walking with dinosaurs.

2 Innovation = Creativity and Commercialization.

Case study 1: bbc’s walking with dinosaurs.

How it all started.

I wanted people to think that dinosaurs were real animals – not monsters. The only other place you’d see really good digital images of dinosaurs was in Jurassic Park. Our idea was to create a ‘David Attenborough’ of the prehistoric world. Tim Haines, Series Producer.

Tim had been fascinated by dinosaurs almost all his life and recalls, ‘There was a footprint in the Tunbridge Wells Museum which I saw when I was five and I have been interested in dinosaurs ever since.’ Over the years, many films have attempted to depict dinosaurs – often with rather comical results. However, the arrival of computer-aided animation opened up new possibilities, first demonstrated in the highly successful Hollywood movie Jurassic Park.

Dinosaurs had been a neglected subject for television-makers, and no one had attempted to use the same techniques for the small screen.

Introduction to Dinosaurs.

Dinosaur – from the Greek words deinos meaning terrible and saurus meaning lizard Coined by British scientist Richard Owen who founded the Natural History Museum The first dinosaur fossils were actually identified as belonging to an extinct reptile in 1824 The oldest, or earliest, dinosaurs found so far are prosauropods from the Late Triassic, around 130 million years ago. These were found in 1999 in Madagascar. The animals are thought to be quite closely related to the great sauropods such as Apatosaurus which evolved much later.

Weighing 70 tons the Brachiosaurus is the heaviest found, equivalent to 14 elephants The longest dinosaur is the Diplodocus tons, at 45 m, equivalent to five London double decker buses The biggest carnivore is a marine reptile called Liopleurodon, it is 25 m long and has a mouth 3 m wide The largest flying animal is the Ornithocheirus with a wingspan of 12 m (40 feet) and a weight of (only) 100 kg The Torosaurus (horned dinosaur) has the largest skull: 2.6 m long In Jurassic Park, a company lawyer is eaten by a Tyrannosaurus. Scientists have worked out that it would need 238 average sized lawyers a year to keep it going A sauropod’s stomach could hold up to half a tonne and had large stones inside it – gastroliths – to help grind down and digest the food A single Diplodocus produced about one tonne of dung per day Tim has a degree in zoology, specializing in entomology, ‘Like anyone who sat watching Jurassic Park, or but went into medical journalism after graduation. From who has studied dinosaurs has asked themselves there he moved on into radio and TV, always specializing what they were really like, I thought, I’d love to in science, medicine and the environment. He was just see them alive. They are tremendous evocative about to start a new series on Ice Mummies, but before creatures, quite unlike anything we have seen that had a couple of weeks to think of new ideas, and before.

he knew that the BBC was looking to create a landmark Tim Haines series. Having seen Jurassic Park he felt that there was a level of reality to dinosaurs that people expected which was not reflected in past or current television programmes.

The technology had so much potential, yet there was a gap in the market for documentary approaches. He wanted to create a programme that could offer the same quality of special effects that had been used in films such as Jurassic Park, but with his programme he wanted to recreate, as far as possible, a true representation of the period – environment, flora and fauna, and so forth. His aim was to produce a documentary-like film that would make dinosaurs look like real animals. ‘I came up with the idea of doing it as a natural history programme because that’s how we are used to seeing real animals, but I wanted to make it with top level graphics.’ Having identified his objective his challenge was twofold: (a) he had to consider what kind of money would be required to realize his idea – and whether it would be realistic; and (b) he had to identify some people who could actually make such a film happen. Further considerations were target audiences, viewing time, film length and, very important for the costing of the film, how much time per show of animated film he would be looking for.

Selling the idea – phase 1.

The first step for Tim was to raise money for a pilot. With the programme idea being unusual and very innovative, he felt that, to raise the money necessary to make the programme, it was essential to be able to show people what he had in mind.

