It’s Lonely on the Edge

Every three months, 60 executives responsible for moving their companies into the Internet economy gather to discuss challenges and frustrations. This group offers a remarkable window into what it takes to transform a big company into a Net company.

Sixty executives are gathered in a conference room at Le Meridien hotel in downtown Boston, listening to Greg Titus tell a story — a story that almost everyone else has experienced. “Resentment from other departments is a fact of life,” says Titus, 40, describing his job at the time as senior vice president of e-commerce at Scudder Kemper Investments, where he was in charge of taking the big insurance and financial-services company online. “I was walking down the executive corridor, and as I went past one of the offices I heard someone say, ‘There goes Greg Titus, e-commerce god.’ And it wasn’t meant as a compliment.”


Pushing for real change inside a big company is never easy. Being a change agent takes all of the charm that you can muster, all of the political skill that you can summon, and all of the allies that you can rally to your cause. It can be lonely. Many people don’t want to go where you want to take them. These days, when almost every established company has a small team responsible for leading the organization onto the Web, there are a lot of lonely change agents out there.

That’s the reason for this meeting. The 60 attendees are senior executives responsible for building Internet businesses at such companies as Aetna, American Express, GE Capital, and Metropolitan Life — big, powerful companies that are being pursued by a pack of dotcom startups. Unlike their dotcom counterparts, however, who start with a fresh strategy and newly minted operating practices, these executives carry the extra baggage that comes with working inside an established company. “Management says that it’s going to increase spending on e-commerce by 100%, and the folks in the marketing department find out that their budget is being cut,” Titus says. “It’s not hard to make the connection.”

Officially, the support group is called the eStrategy Executive Council. It meets every three months at the invitation of Mainspring Inc., a consulting firm based in Cambridge, Massachusetts. Mainspring has put itself on the map as a digital business-strategy adviser to companies in the financial-services industry — an industry that has felt the effect of the Net in countless ways. Ostensibly, council members attend these sessions to talk to one another about what’s working and what isn’t. But what keeps them coming back has less to do with technical challenges and more to do with counseling one another on the emotional challenges of the business.


Early on in its 18-month history, the council evolved from a strategy forum into a bricks-to-clicks support group. “All of these people are wrestling with the difficult job of moving an established bank, brokerage firm, or financial-services company online,” says Randall Hancock, 35, a senior vice president of eStrategy at Mainspring. “They’ve been given responsibility for building the future of their companies, in the face of intense competition and a ton of pressure to get into operation fast.”

Sometimes members bail out. Titus, for instance, recently left Scudder for a financial-services portal that’s in startup mode. But most of the executives in the support group choose to stay inside established companies. “There’s real challenge in trying to refashion something that already exists,” says Amy Radin, 42, a former executive VP and chief marketing officer at the Dime Bancorp Inc., who is now heading up Citibank’s effort to move its credit-card business online. “An established brand and an established customer base can be critical assets, not just legacies that drag you down. What we’re all searching for is a way to drive change very rapidly, in such a way that people feel positive about it, rather than threatened by it.”

What follows are stories from three of the change agents in the Mainspring group. They are stories about strategy, structure, and budgets. But mostly, they’re stories about people and their fears — in other words, about the hard work of making change happen.


“Draw pictures that take people where they want to go.”

Chris Crosby
Senior VP and director of Internet
Dain Rauscher Corp.
Minneapolis, Minnesota

When Chris Crosby (pictured above) arrived at Dain Rauscher Corp. in April 1999, the investment-services firm was living on borrowed time. Its core business — providing investment services to individuals and small companies through brokers in 26 states — was the very market where Charles Schwab and E*Trade were finding early converts. Crosby’s very first task was to rally Dain Rauscher executives around a Web strategy that wouldn’t threaten the firm’s long-standing relationship with its brokers. This summer, Crosby rolled out the firm’s new site.

