Competing in Time

The Management Opportunity and Responsibility

When do we lead, when do we follow the leaders in using new technology or applying existing technology in new ways? This question becomes critical when technical risk becomes business risk, and vice versa. Investing in telecommunications is inherently a business gamble. The technology is expensive, rapidly changing, and complex. The stakes increase as traditional marketplaces are changed by electronic delivery, as new markets open up, as some firms use communications successfully to reposition their business, and as others succeed only in creating expensive write-offs on the income statement. When a firm leads, it is betting on an unproven business idea and often on unstable technology. When it follows, it is betting that it will be able to catch up to the leaders.

Given the past gaps between promise and reality in such areas as home banking, office automation, expert systems, debit cards, videotex, videoconferencing, or on-line information services, most senior managers are skeptical about geewhiz technology. They prefer to wait a little and let someone else prove the market is there. What can they do, though, when a geewhiz business idea, based on proven technology, turns out to be a winner? The technology creates a barrier to imitation. Since catch-up time is measured in years, the firms that lack the telecommunications base are locked out.

"When do we lead, when do we follow?" can be rephrased as "What telecommunications infrastructure do we need in order to respond to opportunities and lead the competition, or if we must follow, in order to follow fast?"

THE COST OF FOLLOWING TOO FAR BEHIND

There is ample evidence from many industries that following is actually more risky than at least keeping very close to the leaders.

Banking.

In banking, not being able to provide automated teller machines (ATMs) is like not giving customers checkbooks; yet, as late as 1982, many banks were not convinced that ATMs would be profitable. In international corporate banking, leading firms held back from following the lead of Citibank in building a global electronic delivery base. They saw cash management, electronic funds transfer, and foreign exchange trading as separate services. As they automated them, they built independent and incompatible communications systems, instead of focusing on creating the multiservice system onto which a growing variety of services could be added at low incremental cost. They are now wishing they had had a master plan and blueprint earlier.

A June 1987 report from McKinsey and Company and Salomon Brothers points out that "to compete and thrive during the remainder of this decade and throughout the 1990s, banks must integrate the various elements of electronic banking." Citibank is far from playing the hare in the banking race and much of its recent dominance of its industry reflects its willingness to experiment and take risks in the 1970s. The report said that Citibank's 1985 expenditures of $900 million far outpaced runner-up Bank of America, whose estimated expenditures were approximately $500 million-much of which was catch-up expense.

While a large information technology budget helps, several smaller banks have increased profits by forging ahead of the pack. Examples are Banc One Corporation with its credit and cash management account processing, First Wachovia Corporation with its student loan processing, CoreState Financial with its ATMs and point-of-sale terminals, and Bank of New York with its mutual funds. The main element of success in each case was having the telecommunications highway on which to put various applications in place ahead of the competition.

Airlines.

Delta Airlines, for decades one of the best managed airline companies, admitted in 1984, when the federal government proposed to bring lawsuits against American Airlines and United Airlines, that it was now at a competitive disadvantage from not having invested in reservation systems ten years earlier. The suits argued that the other two companies' telecommunications capabilities gave them a dominant edge.

Any airline or travel agent that has not invested in computerized reservation systems and distribution systems or that has to rely on competitors' systems for the sale of their own products faces serious disadvantages in the travel market. Luke Mayhew, head of distribution and marketing services for British Airways, in discussing airline reservation systems as the base for marketing and managing distribution channels, particularly travel agents, says that "it can be argued that the changes in the structure of the industry are largely being dictated by distribution systems and how they are being used by the airlines that have them. The have nots have been faced with real problems" (Financial Times, August 5, 1987.)

American Airlines has long set the pace for innovation in the industry. It was the first company to launch a frequent flier program. The purpose of the very popular "AAdvantage" program was not just to gain short-term market share but to accumulate data on the fewer than 400,000 people who accounted for about 70 percent of full-fare travel. Several years earlier, when it was going through difficult times, American began investing in its reservation system SABRE (Semi Automated Business Research Environment). AAdvantage depends on SABRE.

American Airlines' competitors had to follow its lead and offer their own frequent flier programs. They got all the costs of administration of the program, while American has the customer relationship data, accessed and processed through its SABRE reservation system, with direct links into other such systems. Today SABRE is clearly the market share leader. With 50,000 terminals in 14,000 travel agency locations, the system handles 45 million individual transactions per day. More important though, and a factor that American's competitors now view as crucial, is that the ownership of the world's leading reservation system does a good deal more for American than simply boost revenues. It has set the pace for all other major airlines in terms of marketing, building customer loyalty, and even making acquisitions and mergers. American Airlines' initiative, an apparently technical project, was a springboard to business innovation. The company made almost twice as much profit in 1986 (around $400 million) from SABRE as it did from its airline operations.