Securing some finance was one thing but equally, if not more important, was to find a company who could realize the animation. Initially he contacted the people who had been involved in making Jurassic Park, but they quoted a production cost of $10,000/ sec. With that level of cost for animation they would end up with 3–5 minutes of animation per 30-minute programme. This was not what Tim had in mind, and it clearly indicated that they were not really interested. It seemed that people in the US were generally more interested in film work and not TV, so the work would have to be done in the UK.

After generating a short list of companies that might be able to do the computer animations, he invited proposals from four companies. The responses from the first three were rather disappointing: Company A’s suggestion was so extremely poor that it was not worth taking any further; Company B could not be bothered to respond; and Company C had changed their focus, which meant they were no longer suitable. This left Company D. The company, called FrameStore, founded in 1986, specialized in visual effects and computer animation for commercials, feature films, television dramas, video games, promotional graphics and title sequences.

‘I started ringing around and I whittled it down quite quickly; there are only a handful of people who would be comfortable and capable of trying to realize this and I went round and saw several of them.’ On 8th August 1996, while still filming for the Ice Mummies documentary, Tim Haines went to meet with Mike Milne, Computer Animation Director of FrameStore, and a few of his colleagues. Mike remembers, ‘In a lot of meetings we are asked to do things that are just impossible. Initially the one with Tim seemed to be one of those. It seemed that what Tim was asking for was a Jurassic Park for a TV documentary budget, but he was not presumptuous, as a first step he was asking us whether we had the technical expertise to do it and how much it would actually cost – but even at that point the other people in the meeting still felt it was not quite realistic.’ Insert: FrameStore won an unprecedented three consecutive Primetime Emmy awards in the late 90s for the visual effect (Gulliver’s Travels, The Odyssey and Merlin), and since then added a further five Emmys including one in 2000 for ‘Outstanding Animated Programme’ for Walking with Dinosaurs.

However, Tim had got his timing right, Mike was fascinated by the idea and had also reached a point in his career where he was interested in moving on from the commercials he had been doing for the past years. He felt that Tim’s series was something different, a piece to get his teeth into – and also something that was more meaningful. He liked the idea of a documentary, and, ‘Working with researchers and scientists who all had a great aim in life – and were pursuing it for not too much money.’ He knew he would desperately try to make it work. It also helped that Tim had a reputation for good documentaries and had worked with Horizon/BBC2. And finally, Tim pointed out that it would not have to be highly detailed shots. They agreed that Mike should create a short piece of animation to illustrate how he would realize the task.

When Tim went back to look at Mike’s first pictures a couple of months later he was impressed. Mike, who had spent time in the London Zoo and the London’s Natural History Museum thinking about the project, had also looked at some animal documentaries and realized that the level of detail was often not that great, it was often fast moving and even a bit blurred. So Mike took a misty shot of a rhinoceros and put some very simple dinosaur silhouette figures on top and then composited it in, so the actual amount of animation was quite limited. The detail of the animal was almost nonexistent and the compositing with all that mist around was fairly simple – but the picture at the end was utterly convincing. Tim knew they were thinking on the same wavelength when they met again on the 17th October. He recalls, ‘The lesson was, don’t throw in 500 animators and all the skin designers in the world realizing something on which you can see every scale on its body, if you don’t need to. It’s just as evocative to see an animal in the mist walking towards you.’ That’s how the cooperation started.

The very basic and short video Mike had produced was a great help in raising money for the pilot. Tim’s boss bought into the idea straight away, and BBC Worldwide was quite interested too. This meant that Tim was able to raise £100,000, which would be enough to produce a 2–3 minute pilot. Mike did not waste any time, and while Tim was seeking to raise the money he started planning for the pilot.

But not only did Mike start working pro-actively, Tim ensured that the project would move forward in his own time too. While on holiday in Cyprus over Christmas 1996 Tim shot some background footage for the pilot. In January 1997 Mike and his colleague, Andrew Daffy (now head of commercials at FrameStore), started working on the pilot.

