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Product Strategy

E-Commerce Challenges: Introducing Tech DNA at the Board Level!

Martin Rubio
Martin Rubio
Customer Success Officer

Creating, organizing and improving online sales activities is a definite crash test for companies. The greatest e-commerce challenges are primarily related to the e-commerce platform itself, of course, but also its management. Andreea Hodade, e-commerce specialist at Pentalog, further explains this concept. Andreea’s vast experience has allowed her to experiment with all phases of the digitization process. From ROI to human management…

Pentalog: Andreea, which manager profiles do we find in a typical e-commerce organization?

Andreea Hodade: To simplify matters and from a chronological perspective, e-commerce platform managers can be categorized according to two main types: “builders” and “operators.” In other words, the e-commerce CTO (Chief Technical Officer) and COO (Chief Operating Officer), respectively.

P5: Let’s start with the “builders”…

A.H.: “Builders” are into innovation. They’re obsessed with the needs of the client. These needs are somewhat hypothetical, because they are often at odds with the satisfaction experienced during product use. These initial builders obtain enough capital to launch the platform. They don’t have a detailed understanding of the processes specific to its operation, such as supply, logistics, transport, and shipping. These things just aren’t important to them at this stage in the game. When creating a platform, no one wants to take its complexity into account: speed and ease of use are paramount. The question of cost comes later. And this is quite natural, it’s the result of constructive energy. “Builders” don’t really understand how the final product will live out its life cycle. CRM, warehouses, suppliers, and so forth are all mood killers for them… If they took all this into account, chances are they would get discouraged.

P5: But then the “operators” come along…

A.H.: The “operators” are often expected to take over the baby, once the construction phase is completed. And they don’t want any bugs! The less they hear about technical aspects, the better. Their main concern is the margin and users’ daily satisfaction. When “operators” take over a recently launched e-commerce store, they are often surprised. They think to themselves: “Is this all I get as initial features?” They are worried about customer frustration due to the errors inherent in any startup. They’re not prepared for this. And they often take it upon themselves to improve the platform and its fluidity through feature development, including CRM, warehouses, suppliers… All the bits and pieces that define the true value of an e-commerce service, but no one cared about before.

P5: Today, the e-commerce business is more mature, in general. What would you say about the way decision makers approach the challenges of e-commerce platforms and marketplace today?

A.H.:Now more than ever, managers need to show humility. There is no magic formula. Communications like “The 5 Key Points of E-Commerce” are bullshit. Many first attempts end in failure. When it comes to the big traditional retailers, some have adopted the idea of test and learn. But their idea of test and learn is rather a sledgehammer approach. The stress level raises at a point of value-destruction (this is the “test” part). Teams are scared away by this level of stress. It therefore slows down the project cycle. These are projects — black boxes — that go into the dust bin: sometimes $20 million is wasted in three years’ time. A sledgehammer approach ultimately translates into accepting big losses. We’re still at this point. Of course, other more or less completed projects will ensue, fruits of the lessons learned from past mistakes (this is the “learn” part). But at what human and financial cost?…

P5: So, what would be the correct attitude to adopt?

A.H.: I believe that in 2021-2022 the correct attitude for the “builder” and the “operator” would be to admit that “I don’t know how to do it”. To accept that “it’s OK to ask for help” and reach out. To whom? Well, it could be reaching out for external help. An external team, for example, might offer a very interesting price-quality-availability ratio. If it is obvious that it didn’t work internally with the black-box principle, let’s find a legitimate service provider specialized in what we are trying to build. A provider able to both help build it at the right cost AND teach us to do it ourselves afterwards.

P5: Is this what you mean by Board Humility?

A.H.: Sort of. Humility should be demonstrated not only toward partners, but also internally. The “operator” should be humble in relation to the CTO and the “builder” should be humble in relation to the user.

e-commerce challenges and opportunities

P5: I guess this is the “third step” you have mentioned before this interview?

A.H.: Yes, that’s exactly it! Look, if we imagine a “technological maturity model” of the Board of Directors’ strategic and operational decision-making process, we can easily distinguish three steps, three phases, or three ways of doing things:

  1. First step: we notice that we lack digital skills internally, and so we ask a major consulting firm to come and teach us about the e-commerce business so that internal teams stay focused on core-business. A relationship of co-dependence is established, one in which business knowledge remains outside the company, with the consultancy firm. In the long term, major strategic decisions do not benefit from this technical expertise. This is the “I do e-commerce, but I believe that technology is not our core business” step.
  2. Second step: we create an internal startup. We allow one or more digital projects to be built outside the prying eyes of the Board, and then, once the products are finalized, we try to integrate them into the existing old technological ecosystem. I say “try” because “transplants” are often rejected by the body. Unfortunately, this happens quite often because those in charge of old systems do not look favorably on an e-commerce platform built without their validation (even if it’s very good). The product may also grossly ignore the reality of the old ecosystem, making it almost impossible to marry old and new features. This is the “I’m trying to bring technology into my core business, but through the back door” step.
  3. Third step: we hire directors and Board members (CEO, legal, operational, marketing etc.) with technical backgrounds. This step effectively “technologizes” the company’s DNA, so to speak. This is the “I am officially bringing technology into my core business, and I have a foolproof plan for its implementation in the long run” step.

This third step is key. At this point, smooth progress depends on hiring people who know how to “talk tech”, who have a tech mentality. The more of them in the Board the better. Technology today is like English speaking skills 20 years ago. Everyone has to be fluent, all the way up to the top. Today, even CFOs with tech experience are in demand.

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