As the doc.coms are becoming dot.bombs, much of the early internet euphoria has gone. No longer is it sufficient to have an idea involving the internet in order to get funding and float a company, making millions. That does not mean however that the Internet was all hype, just that it is now settling into its role as a very important part of business - but not replacing such business fundamentals as the necessity to actually meet the needs of customers profitably. A few articles from the most recent two HBR's that reinforce this theme.

When is it best to manage with tight, traditional, controls, and when is it best to leave rules vague, authority fuzzy, and budgets non-existant? Maletz and Nohria call this respectively "Blackspace" and "Whitespace" management. Not surprisingly, there are times when using the wrong kind of management can kill entrepreneurial activity and destroy projects. In this paper, the authors explain when it's imperative to operate "in the whitespace", and when it's wiser to stay with traditional "blackspace" management.

I'm not sure that I like the "whitespace" and "blackspace" labels (I can not bring myself to write them without quotes), but from my experience I can agree that selecting the right management approach can make all the difference. This article is useful in providing guidance on how to select.

Customers say that they shop on-line for lower prices, but their behavior tells a different story - convenience, lowering transaction costs, is more important.

Neither using the Internet as a discount medium, nor offering offline prices online, are optimal strategies. They miss the big opportunity - to track customer's behavior and adjust prices according, targeting promotions where they will to the most good.

Many of the pioneers of Internet business, both dot-coms and established companies, have competed in ways that violate nearly every precept of good strategy. Rather than focus on profits, they have chased customers indiscriminately through discounting, channel incentives, and advertising. Rather than concentrate on delivering value that earns an attractive price from customers, they have pursued indirect revenues such as advertising and click-through fees. Rather than make trade-offs, they have rushed to offer every conceivable product or service.

It did not have to be this way--and it does not have to be in the future. When it comes to reinforcing a distinctive strategy, Michael Porter argues, the Internet provides a better technological platform than previous generations of IT. Gaining competitive advantage does not require a radically new approach to business; it requires building on the proven principles of effective strategy. Porter argues that, contrary to recent thought, the Internet is not disruptive to most existing industries and established companies. It rarely nullifies important sources of competitive advantage in an industry; it often makes them even more valuable. And as all companies embrace Internet technology, the Internet itself will be neutralized as a source of advantage. Robust competitive advantages will arise instead from traditional strengths such as unique products, proprietary content, and distinctive physical activities. Internet technology may be able to fortify those advantages, but it is unlikely to supplant them.

We thought that the Internet would be the great "disintermediator", allowing everybody to deal direct with companies and cutting out middlemen. Where the middlemen's business were able to charge high fees because they controlled the access to vital information (for example, the traditional share broker), then this business was indeed under threat. However, many agents perform valuable services for their customers, and the Internet has changed, but not destroyed, their business.