Supermarkets and Retailers.

Supermarkets have turned their cash registers into point-of-sale banking machines, often at the expense of banks, since many retailers have more effective telecommunications systems than the banks do and have shown more imagination and boldness in using them. The Publix chain in Florida completely preempted the state's major banks in electronic funds transfer at point of sale (EFT/POS). By providing the highway for the development of the ATM card and credit card networks, telecommunications thus breaks down barriers between industries. It even redefines them: Is EFT/POS banking or retailing? Who covers the cost of the hardware and the cost of processing? More important, who controls the information being exchanged? Sears, Publix, and Giant Foods (also in Florida) are now powers in banking because they have discovered that the movement of money electronically can be done by anyone, not just financial institutions.

In August 1987 Sears could offer its customers a full range of financial services-from Discover credit cards and Allstate insurance policies to home mortgages, car loans, and Dean Witter mutual funds. The jury is still out on the long-term success of Sears' strategy to reposition its business, again using telecommunications and electronic online service as the springboard, but in the meantime Sears is certainly no longer just a department store.

New industries emerge through electronic delivery. Who controls which parts of the infrastructure? When should firms cooperate and when should they compete? The Florida banks assumed that their control of the payments system would allow them to set the pace and path of change. Publix bet on its ownership of the customer contact point and of the telecommunications highway. It was able to force the main banks to cooperate with it, not the other way around.

Will credit card providers like American Express control more aspects of business air travel because the card establishes the customer relationship and because these companies have access to the airline reservation systems? Should airlines cooperate with banks and credit card firms in integrating reservations and payments and adding new customer service? Should banks compete with each other to establish premium electronic services or should they share resources to create barriers against nonbanking competition? There are no easy answers to such questions, but it is vital for any major firm to recognize when they have to be asked.

Manufacturing.

In the late 1970s Chrysler Corporation was given only months to live by most automotive industry analysts. The role of Lee Iaccoca in leading Chrysler back from near bankruptcy is very well known. Less familiar is the role of telecommunications to support the business leadership. Despite the dismal outlook, the company's planners decided to invest millions of dollars that they could scarcely afford on sophisticated communications and computer systems. Robert Brauburger, chief engineer at the Technical Computer Center stated that "from 1979 to 1983, the company spent the money on technology when they weren't spending it on anything else." Today, largely because of the strategic move toward computer-integrated manufacturing (CIM), Chrysler is out of the hole and in a competitive position beside industry leaders Ford and GM.

Chrysler's vice chairman, Gerald Greenwald, ascribed much of the firm's comeback to its use of communications and computers, which eliminated 20 percent of the company's paperwork and allowed drastic cuts in inventories. With its new ability to build to order, Chrysler no longer needs an inventory of $700 million of unsold cars in 40 assembly plants. Dealers' orders are received and their credit checked electronically. Currently, more than 3,000 dealers are linked to the corporate information system.

Chrysler's Dynamic Inventory Analysis System (DIAS) network links all suppliers to all Chrysler plants and all plants to all markets. Components are always on hand. Assembly line stoppages due to shortage of supplies have been eliminated. In the Canadian minivan plant, terminals linked to manufacturing equipment provide feedback to control centers, and they have cut days or even weeks from the time needed to respond to needs for maintenance and troubleshooting. This is quite a feat when one considers that the DIAS system has to coordinate the flow of producing 12,000 vehicles a day, using approximately 40,000 types of parts and 10,000 employees.

The essence of CIM is the control of an entire factory production system through computers possessing a common database of information about the factory, its capabilities, and its products. CIM enables firms to produce multiple products efficiently, respond to rapid market changes, adapt to shorter product life cycles, develop high-quality custom designs, and drastically reduce inventory. At a time when markets are continually changing, this advanced method of manufacturing will almost surely become the base for U.S. manufacturers-not just in the automotive industry-to lead the competitive response to Asian competition by using information technology-especially CIM and electronic data interchange (EDI) to offset disadvantages of labor costs.

Large Companies.

Many large firms have realized that once they have established a network, the cost of adding new traffic to it can be small. Ford decided that it was better positioned to handle electronic cash management than were banks and applied (unsuccessfully) to join the Society for Worldwide Interbank Financial Telecommunications (SWIFT), the international banks' telecommunications system for funds transfer.

