Is the Internet Second Nature?

These days, life in the Internet economy is more about questions than it is about answers. What went wrong with dotcom startups? Will any of the business models that emerged over the past five years survive the meltdown on Wall Street? Those are big, important questions. But for companies that have made the Net "second nature," there are better questions.

These companies understand that the Internet is more than just a technology and more than just a channel. Above all, the Internet is a mind-set. Net-based companies will come and go. But Net-centric companies -- companies that succeed in translating the possibilities of Internet technology into the everyday realities of an Internet culture -- are here to stay. Even as Internet hype continues to evaporate, the real significance of the Net is seeping down to the roots of smart, serious companies. Down there, where the real work of business is done, the Internet is reshaping the nature of leadership, the logic of competition, and the scope of innovation. Ultimately, becoming a Net-centric company is less about bandwidth than it is about behavior.

So second-nature Net companies are asking questions that force them to look within, questions that revolve not around external conditions but around internal operations. How can you -- how must you -- transform the way that your company deals with information and with ideas, with customers and with employees?

Cisco Systems, Intel, and Microsoft are three companies for which the Net has become second nature. Although each has struggled amid the havoc of the past year, each has irreversibly transformed itself in response to opportunities that the Net opens up. Each is a model -- not just of how Net companies operate today, but of how all companies will operate tomorrow.

Cisco embodies a devotion to the Internet that goes beyond just selling routers. And while the recent drop in Net-related spending has taken a toll on the company's earnings and its stock price, that devotion remains evident in Cisco's adoption of smart, Internet-driven business practices throughout the organization. "The long haul is going to be about the complete reinvention of companies," says Peter Solvik, 42, CIO. "It's not a matter of throwing technology at a problem. It's a matter of changing every aspect of how the company works internally."

For Intel, embracing the Net starts with a militant pursuit of efficiency. It is a place, after all, where every conference room features a poster that outlines the rules for effective meetings. Meanwhile, despite the recent dip in chip demand, Intel has become the number-one e-commerce company in the world. How? "We get technology," says Craig Barrett, 61, president and CEO. "We make it, and we use it . . . . We almost couldn't help becoming an Internet company."

Six years ago, Microsoft made a better-late-than-never commitment to the Net. Today, it stands out as a true Net-centric company. But its absorption of Net products and practices extends beyond such high-profile experiments as MSN.com and Hotmail. "We've worked hard to recraft how to do business internally," says Bob Herbold, 58, a former COO of Microsoft, who still works with the company. "Using the Internet, we've driven the cost of handling an invoice from $30 to $5. Yes, that saves us money. But more important, our people are a lot more in tune with what customers should expect."

How can you connect with customers? How can you balance size with strategic flexibility? How can you grow ideas and groom leaders? Read how Cisco, Intel, and Microsoft answer those questions -- and learn how your company, too, can make the Net second nature.

Are your vital assets within easy reach?

At a Net-centric company, leaders understand that information is one of their most vital assets. But the key metric here isn't how much data the company's Intranet contains. No, it's the distance between an employee and the information that she needs at any given moment. For a second-nature Net company, that distance is just one click: Sales figures, customer profiles, market analyses -- it's all available online, in an easily browsable format.

And people -- another vital asset -- need to be available online as well. After all, a company's most valuable knowledge often resides not in a database but in someone's head. On its Intranet, Microsoft has a people-based search engine that allows employees to troll through the company's roster using queries like "Who manages the Xbox project?" and "I'm looking for a programmer who can do kernel debugging." This tool follows a "one degree of separation" principle: Users can reach easily across teams or departments to get help from a former colleague, say, or from a stranger whose work they admire.

Intel takes that principle a step further: Just about anything that its employees can do online, its external partners can do online as well. Indeed, the Web connections that Intel has established with its 75,000 resellers and 18,000 suppliers are so robust that those partners in effect help the company manage its supply chain. Says Sandra Morris, 47, vice president and director of Intel's e-business group: "We've taken the walls off of Intel and wrapped it in cellophane, and everybody can look inside."