 1 - March 31, 2000 | BY John Gehl 

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UBIQUITY: What do you consider special about your program?

DONNA HOFFMAN: eLab is unique because of our three-pronged mission, including the scholarly study of the Internet commerce opportunity, the dissemination of those ideas into the academic community, and the influence of e-business practice. In the six years since we launched our corporate-sponsored research center, we've worked with a wide variety of companies from Internet start-ups to Fortune 500s on the cutting edge business issues they face as they struggle to develop effective "dot-com" strategy.

This practical work complements the research we do and vice versa -- and gives us a chance to see our ideas put into practice. It also makes our teaching come alive because we're able to bring real-world experience into the classroom -- and then take the academic work back into the firm. So we have an important never-ending feedback loop. We think this is a very successful model for a research center focused on the Internet opportunity. Additionally, we believe that e-commerce research must be multidisciplinary to succeed. For us, this has translated into a deep interest in the policy implications of commercializing new media, including issues of privacy, anonymity, rights of consumer data ownership, and ethics. Many traditional marketers have not carefully considered these issues in the past in the context of developing a successful strategy. But in today's world, they cannot be ignored.

UBIQUITY: What are you looking for in your MBA students?

HOFFMAN: Well, that's a good question, because I think what we're looking for is probably broader than what the traditional IT manager in the past has been. Which means that we're looking for people who not only have the technical skills and background but who can think strategically; who can develop business plans; and -- most important -- understand the importance of marketing in moving the organization ahead in the emerging economy.

Our students do not necessarily come with technical undergrad degrees. On the other hand, since they have, on average, about four and a half years of work experience before they come to us, many of them have had Internet experience. That is, they've actually worked for companies where they've had some role in developing an Internet strategy.

UBIQUITY: And are they given a good reception when they return to the marketplace after finishing your program?

HOFFMAN: A phenomenal reception. They are getting anywhere from four to six job offers each. The starting salaries are much larger on average than the starting salaries for traditional MBAs, and they can pick any kind of job they want. There are more companies looking for MBAs with e-commerce training, than there are MBAs with e-commerce training. So it's a very hot market. It's hard to imagine that for years and years to come there won't be a demand for individuals who know how to help organizations compete in the digital economy. What will happen is that the Internet will continue to become integrated into the very fabric of the way a company goes about conducting business. So these kinds of people who have these skills will become even more important than they are today. The issue of demand and supply is going to get a lot worse before it gets better, because we cannot turn these students out fast enough. And then, on the other side of it, we don't have enough e-commerce professors to teach the courses, and train the students, and do the research that companies can use to understand how things work in organizations. So, I think we've just seen the beginning.

UBIQUITY: What should older professionals be doing to compete with your students?

HOFFMAN: In my experience, older executives at traditional firms -- typically meaning males in their 50s and 60s -- often don't have significant Internet experience. And, so, I think one of the most important things we recommend to executives we're working with is that they have to get online themselves. You would think that all these people would already be online but, surprisingly, they're not.

UBIQUITY: Is it because they resist it?

HOFFMAN: Well, they used to. I think as recently as two or three years ago there was enormous resistance in the executive ranks of traditional firms. But I think that resistance has largely fallen away, because it would be hard now to find an executive who didn't think the Internet was important for his business. So, I don't think it's a resistance issue anymore, but I still think there are barriers -- there are psychological barriers, there are experience barriers. And I think it's hard to convince executives sometimes that this is something that they personally need to do. But if involvement with the Internet is not coming top-down, the organization is going to have a more difficult time moving ahead, because the Internet is a phenomenon that has to be individually experienced. Otherwise, there's just no way you can get it.

UBIQUITY: What have you found most surprising about the way e-commerce has developed?

HOFFMAN: What I've found most surprising in the course of doing research is how many people still don't get it. That continues to amaze me.

UBIQUITY: In what sense?

HOFFMAN: Well, in the sense that you still find pockets of people who have very traditional views, and who think that the Internet is just a fad and somehow going to go away. They may concede that there's something going on here, but they still don't sense, or believe, that this is a revolution that is going to radically transform society.

UBIQUITY: How far do you go in the contrary belief? Do you think "bricks-and-mortar" companies will all go away?

HOFFMAN: Oh, no. In fact, the bricks-and-mortar companies are perhaps the best-positioned to really take advantage and reap the benefits of the digital revolution. Because it's clear that the ideal strategy is one in which consumers can do their processing and decision-making online, do their ordering online, do all the stuff that makes it more convenient online ... but still have opportunities to go into the store, either to pick things up or to return things. So those companies that actually have that presence already should be better positioned. That being said, it doesn't mean that traditional companies all necessarily agree with that or understand how to leverage their positions, or even how to implement those integrated strategies.