Texaco realized that it could bypass banks for foreign exchange and treasury management activities if it could link into the international dealing networks.

A number of car manufacturers saw that they could use their telecommunications system to allow central staff to get up-to-date information on dealer inventories, yesterday's sales, and so on, to coordinate production and reduce information "float"-the gap between something happening in the field and information reaching the decisionmakers at the center.

British Petroleum found that it could use the banks' technology to manage its own financial transactions and save on commission. In 1986 British Petroleum Finance International managed the company's $4 billion worth of liquid resources and contributed over $40 million to its annual income. In other words it used telecommunications so that it could become a bank. Volvo has done the same and at least a dozen major multinational corporations are close to doing so.

Telecommunications eliminates the dichotomy between centralization and decentralization. Several companies have been able to exploit this to reduce levels of key inventories (including the cash inventory) by around 20 percent. Bechtel, through the imaginative combination of visionary business thinking and visionary technical thinking, is getting ready to field "offshore" project teams and engineering skills in the same way manufacturers set up offshore production. Hewlett Packard has changed the relation between its field sales team and branch offices. The sales representatives use portable personal computers linked to central information stores.

The examples could be multiplied, but the ones just mentioned contain the main messages, that electronic delivery has become the norm in industry after industry; firms have to have the highway system in place before they can carry the traffic.

Suppliers put a terminal in the customer's office, providing a direct link to their computers for placing orders and getting information. The customer gets a new level of service and responsiveness. In any mature industry where it is hard to differentiate the product through price, promotion, or manufacturing, such service becomes the differentiator.

There can be no better service than one that gives direct and immediate access, even outside normal business hours and across time zones. Electronic delivery can also mean more, not less, personal service; the sales force does not have to spend so much time on administration, order taking, and answering routine queries. The terminal does that, and the sales staff can concentrate on selling and face-to-face service. The customer does not have to wait for the salesman or phone the company to get information it needs now. The customer service unit is in effect in the workstation; it is as if the supplier has a branch on your premises.

Getting the electronic delivery base in place ahead of the competition can give a company the advantage of occupancy; customers want only one terminal, which can soon mean one main supplier. Ownership of the customer contact point, such as the airlines reservation terminal, point-of-sale register, cash management workstation, or order entry terminal, provides the base for delivering nontraditional services and capturing the customer relationship.

The evidence is that it is better to get there first with a good enough service than second with a better one, largely because of what Michael Porter calls the "cost of switching." American Airlines does not have the best reservation system, in terms of technical design. TWA's is far better. Chase's cash management services are technically superior to Citibank's.

The occupant can create a new product stream once the system is in place. When the dealer order entry system is in place, it costs little extra to use it for processing warranty claims, distributing updates to price lists, or "downloading" daily reports to the terminal at 2:00A.M. when the supplier has processed today's transactions. When the customer opens up for business in the morning, the transactions are immediately available. The leader in installing a corporate cash management service can add portfolio management and payroll services to the same base at minimal incremental cost, as has the Royal Bank of Canada, which thus became the de facto pacesetter in its market.

These are not advanced services but already relatively standard requirements for maintaining competitive position among pharmaceutical distributors, corporate banks, car manufacturers, airlines serving travel agents, and insurance firms. Their strategic business options expand or contract depending on the scope and quality of their highway system. The early 1980s showed many examples of this, with Citibank, Thomson Holidays of the United Kingdom, American Hospital Supply, McKesson, and American Airlines being the most widely cited instances. These firms were early winners in the electronic marketplace, not because of the technical quality of their systems, but because of the recognition by the leadership that telecommunications was not just an operational necessity but rather the springboard for business innovation.

In the late 1980s opportunities to create striking market leads are fewer. American Hospital Supply is a legend for showing how being the first to lock in customers by electronic delivery could preempt an entire industry. Now, every firm recognizes the need. American Airlines still holds the industry preeminence opened up by its early investment in SABRE, but now no airline overlooks the importance of reservation systems.

Thomson Holidays of Britain developed a cheap and simple videotex system that enabled the agent and prospective client to become involved in the holiday booking conversation as the videotex TV screen interacts with the Thomson computer center. Thomson's system has become the de facto standard of the European travel trade, and although the other big operations have introduced me-too systems, Thomson's system remains the favorite. The rest of the pack, though, is now back in the game. Thomson is unlikely to find such easy pickings in the near future. That will be true for American Airlines and Citibank, too.