It took about 12 weeks to complete, and looking back into his diary Mike commented, ‘I worked 60 days straight without a day’s break during that three-month period.’ The results were impressive, better than Tim had anticipated both in terms of animated time produced and visual effectiveness. ‘But,’ Mike says four and a half years later, ‘while it was great at the time now we would hate anyone to see it.

Once the pilot was done Mike had to sit down and work out the budget. He remembers, ‘The costing for the project was based on scaling up the pilot, i.e. cost and timing for the 5-minute pilot times 6 = 30 minute for each programme, and again multiplied by 6 for the series; six times two animators would be needed plus technical staff and admin, etc.’ This was quite different from how a project would normally be costed within the industry. Work in the industry would normally be based on a ‘rate card,’ which is generally available in all meeting rooms. It means a project is costed based on hourly rates for both people and equipment – but this would have pushed the budget far beyond its limits. So Mike went to see the financial director and together they worked out how to do it another way.

One decision was to recruit college graduates rather than experienced animators, another was to get second-hand equipment. However, compromising quality of equipment was not an option for compositing. They realized that they did not have the required number of machines for compositing available, but new machines would have cost £800,000 apiece, which was out of the question. So they decided to make do with the machines available but to run them around the clock, manned with junior staff. As Mike recalls, ‘We basically treated the project like a start-up.’ The original idea had been to hire a warehouse for 18 months to bring the team together, but eventually it proved more workable to use a floor in the building where FrameStore was located.

The proposal they finally came up with was based on cost plus a small profit – and that was exactly how they presented it to the BBC, being entirely open about cost and profit. Tim ended up with a total cost for the series of £6.2 m, including all shooting, location, puppets, sculptures, music, expenses for travel, and so on.

Selling the idea – phase 2.

The budget the BBC is willing to commit to any programme depends upon the broadcasting slot and the target audience for the programme. It also depends upon the type of programme, for example, a soap opera can be made for much less than £1 m an hour – Tim needed about twice that for his series. A project of this financial scope was new ground for the BBC. However, the BBC was always looking for innovative and new programmes, and Tim was convinced, ‘If we could produce the programme how we imagined it, then it would not only be very novel but also likely to attract a wide audience. The programme was not aimed at dinosaur buffs but whole families who could sit down together and watch it. This was something which the BBC was very keen to encourage.

Armed with the pilot and budget requirements, Tim set about securing funding for the series. As Tim had anticipated, the pilot made all the difference. Alix Tidmarsh, Global Intellectual Property Director, BBC Worldwide, remembers, ‘It enabled people to understand what was in Tim’s head and what they would get for their money.’ Or in Tim’s words, ‘When we showed the pilot to people they immediately understood what we were planning to do – and bought into it.

Within the BBC fund raising did not prove too difficult. It was decided to take the idea forward because it seemed simple and achievable, and nothing like that had been done on television before. Between them BBC Broadcasting and BBC Worldwide contributed £3.5 m. In total Tim ended up with six investors: besides the two departments of the BBC, ProSieben of Germany, TV Asahi of Japan, France 3 and the Discovery Channel (US) put up money for the programme. While the level of funding was unusually high for the BBC, it still meant that they would not be able to afford more than £1 million per show – not an overly generous budget for a programme that would rely almost exclusively on computer animation.

The development and its challenges.

While the fact that they had been able to gain support from television companies around the world was a great success, it also had its downside, as it meant that Tim would have to please six masters. The issues were not so much about content, that was clearly the domain of the producer, but different countries had different requirements in other respects, particularly with regards to programme length. This caused big discussions about the format of the series, i.e. how long each programme should be and how many parts the series would have. For example, the BBC would develop 30-minute programmes, commercial stations would be looking for 50 minutes of production plus 10 minutes for advertising. In the end there was no common format, but individual countries would follow what was most appropriate for their environment: in the UK the series was scheduled to run in six 30-minute sessions, the US planned to broadcast a three-hour session with scientists’ comments in between, and Japan planned to incorporate its own work too. However, in the end all changes had to be approved by the BBC and individual countries were not allowed to alter the creative content of the product. It was Tim’s responsibility to negotiate and give his final approval – though, as Alix pointed out, ‘One has to realize that it can be very difficult if not impossible to control, in the end it becomes a matter of trust and relationships, and it is very important that everyone gets on board early and buys into the idea at the outset.’ As the team wanted to make sure that the dinosaur world came alive with as much realism and accuracy as possible, they set about the challenge to making something that was scientifically rigorous as well as being dramatic and entertaining. This meant that important preparatory work had to be done before they could start:

The right locations had to be found.