I’d been in the job for six weeks when I was asked to give a talk about the Internet to a couple hundred managers at the company. I didn’t know where we were going at that point, but I had some ideas about what makes the Internet a unique opportunity. I studied religion and anthropology in college, and I think that, fundamentally, humans are a tribal species. We’re clannish; it’s in our nature. We have a fundamental desire to be connected, and the Internet is the most powerful medium yet to allow people to do that.


I’ve given lots of talks in my life, but this was the biggest failure — bar none. People were looking at me with mouths agape. My colleagues didn’t want a philosopher talking about tribalism, language, and the search for meaning. They wanted someone who could say, “This is where we’re going, and this is how we’re going to get there.”

For a lot of people, the Internet is the sum of their fears — particularly in a business that’s organized into silos. In our company, the Internet is a proxy for change. People are looking for me to be the change agent. But I have none of the leverage. I can’t just go up to colleagues and say, You’ve got to do this, this, and this. I have to go out and convince them that it’s the right thing to do.

One of the first conclusions that I came to was this: In order for our e-commerce strategy to succeed, it has to be a normal part of the day. It won’t work if the Internet is regarded as something separate. One way that I demonstrated this was by creating and deploying a pretty vibrant intranet system, with no additional head count. Now when our intranet goes down, you can hear the screams. In just one year, the intranet has pretty much replaced paper altogether.


So I said, We want to do the same thing for our clients — something that’s mission-critical, something that replaces paper. The result is a Web site that’s a lot like a visit to your broker (but your broker has the ability to own some of the real estate on the page and to publish stuff for clients). For a fund that traditionally goes through the broker system, this is highly controversial; at first, the brokers felt threatened. I figured that I would divide and conquer. I broke the project down into five or six pieces and started building consensus around each one. But once we got consensus on one piece and moved on to the next, we forgot how to put all of the pieces back together.

I had to start over. I tried to make people comfortable by saying, “I’m not here to destroy your business. It’s just the opposite.” In the end, what worked was literally taking people’s suggestions and turning them into screen shots. You can get to “yes” a whole lot faster if you can show people how their input is taking practical shape.

That’s my one piece of advice: Draw pictures that take people where they want to go. Make the idea as tangible as possible. I had to take management out 18 months and say, “Here’s what the Web site will look like in a year and a half.” Once people could see it and touch it, they could understand it. My CEO said, “I like it, and you don’t have 18 months to build it — you have 6 months.”


Is the world going to change for us tomorrow?”

Steve Messinger
Senior VP, and director of e-commerce and strategic planning
Van Kampen Investments Inc.
Oakbrook Terrace, Illinois

In four years as a management consultant, Steve Messinger (pictured below) saw his share of strategic upheavals. But nothing prepared him for the magnitude of the change that he faced when he joined Van Kampen Investments Inc., in the summer of 1998. A year after Messinger, now 38, took the job, Merrill Lynch stunned the industry with its announcement that it would be shifting to a fee-based pricing model and that, ultimately, brokers would no longer be paid commissions. For a firm like Van Kampen, Merrill’s announcement signaled a dramatic shift in the rules of the market. Messinger used the fear generated by Merrill’s move as a catalyst inside Van Kampen — though he still had to win the cooperation of different divisions to bring the company online.

A year ago, I really believed that the Web was going to have a revolutionary impact on the mutual-fund industry. Now I believe that the impact will be more evolutionary. I’m not as worried as I used to be about how a company like Van Kampen (which relies on brokers to sell funds) will get shaken up by having customers buy funds directly over the Net.


So far, the rates of adoption for that kind of business have been negligible.

But when Merrill Lynch announced in June 1999 that it would offer a pure online option for customers, charging them a flat fee for each trade, I thought, “Oh my gosh. Is the world going to change for us tomorrow? Do we need to fundamentally rethink our business model?” I had a team of 17 people and was responsible for all Web marketing, development, content, and operations. I also managed a 5-person strategic-planning department. But this announcement was so big that I sat down and wrote a memo to senior management that asked, “What does this mean for us, not six months out but over the next two or three years?”