There are, though, still plenty of gaps to fill. The Wall Street Journal's 1987 Technology Review scorecard shows that even now many large firms have not recognized that telecommunications is no longer about technology but about business capital. The Journal gave the telecommunications industry a C- for failing to sell its impressive technological know-how to the customer. Other industries got equally low grades because they did not make use of technological advances in a timely manner. "Banks don't put money into where things are going, they only put money into where they are," says Banc One Corporation Senior Vice President John F. Fisher, who is considered one of the industry's best practical futurists. (Bane One has created a major market niche as a provider of electronic services to other financial institutions. It was Banc One's Visa processing capabilities that provided the service base for Merrill Lynch's Cash Management Account (CMA). The long-term competitive cost of such a view will lead to often unresolvable trouble for many organizations because the cost of following is increasing, not decreasing.

MOVING FAST IN TELECOMMUNICATIONS:
SENIOR MANAGEMENT ACTION

Of course, telecommunications does not create business strategy. It opens up new possibilities for it. It also creates new risks. The technology of telecommunications is changing rapidly and involves expensive gambles. The business gambles are even bigger. For every success in innovation in electronic delivery and in moving into new markets through telecommunications, there has been at least one failure of comparable size.

Dun and Bradstreet successfully repositioned itself to become an electronic publisher. The New York Times tried earlier and lost. Merrill Lynch's Cash Management Account, which relied on the telecommunications processing base, took away billions of dollars of deposits from banks, but the firm got into trouble in its traditional business, and it is not clear how profitable the venture turned out to be. Retailers, including Sears, which is a leader in the move toward creating the financial supermarket through technology, have had a number of expensive failures with point-of-sale systems over the past 20 years. While electronic cash management is now a proven success, home banking is still a solution searching for a problem. Continental Illinois was one of the most effective innovators in electronic banking and the use of the office technology, but when a firm makes major mistakes in its core activities as did Continental, no amount of technology can rescue it.

Even when the strategy is clear, it is not guaranteed to work. Soon after United Airlines renamed itself Allegis, its chief executive officer, Richard Ferris, lost the support of first his pilots, then Wall Street, and then his own organization. He is gone and his strategy of vertical integration of travel services via telecommunications has collapsed. This dismantling of Ferris's grand plan may well turn out to be the way the airline business is moving-and the pilots' perspective an error-but when the CEO cannot communicate the vision and get the buy-in of his people, the strategy is irrelevant.

One reminder that innovation via technology is inherently risky comes from Federal Express. Its brilliant use of cellular radio in the delivery van and coordination via communications was a major competitive differentiator around the same time its Zapmail service was a multimillion dollar flop. The project was bold and made good sense, but the demand was missing and an alternative technology of low cost, high-speed facsimile machines was developing faster than was realized. Perhaps Federal Express should have waited.

The cautionary tales could be multiplied: Citibank and McGraw Hill's joint venture, GEM; the consortium of CBS, Sears, and IBM losing over $30 million each in a videotex venture; and on the vendor side, US Sprint's loss in 1987 of $1 billion trying to buy market share via advanced telecommunications technology.

Nonetheless, whether viewed in terms of opportunity or necessity, no doubt exists now that telecommunications and business innovation are interlinked. Senior managers simply must understand the linkage and be ready to act. Only they, not their technical staff, can decide when to lead and when to follow: when to make the business act of faith needed to build an infrastructure that will take at least 2 years and probably closer to 10 to provide bottom-line benefits and when to wait until others have clarified the direction to move and reduce the business and technical gambles.

In the 1970s it generally made more sense to follow than to lead. The cost and problems involved in introducing new systems were too often higher than the likely payoffs from pioneering in new business territory. The risks now are in the other direction and at the very least firms need to ask what is the communications base they need for defensive necessity, if not for competitive opportunity. The corporate network is the highway system for the computer traffic of the late1980s and the 1990s. When that traffic is the firm's business revenue, customer image, and base for growth, it's time to move fast.

THE THREE STAGES OF TELECOMMUNICATIONS MANAGEMENT

Historically, telecommunications management has moved through three stages: 

• The operations era
• The internal utility
• The coordinated business resource.

Each of these entails a different mandate, experience and skill base, technology, and managerial perspective on the use of telecommunications.

Telecommunications used to mean telephones, essential to business efficiency but hardly something senior managers needed to factor into their strategic planning. Early data communications by computer were built on the telephone system. The main need in the 1970s was to link terminals to computers; airline reservation systems were among the first widespread applications. The transmission speeds were low and costs high.

