Digital Companies

Sidebars to the Big Idea -- Digital Talent, Digital Customers, Digital Finance.

Digital Talent: Cisco Systems Inc.

What's on the agenda of the VP of Human Resources at one of Silicon Valley's fastest-growing and most competitive high-tech companies? Not what's on the mind of every other HR manager in the Valley -- or in any fast-growing company anywhere. "Recruiting's the hot topic -- but that doesn't make it the right one," says Barbara Beck, 41, senior vice president of human resources for Cisco Systems Inc. "Companies are so focused on hiring that many forget the point of the exercise. The goal is to recruit and to retain the best." Beck shared with Fast Company how Cisco uses digital technologies to build competitiveness.

Digital Idea: Everything we do with technology focuses on developing a linked set of capabilities: hiring the right people; aligning a huge, chaotic organization around the same goals and mobilizing around specific, targeted initiatives; and developing leadership capabilities. Setting up a technology tree, where all of these functions are interlinked, allows us to leverage our time.

Digital App: We've built the recruiting piece of the technology tree around a few basic principles: The best people to screen Cisco candidates are the candidates themselves; great people gravitate to other great people; we don't fill jobs -- we're constantly looking for people who can help drive the company forward.

Digital Bottom Line: Once you put in a new technology, you can't continue doing things the way you've always done them. We've moved from focusing on old functions, such as "orientation" and "recruiting," to building employee and organizational capabilities -- fast. Once you make that shift, recruitment becomes a self-fulfilling process.

Digital Customers: Levi Strauss & Co.

Levi Strauss & Co. uses a mix of digital technologies to involve customers both in the creation of their own jeans and in the future of the company, says Sanjay Choudhuri, 48, Levi's director of mass customization and director of the Original Spin initiative. "Most people in the apparel industry who talk about mass customization are talking about fit. With Original Spin, we've moved from a fit proposition to an individuality proposition," he says. "We're focusing on one thing: building mechanisms of direct connection with customers." Choudhuri spoke to Fast Company about the thinking behind Levi's digital spin.

Digital Idea: The Original Spin program is at the forefront of our exploration of alternative business models for connecting with customers. It sets up a feedback loop so that we can tap into that level of information right in the store, using interactive kiosks and sales associates who are trained to guide customers through the process. The goal is not to sell a pair of jeans; it's to build a relationship.

Digital App: If you walk into any of our 10 Original Levi's Stores around the country, you can easily interact with one of our Original Spin kiosks to create a unique pair of jeans. Once you're satisfied with style and fit, a sales associate zaps your information over our network to our factory in Tennessee. Your jeans arrive at your home or at the store 10 to 15 days later.

Digital Bottom Line: We're not marketing to the customer -- the customer is acting as a styling consultant to us. The customer says: "I know your pants fit me; now let me tell you what I want the jeans to look like and how I want to look in the mirror." It's getting personal. The customer is starting to design.

Digital Finance: Dell Computer Corp.

Here's the way that James M. Schneider, 46, Dell Computer Corp.'s senior vice president of finance, explains the importance of digital finance: "We are driving the financial management of this company so that we can continue to grow without needing new capital. And that's had a significant impact on our stock price. Cash is king, and our cash flow, with its velocity and predictability, has made us attractive." To get a first-hand explanation of Dell's approach to digital finance, Fast Company asked Schneider to break down the ideas and applications in Dell's system.

Digital Idea: We start by being connected directly to the customer. Then we work with our vendors to create a system where we try to have no inventory. We complete the cycle of taking an order from a customer, taking parts from the inventory of a vendor, making a PC, shipping it to our customer, and collecting payment from the customer as fast as we can.

Digital App: We think of our system as a cycle -- a cash-conversion cycle. We express it in a formula: CCC=DSO+DSI-DPO, which stands for Days Sales Outstanding plus Days Supply in Inventory minus Days of Payables Outstanding. We have virtually no finished-goods inventory and only seven days of inventory comprising components and work in progress -- which means that our DSI is only seven days. Last quarter, our numbers looked like this: 40+7-56=minus 9. In other words, we had a negative-cash-conversion cycle of 9 days.

Digital Bottom Line: In some respects, we're like an Internet company. In 10 years, you might see Dell selling other technology products and services. More and more of our business is becoming Internet-based, which has a lot of cost advantages.

Adrian Slywotzky (adrian_slywotzky@mercermc.com) is a vice president of Mercer Management Consulting. He is the author of several best-selling business books, including "The Profit Zone: How Strategic Business Design Will Lead You to Tomorrow's Profits" (Time Business, 1997) and "Value Migration: How to Think Several Moves Ahead of the Competition" (Harvard Business School Press, 1996). His next book, "Profit Patterns," will be published in March 1999.

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