UBIQUITY: What do you think will happen to the people who don't get it?

HOFFMAN: They'll be out of business.

UBIQUITY: You think so?

HOFFMAN: Absolutely.

UBIQUITY: Even considering the fact that you're not the only person who's telling them that they better get it? That they're even probably tired of hearing it? You think they still won't mend their ways?

HOFFMAN: That's right, I'm definitely not the only person who's telling them they need to get it. But there's a magnitude problem. There's a lot of thinking that's just completely wrong, a lot of it. Wrong headed, and absolutely stupid. For example, there's a shopping mall that tried to deal with the Internet this last Christmas season by not allowing its merchants to put signs in their own stores to tell their customers how to find them on the Internet. They wanted to prevent merchants from putting a sign in the window saying: "Come visit our Web site at http." What were the mall owners thinking! I frankly never heard of anything so stupid.

UBIQUITY: The mall owners realized that soon enough, and backed off pretty quickly.

HOFFMAN: But those kinds of ideas are crazy, and there are plenty of examples of that kind of thinking by executives who just don't "get" it. So I think the most exciting strategies in this decade will be solutions to the question of how do we integrate the different facets of our business to become one seamless operation so that we can satisfy consumer needs wherever consumers might happen to be?

UBIQUITY: You used the word "strategies" in the plural, of course, indicating that this is not just one generic strategy of "Get on the Internet" but something more complex. It's more than just getting an AOL account, right?

HOFFMAN: Right. I think it depends on what kind of business you have -- whether you have physical goods or if you're strictly in the information or digital goods business. Because, right away, those call for very different strategies. It also depends on whether you are an existing business, and you have a bricks-and-mortar presence. That is going to require a very different kind of strategic thinking than a business that has just sprung out of whole cloth in the last year or so, and doesn't have to worry about upsetting all of those previous relationships -- the usual channels of distribution or the traditional channels of distribution.

UBIQUITY: How can you tell a good Internet strategy from a bad one?

HOFFMAN: One of the things that is revealed of a strategy is what the Web site looks like, because the Web site is the realization of the strategy, it's how they communicate with customers. I think it's safe to say that most of these are not very good. In fact, I think there are fewer good ones than there are bad ones.

UBIQUITY: What makes them good and what makes them bad?

HOFFMAN: The thing that makes them good is an understanding that for the first time in the history of communication media and in the way we think about marketplaces, the Web is a marketplace in which consumers are active participants and actually can contribute content to the medium, and they're actually in more control than they ever were. And the sites that I think are particularly good are the sites that recognize that principle, and give consumers that control.

 You know, I can decide what I'm looking for as opposed to the site or the firm telling me here's how we will structure the information for you, and here's how you will be forced to go through some sort of hierarchy or structure to get to where you need to go. And most sites actually are of this latter type where they have a preconceived idea -- particularly sites that already have stores or already have businesses. They tend to think of their businesses online in much the way they think of them off line. And I think that's a mistake. They certainly ought to, at a minimum, allow interactivity with their customers. Which means they need to be able to engage them in a meaningful interaction in order to develop a relationship.

UBIQUITY: And this means what, for example?

HOFFMAN: It means it should be easy for customers to send them e-mail. And it means that those customer e-mails need to be answered. There are still many firms that don't respond to customer e-mail, which is amazing to me. Beyond e-mail (though this is more controversial) companies need to think about allowing customers to talk about the company or its products. Things like this have to be carefully managed of course, but they're all vital, because one of the most important features of the new medium is this idea that users can be providers.

I think it's also important to recognize that the Web site is an alternative view, an alternative reality. It is not as if there's the real world, which somehow is the better world, and then there's the fake world, the virtual world, which somehow isn't as good or is a poor substitute. But, in fact, that there are two different alternative realities which both have validity and meaning.

UBIQUITY: What does it mean to have these alternative realities?

HOFFMAN: It means that, in just the same way we would think about trying to design the best possible physical store or shopping experience for consumers, so we have to think about our Web site as the best possible online store that we can develop, so that it creates a compelling experience for our customers. And I don't know about you, but I spend a lot of my time online and there are very few compelling environments.

UBIQUITY: Can you think of an online environment that you think is wonderful?