In the early 1980s there were rapid changes in every aspect of telecommunications. The plain old telephone system (POTS) could not provide the capacity, speeds, and efficiency needed for computer communications. Satellites and fiber optics communications have transformed the economics and accessibility of telecommunications. Deregulation in the United States, liberalization in the United Kingdom, and protection of its monopoly by most other countries' telephone authority have made communications a volatile political issue. So, too, has the question of "standards." Each major computer and office equipment vendor, such as IBM, Wang, Xerox, and Digital Equipment, had its own proprietary telecommunications systems, which meant that customers had proliferating facilities, incompatible equipment, and escalating cost.

International committees tried to define comprehensive standards while the vendors fought to establish their own. The technology became more and more diverse and more and more complex. There were so many major improvements in voice communications (computerized telephone systems) at the same time as in data communications and in computer hardware and software that the telecommunications manager's job became like trying to change the tires on a moving car.

In the 1980s instability has been the norm in just about every aspect of telecommunications. It has not been easy for companies to coordinate the many technical and managerial issues involved in running phone operations, upgrading them to exploit the immense improvements in voice technology, dealing with deregulation, handling cost-effective data communications for specific applications, trying to eliminate incompatiblities and establish standards, and evaluating emerging technologies and new vendors.

Not surprisingly, the focus has been on managing operations and on technical issues and costs. It has been hard enough for firms to locate and retain good telecommunication specialists and even harder to find generalists who understand both the technology and the business context. As a result, there has often been far too little dialogue between the groups who need to work together, and think together, to create a corporate business resource.

There is a knowledge gap even among the specialists. Many telephone managers have little understanding of data communications, computer staff of telecommunications in general, and data communications people of data processing. With the gaps in knowledge come splits in responsibility. A priority in organizing for telecommunications must be to bridge the gaps.

The Operations Era Management

The operations era was concerned with providing reliable telephone and telex services inside the firm. The skill base was fairly low; supervisors came up through the ranks and were mainly required to have strong operational experience. There was no need for technical expertise, since external suppliers, mainly the phone company, provided technical support.

During this period, central planning was rare. Business units might each have their own telephone manager plus a telex operation. In many geographically dispersed firms, the consequence of this lingers on. Responsibility for communications is scattered among a number of people and budgets. Voice communications are mainly handled on a local basis. The data processing unit eventually took over most aspects of data communications, but the scattered fiefdoms remain. Quite often, senior management has no idea of just how much the firm is spending on telecommunications because of this lack of coordination.

The operations era of telecommunications management is past. It has left behind some old-timers who may hinder change because they think entirely in terms of physical operations. They are not up to date about the new technologies, though they tend to know a lot about a few vendors' products or specific equipment. For them, telecommunications planning means equipment selection, which many of them are only now recognizing. Although it is easy to dismiss the old-time operations managers' experience as irrelevant to the new era, they do know how to make things work. Telecommunications is at the same time very abstract and very concrete. People take for granted that the telephone system works. The operations manager views it in terms of the physical devices and is very aware of how much lies behind the phone receiver and how much has to be done to keep it working.

The operations mindset is still needed for data communications, to support, not substitute for more adventurous planning. Conceptually, for instance, installing a "local area network" to link up personal computers in an office building is relatively simple and the technology proven; however, a myriad of small details must be dealt with: problems of cable size, connectors, power supplies, synchronization, etc. No one-not business managers, data communications gurus, or telecommunications planners (or writers of books on telecommunications and business strategy)-should ever forget that in moving from strategy to cables and boxes, from abstraction to physical system, if the boxes do not work, the strategy is irrelevant.

The Internal Telecommunications Utility

Most large firms began moving to consolidate communications and create an internal utility around 1982. Many companies, both large and small, still handle telecommunications in this way. They view it as a technical function and focus their attention on providing facilities as needed and on controlling costs. The utility reflects a largely reactive strategy.

In the early 1980s the tidy world of the operations era was disturbed by a broad range of new factors. They included: 

• Management's concerns over ever-increasing phone costs
  
  
• The proliferation of new vendors and products in what had been a very stable industry dominated by AT&T
  
  
• Disruptions in service created by the Bell System divestiture
  
  
• The growing importance of data communications and computers, and the proliferation of equipment and facilities they create
  
  
• The need to plan for computer communications as well as voice.

The message from top management was "Get this under control."

