It's Lonely on the Edge

So we started looking within our own customer base for the people who would likely do business with us electronically. A lot of dotcoms get killed financially because they pay so much to acquire customers. It's really important to find the right customers to pitch your online offering to, in order to make the financials work out. It took us about six months to understand the patterns in our own customer base. We identified about 20% of our customers who would likely be receptive to online banking. And we demonstrated that our highly profitable customers -- those we earn the most money from -- use lots of different channels, including online banking.

We wanted to build a predictable financial model for the online business. It became obvious, however, that with no prior results, we were just making educated guesses about what would happen. But it was still helpful, because it showed us the circumstances that we needed to create. I then relied on my gut to tell me whether something was reasonable. Having a model forces you to confront the reality of what you have to do. If our investment doesn't work out, what then? What's my back-out strategy? The model forced us to realize that our effort had to be funded out of savings from existing businesses. And it helped us understand how to phase in our online retail-banking business. That was very important. Success on the Internet comes from launch-and-learn approaches, rather than from a big bang. It's best to try many smaller initiatives.

One lesson that I've learned is to create a financial incentive so that business units will support an Internet initiative. We are planning to create a shadow P&L for our e-commerce efforts to track how everything is going. But the benefits, all of the revenues created, will be allocated to the operating units. That way, you get the central focus that you need to launch and run an online business, but you also get the buy-in from other parts of the company -- because you're helping people meet their own goals.

I've noticed that the types of people being asked to establish an online business inside a traditional company usually have similar psychological profiles. It's not just about coming up with a good strategy. You also have to be a teacher and a motivator. You have to build support one person at a time. You have to be flexible. You have to be a good listener. You have to want to be very open and sharing with information. You have to put a stake in the ground to show people where you're going. And you have to possess a certain level of self-confidence -- because you're going to get challenged a lot.

Paul C. Judge (pjudge@fastcompany.com) is a Fast Company senior editor.