The Nature Co. spent a fortune on systems that were obsolete before the company could grow into them. The worst cost was "the effect on employees," Bergen says. "We never had a system everyone could rely on. I saw employees create manual systems to support the computer system."
Bergen's first response was to buy more technology. "We let the technology nerds talk us into spending tons of time and money on systems that are extremely complicated," he says. "I found it very hard to stand up to techies who spend their lives convincing you if you don't accept the leading edge, you are an old fart. You aren't competitive."
Despite the problems, the Nature Co. grew to $130 million in sales during Bergen's tenure. He left in 1995, after selling the company to the Discovery Channel. Now he's president of the Earthwatch Institute, in Watertown, Mass., where he's determined to learn from experience. "The mistake," he concludes, "is in thinking that technology will [always] make your life so much easier." --S.G.
MYTH NUMBER 7: 'YOU MUST BE ON THE WEB IN A BIG WAY'
Wait for the Web
THE CEO: John Peterman
THE COMPANY: Lexington, Ky., catalog retailer J. Peterman Co.
THE BUY-IN: Every retailer has to leap into E-commerce right away.
There's one item John Peterman sells more of than practically any other clothing cataloger does: romantic intrigue. So perhaps it's fitting that the founder and CEO of J. Peterman Co. was smitten by the seductive powers of the Web. "I kept hearing that this was the new way to make millions of dollars in direct-to-consumer purchasing while saving on print and postage costs," he says.
So in 1996, Peterman put his entire catalog--more than 100 items--on-line. Customers were underwhelmed. The Web site didn't move much merchandise and certainly didn't make millions; it didn't even save much in postal costs. Nor, Peterman fears, did it win him any new fans.
The digital catalog was short on romance and long on aggravation. "It was so laborious to call up anything," says Peterman. "The images took too long to download. I would get terribly impatient trying to go from one place in the site to another. I couldn't even stand it--and it was my own catalog!"
After nine months, in mid 1997, Peterman drastically scaled back the Web site, which now features only a handful of items for sale. Fully half the people who order from J. Peterman on-line are already receiving the catalog.
Peterman no longer buys the line that every retailer must leap into the E-commerce arena. The way he sees it, the Web site has driven up advertising costs quite a bit while increasing orders by just a tad. He knows there are some sites, like Amazon.com, that sell like crazy; but he's in a different business. When it began, the J. Peterman site sold only $100,000 worth of apparel a year. "For us, it needs to be $1 million at a minimum to be a viable distribution channel," says the CEO, whose company has annual sales of approximately $75 million.
It's not that Peterman thinks the Web won't ever work for him. The lesson he learned was that there is a high price for early adoption--and no penalty for waiting for technology to improve. In fact, the site brought in nearly $500,000 in 1998, but that was due to the popularity of a line of merchandise tied to the release of the movie Titanic. And "a lot of time and effort went into that $500,000," says Peterman, who notes that servicing the site occupies the entire company. "The merchandising department gets involved, as well as marketing and production. It feels like we could generate more money somewhere else. It all comes down to where you want to put your resources."
Peterman is happy to put the Web on hold. "There's a lot of hype, but in the apparel business it's not going to take the place of a printed catalog" anytime soon, he says.
Besides, the old technologies are still working fine. Most days, he'll walk down to the mail room of his Lexington, Ky., headquarters. "I get 300 to 400 letters a week," he says. "I get only 20 to 30 E-mails, and half of those talk about the print catalog." --S.G.
Great moments in the new economy
"By the beginning of the next century, the corporation as we have known it for eighty years will have largely disappeared...[Those that delay] the process of becoming virtual corporations will be swept away."
--William H. Davidow and Michael S. Malone, The Virtual Corporation, 1992
"By some estimates, one-quarter of the working population will be working from home by the end of the century."
--Charles Handy, The Age of Unreason, 1989
"The market will demand...that each employee be...turned into a businessperson. Yes, it means being empowered. It also means having all the organization's information at your fingertips--make that everyone's fingertips."
--Tom Peters, Liberation Management, 1992
"Those who do not find the wave [of globalism]...are bound to falter as the wave crashes around them."
--John L. Daniels and Dr. N. Caroline Daniels, Global Vision, 1993
"Western companies that fail to participate in the great Asian boom will not only lose opportunities, but may also undermine the competitiveness of Western corporations."
--John Naisbitt, Megatrends Asia, 1996
"Information technologies are the core for today's economy, and to survive all businesses must informationalize...from small mom and pop stores to giant global corporations."
--Stanley M. Davis and William H. Davidson, 2020 Vision, 1991
"The observation that in business, you are either growing or dying is true now more than ever."
--Robert M. Tomasko, Go for Growth!, 1996
"Fire all the consultants."
--Albert J. ("Chainsaw Al") Dunlap with Bob Andelman, Mean Business, 1996