HOFFMAN: Well, I think it depends. There are several that I think are wonderful and it depends on the particulars -- such as your state of mind and your goals. But one that I thought was particularly good until recently, though I now find it becoming increasingly cluttered and confusing is, Amazon.com. I think that Amazon has done a very good job of satisfying the criteria I've talked about. They've created a compelling online environment for their customers. In other words, it's a place you can really go and shop. You can browse; you can check things out; you can compare things. I mean, you can have a wonderful time online on that site, or you can just get in and get out. And, so, I think that site really meets a lot of different needs. It also allows consumers to have control because from any point, anywhere, and anytime, you can always look for what you need in the way that you need to look for it.

UBIQUITY: What other sites do you especially like?

HOFFMAN: There's a new site, www.Sephora.com, which is about cosmetics and is interesting because the company had a physical store, and made its name in physical retail. And they are known for having a very compelling physical presence. Their stores are really breathtaking, and the layouts are very striking. They look almost like upscale grocery stores the way all the products, and the cosmetics, and the beauty aids, and the goods are all laid out on shelves and in baskets. Everything's color-coded, and the people that work in the stores all wear black and wear headsets. It's just a fabulous shopping experience. Very compelling.

You certainly can't go anywhere near recreating that on the Web, but their Web site does something very different that's appropriate to the online environment, and it's beautiful in its own way. It's compelling; it's easy to use; it's very exciting. So I think that's a nice example.

UBIQUITY: And one final one.

HOFFMAN: Well, one of my favorites -- which I don't think is that popular for travel sites, but I think really gets the job done -- is the Internet Travel Network: www.itn.net. It's very popular among true road warriors like us. Those of us who really need to get around use that site because it understands how you need to look for things. It doesn't have a lot of clutter, and doesn't have a lot of ads junking up the space. It's very quick loading, it's very easy to navigate, and it allows you to browse. I think it's a wonderful site.

UBIQUITY: Let's change the subject from traveling to staying home, and staying home for you means running the eLab at Vanderbilt's Owen Graduate School for Management and e-Commerce, with Tom Novak as co-director. Tell us about your work at Vanderbilt. What are subjects of a couple of recent dissertations?

HOFFMAN: One recent student who's now at Rutgers as an assistant professor of Internet marketing did her dissertation studying online advertising effectiveness, and was able to model the log files from a very popular online content site and look at the relationship between the visits and exposure to ads and ad effectiveness.

Another recent student who's now at the London Business School as an assistant professor of organizational studies, did his work with us studying how managers within organizations thought about new technology and change in the environment, and analyzed what role their attitudes played and how the organization fared.

I don't want to call those dissertations "typical" because we're still a new program and only now are we seeing students starting to do this kind of work. But, I think those are the sorts of problems you can expect to see people working on.

UBIQUITY: Explain eLab, and tell us where people can go to find out more about your academic and research programs.

HOFFMAN: They should look at http://ecommerce.vanderbilt.edu/. As for eLab, it's a corporate-sponsored research laboratory devoted to the study of electronic commerce. Since we started it in '94, we've raised over $1 million, and have worked with more than 25 firms from Internet startups to Fortune 500s. And we work with companies on the cutting-edge issues that their businesses are facing, and our research is integrated into the MBA program. The work we do with the sponsors allows us make sure our research is relevant to what's going on in the real world.

UBIQUITY: Is eLab different in any way from typical research labs?

HOFFMAN: Well, yes. Most research centers at academic institutions do a conference every year for their sponsors, they put out a newsletter -- that kind of thing -- and they try to retain sponsors. In other words, they do whatever they can to get their sponsors to stay around for a long time and continue to support the center. We have a much more dynamic model. We don't do conferences. We don't have newsletters. We kick our sponsors out after a year..

UBIQUITY: This is the way to survive?

HOFFMAN: For us, yes, it is. Each year we have a pool of applicants -- potential sponsor companies that literally apply to be considered to become the eLab sponsors and work with us and our students. And we evaluate them according to the problems that they have, in terms of whether their problems represent cutting edge e-commerce issues and fit with our areas of research expertise, and whether they're a good fit for us and we're a good fit for them. We pick four to six of them each year and we work on those projects with those companies, and then we get a new set the next year. And what that allows us to do is it gives us a wide variety of both depth and breadth of experience. So that we're always sure we know what's going on in many different industries, all different kinds of problems, at all different points in time. And we found that to be very successful.

But our big problem now is managing growth, just like it is for startups. There's just no way we can meet the demand from all the companies that we would like to work with and would like to work with us. We would really like to work with all of them, but there are only so many hours in the day.

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