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Infrastructure

Technology strategy failures can be either management failures or technology failures. Mail Boxes Etc. (MBE) exempli-fies the case of grand strategy but the failure of technology.4 MBE launched an Internet-based shipping system called iShip that was the brainchild of MBE President and CEO Jim H. Amos, Jr. The aim was to position MBE as the preferred shipping partner for e-tailers. The infrastructure comprised building a satellite network to connect the 3,500 domestic franchises with corporate systems, an Internet-based point-of-sale system and the iShip manifest system. The system would only require the phone number of returning customers and would be able to recall all the customer information, including recipient information. This, it was hoped, would make the customer feel very special and make life easier for the customer by not requiring address information during repeat visits. While it was a well-intended technology strategy, the infrastructure did not work as planned. Connections to the remote computer system were very difficult to establish and, even when successful, were very slow. Part of the problem was that the satellite hookup was slow even compared to cable modem technology. Indeed, many MBE franchisers went back to a decade-old DOS-based system to enter orders rather than the Internet-based iShip system.

Another illustrative example is that of Furniture.com,5 whose executives promised shoppers 24-hour browsing as well as a six- to eight-week delivery time on everything from table lamps to 10-piece bedroom ensembles. The first part of the plan went very well—that of attracting more customers. The site attracted about 1 million users a month. However, while executives of Furniture.com built its brand name at an astonishing pace, they neglected to create the infrastructure to support it. Customer complaints filed with the Better Business Bureau in Worcester, Massachusetts, jumped from 1 in 1999 to 149 in 2000. Most complaints were delivery problems, followed by product quality and bill disputes. Why did this happen? The company did not create an appropriate infrastructure that would factor in the logistics and costs of shipping such a bulky commodity across the country. Besides, they did not have a platform that would track the orders. The company closed its doors on November 6, 2000, and filed for bankruptcy. The company was done in by promises to customers that its infrastructure could not allow it to keep, such as the six- to eight-week shipping time, free delivery, free returns, and so on. According to David Pyke, Professor at Dartmouth's Amos Tuck School of Business Administration,6 while free shipping and returns, low prices, and lots of variety could make customers happy if the promises were fulfilled, the company could not make money like that.

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Last Update: November 17, 2020