Do Business Well

Remember one of the most talked-about business events of the late 1990s—the year 2000, or Y2K, scare? Companies and governments scrambled to prevent outdated computer code from crippling their information systems. Bracing themselves for power outages or actual disasters that were expected to mark the end of the twentieth century, untold numbers of consumers stockpiled staples, candles, and water. Then, at the stroke of midnight on December 31, 1999, the Y2K scare fizzled like a burned comet. All but forgotten in a matter of months, it was overshadowed by weightier pressures such as coming to grips with the Internet and the bobbing stock market.

Some critics called the scare a blatant marketing ploy, fanned by consultants, technology providers, and litigation lawyers planning to intimidate gullible managers into parting with half a trillion dollars worldwide. Even though that is a staggering number—it is more than. five times what the United States spent in the Gulf War from 1988 to 1990 to fight another menace, Saddam Hussein—the financial toll of Y2K was not excessive. I estimate that Y2K expenditures accounted for less than 8 percent of the total spending on technology by the 5,009 companies in my research. A more realistic view of this extremely hyped commotion is that most of the money was spent wisely and that many companies— including IBM, which spent $600 million over several years to address its own Y2K problems—used the threat as a timely excuse to revamp and, in many instances, totally upgrade their systems. They turned complexity into opportunity.

No matter how we look at Y2K, we see that it underlines how technology advances can shake up the status quo. If the new millennium had arrived when our technology was at the stage that it was at, say, twenty years earlier, Y2K would have been far less significant. Then, computer systems and software were much simpler and less intertwined than they are now Finding bug-infested code would have been a snap or, if undetected, would not have set off a chain reaction that threatened to immobilize electric power grids, air control systems, and financial markets. Likewise, five or ten years ago it would have been unimaginable to see the so-called Love Bug computer virus wreak havoc on the Web- connected e-mail systems of millions of people around the world, as it did in a matter of hours in May 2000.

That technology can save time and enhance performance is undeniable, yet at the same time, it adds layers of complexity to our lives, forces us to be more dependent on one another, and confronts us with unforqeen risks. In fact, computer systems and the processes they govern have become so intricate, software so esoteric, that they easily baffle managers.

Technology isn’t the only confounding development. We all know that the financial world is in flux. Globalization and deregulation disrupt the coziness and familiarity of many companies that now have to deal with cross-industry alliances and customers who also occupy the role of competitors. Ongoing scientific discoveries further fuel the restless transformation of entire industries. Undoubtedly, complexity and change are interwoven into every aspect of our business lives and are forces to be reckoned with.

Some customers, for whom the technological challenges posed by Y2K were unwelcome disruptions, addressed their concerns the way they would a long-decayed tooth: Do what has to be done, get it over with, and hope the whole issue never surfaces again. Other customers recognized complexity as a source of progress, and its mastery as a way of distinguishing themselves. They saw Y2K not only as a problem to fix, but as an occasion to upgrade their systems for the future. For these companies and their suppliers, flux and turbulence offer opportunities. Realizing their own limitations, these customers have developed a heightened level of interest in suppliers that can help them succeed. I refer to these customers as collaborators, since they are actively seeking to team up with suppliers that have skills and expertise that they themselves are lacking.

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