The priorities in managing the utility became to reduce costs and provide some degree of central oversight and planning, often in an environment of highly decentralized operations. This was done mainly by setting up a new bureaucracy. The utility coordinated communications planning through the budgeting and internal accounting process. It controlled costs by tracking them and charging them out.

The new technology base the utility has had to bring together is very diverse. It includes an emerging generation of advanced telephone facilities, satellites for voice and data, specialized equipment for improving the performance and throughput of high-speed, high-capacity transmission links, local area networks for personal computers, automated network management equipment, and entirely new providers of basic and advanced transmission services. New skills have had to be added, too often with difficulty.

Around 1980 the very basics of the technology began to change. Historically, telecommunications relied on "analog" transmission, by which signals were sent along wires with electrical pulses reproducing the waveform of the speaker's voice. Computer data is "digital" in form, meaning that every number, letter, or special code is coded entirely in O's and 1's. Sending digital information in analog form became increasingly inefficient. Digital transmission was essential to exploit new advances in equipment and high-speed transmission.

By 1985 it was clear that phone calls should also be transmitted in digital form, and that at some stage all information-telephone calls, computer data, pictures, documents, and diagrams-could share the same highway system instead of needing separate and incompatible facilities. The term "integration" became a standard part of the telecommunications vocabulary, and even though most firms were very cautious about moving too quickly when the new technology was unproven, the planning issues for telecommunications had to focus more and more on defining and building a coordinated infrastructure.

Fiber optics and satellites created new economics of scale. The importance of terminals, workstations, and personal computers, especially for customer service, reinforced the need to avoid incompatibility and to share resources. In the United States and in every developed country, the providers of telephone services started planning to shift to data communications and then, by the year 2000, to integrated digital networks.

All these trends changed the stakes, scale, cost, and complexity of managing telecommunications. They left the utility manager with some continuing and often unresolvable problems: 

• How to balance short-term cost control against the long lead times involved in anticipating unpredictable increases in demand
  
  
• How to impose coherence on the existing multiple voice and data facilities and vendor-specific, and thus incompatible, equipment and networks, while maintaining quality of operations
  
  
• How to organize for a very new technical and managerial environment
  
  
• How to accommodate emerging needs such as links to customers' computers, high-speed applications like videoconferencing or CIM, and interconnection to other networks (links between retailers and banks, for example). 

The telecommunications utility is complex to plan, implement, operate, and advance. It is hardly surprising that technical and cost issues dominate the communications manager's attention in the utility stage or that business managers have very limited insight into what telecommunications is and means. That is why so may companies have been caught unawares by innovators that use telecommunications as a part of an ambitious business strategy or why in almost every industry a few businesses have stolen the march on their competitors. The companies left in the dust by innovators were still in the utility stage, where the telecommunications department or function responds to business needs but does not initiate business strategy.

The Coordinated Business Resource

The transition to the third stage, the coordinated business resource, depends above all on management enlightenment: the recognition at the top of the organization that the topic is no longer an internal utility that is an expensive subset of the firm's administration and operations but about a function that is part of the company's business infrastructure. The recognition is generally stimulated by market pressures or opportunities. These lead to a rapid succession of new applications that rely on data communications: using office technology as a cornerstone for productivity drives, putting a terminal in the customer's office, or linking personal computers to computer databases.

The old utility structure can rarely handle the new demands and the saliency of what has been, up to now, largely a back room, technical function. Senior managers do not start to recognize the importance of telecommunications to key business functions, unfortunately, until lack of facilities, unreliable operations, or the network's "crashing" translate into customers not being able to use an on-line electronic service.

Any managers who have ever planned to get cash at the airport using an automated teller machine at 11:00 P.M. and found the system was "down" appreciate their own customers' feeling and the less than lyrical phrases they use to describe the company when there are problems with the dealer order entry system, the international corporate cash management network, or the advanced digital transatlantic phone network. Telecommunications operations become a business issue when the business is on-line. In fact, it is the firm's cash flow, quality of customer service, and image that are on-line and at risk.

When senior business managers become aware that telecommunications is now important to business effectiveness and not just to operational efficiency, they still have little idea of what to do. It is hard enough for the telecommunications utility manager to handle the technical demands. How can a marketing manager, head of a product division, chief executive officer, or corporate planner begin to think imaginatively and realistically about telecommunications as a business opportunity and then contribute to telecommunication planning?

Creating an organizational strategy for telecommunications requires a new style of business thinking among senior managers who must also have some insights into key aspects of the technology itself. The question is where to start.