I painted some pretty dramatic pictures. People started calling my memo the “Jerry Maguire Mission Statement.” Some of the guys came up to me and said, jokingly, “It’s been nice knowing you.” But I planned on sticking around, and these were things that we needed to know.


I tried to push the program forward. I coordinated a steering committee made up of representatives from every major department. It was a platform to make arguments for fairly modest investments in e-commerce.

But there were some frustrating times.

By the summer of 1999, it was clear that our cross-functional team wasn’t the right approach, but we couldn’t immediately establish a new e-commerce unit. Speed was sacrificed so that we could gain internal consensus. That’s the kind of trade-off that you make at a traditional company. If you’re not comfortable doing that, you ought to be working in a pure-play online business. To me, these trade-offs are worth making, because I believe that our business model is ultimately superior.


When we were a cross-functional team, each of the departments controlled its own e-commerce budget. So if we wanted, say, to run banner ads on Web sites that are frequented by financial advisers, the money for that came out of the marketing budget. Or if we wanted to build into our site the capability to provide our customers with online financial statements, we paid for that out of the transfer-agency budget. That system took us one rung up the ladder, but we needed to get to the top of the ladder. We needed a more integrated business unit with its own budget authority, and that’s exactly what we’ve got now. Today, we go through the same budget process that everyone else does: Here is our strategy, and here are our objectives. These are the priority projects for this year, along with an estimate of what they’ll cost. We’re responsible for our own P&L, but right now we’re a cost center — with no “P” attached.

It’s still very difficult to measure a lot of Web efforts using traditional ROI-type terms. I was very careful not to sell what we’re trying to do as a way to cut costs in the short term. That’s one mistake that a lot of traditional companies make. Instead, I’ve tried to sell our e-commerce program by pointing out two tangible economic effects. First, as we get people to accept their quarterly statements online and to have transaction confirmations emailed to them, there will be more cost reductions. But I also think that the Web will increase our revenues in another way: By giving shareholders and financial advisers more tools and in-depth information about our funds, and by developing closer relationships with them, we will be in a better position to retain our assets.

“Frightening won’t work. You have to win on facts.”

Amy Radin
Former executive VP and chief marketing officer
The Dime Bancorp Inc.
New York, New York


As chief marketing officer for the Dime Savings Bank, Amy Radin was responsible for crafting an Internet retail-banking strategy to compete with rivals like Chase Manhattan and Citibank. With 128 branches in metropolitan New York, Long Island, and lower Westchester County, and with assets of $23 billion, the Dime has preserved its traditional customer base. In some areas, such as insurance sales, it has outperformed its larger rivals. But in the spring of 1999, when the Dime got serious about taking its business online, Radin knew that she would have only a fraction of the resources that the big banks had. Nevertheless, she helped launch the Dime Online Banking in February — right before a hostile takeover attempt by North Fork Bancorp.

On June 27, Radin chose to leave the Dime and join an even bigger, more established player — Citibank. Her new job: Bring Citibank’s credit-card business to the Web. Here, she discusses her tenure at the Dime.

At the beginning, we felt very challenged. The Dime is well known and respected in the market, but as a midsized bank, we couldn’t invest at the level that Chase, Citi, and Fleet can. So the proposition of having a separate online brand seemed much harder to us than it probably did to the bigger banks.


On the other hand, when we looked at what other people were doing, we saw the Web as an additional channel for giving customers a consistent experience. The CEO and the board understand that our need for an Internet-banking channel will not go away. They recognize that the cost of doing nothing is greater than the cost of investing.

Getting that kind of buy-in across the organization takes a lot of education. If you have a core group of people who are focused only on e-commerce, then you’ve got to keep everyone else informed about what you’re doing on the e-commerce front. Frightening people won’t work. You have to win on facts.

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 ( is a Fast Company senior editor.