Dinosaurs to be featured in the series had to be identified.

The time periods covered in individual programmes had to be agreed.

This meant consulting with experts in the field. As Tim recalls, ‘We spent a year and a half designing the storyboards.

In the process we consulted over 100 palaeontologists, their area of expertise varying from dinosaur footprints to dinosaur movement to dinosaur dung, all to ensure the programmes would be informed by the latest scientific thinking. In addition, we had a dedicated palaeontologist working with us in that time, and a further seven who acted as scientific advisors – each series had its own specialist.’ Before Mike and his team could go to work, Tim arranged for several of the world’s leading palaeontologists to visit FrameStore to give staff a two-day intensive course.

As well as the palaeontologists, there were the palaeobotanists and palaeoentomologists and palaeoclimatologists, geologists, etc. What the team was not quite prepared for was that the palaeontologists would all disagree with each other; there did not seem to be one single truth. In the end it was about making the best possible judgement given the information available. The discussions and debates throughout the cooperation were not only educational for the BBC team. The scientific community does generally not have the kind of money that is available for television work, so scientists would otherwise not have been able to spend the amount of money and time on investigating a particular aspect of dinosaurs, for example how dinosaurs might have moved. It was in the interest of all parties to work together to generate the best knowledge possible, because in the end it was all about testing theories that could never be proven. In addition to seeking scientists’ advice, the team drew on the BBC’s natural history library, making cuts of every animal documentary they found to give the animators stimulating ideas about how animals might move.

All the creatures that the team ‘created’ had to give a realistic impression of scale. Tim comments, ‘The scale is a very difficult thing if you don’t have a human there, you can’t tell specific sizes. Since we couldn’t put humans in, we tried very hard to get that moment of ‘‘wow, isn’t he big!’’ through the way we designed the shots! Using low camera work and wide angles we tried to achieve a sense of their enormity.’ Walking with Dinosaurs took over three years to produce, with 18 months spent on research and two years on production. Asked how long it took to shoot a typical scene producer, Jasper James, answered, ‘In terms of person-hours, the programmes took 75,000 times longer to make than to watch – the animation was the slow bit not the filming – a five-minute scene takes about four days to shoot.

Locations and dinosaurs.

Insert: How do you know what Vegetation was around at the Time of the Dinosaurs?

Plants get fossilized just like animals do, although those without hard woody parts tend to get preserved less frequently. Also we have fossilized dung – called coprolite – which tells us not only what plants were around but what the animals were eating! The pollen from plants, too, is often fossilized. This may sound strange, but many millions of pollen grains are produced by plants, and they also have a relatively tough coating, so they do fossilize quite well. It is possible to identify pollen grains from different plants (though not always possible to identify which plants it came from), so they can be very useful in telling what species were around when – and where.

Over a period of 14 months they filmed in these locations sible to identify which plants it came from), so they for a total of 27 weeks. Jasper James, recalls, ‘We were on can be very useful in telling what species were location about one month at a time, very long hours, hard around when – and where.

work, sometimes wonderful, sometimes horrible – nearly Over a period of 14 months they filmed in these locations for a total of 27 weeks. Jasper James, recalls, ‘We were on location about one month at a time, very long hours, hard work, sometimes wonderful, sometimes horrible – nearly always uncomfortable, but the places were beautiful.’ The plan was to shoot between 10 and 12 set-ups a day, but the schedule had to be flexible to allow for incidents. For example, on one occasion in Tasmania they had three days of heavy rain mixed with snow, and were unable to film a single frame. However, on one of their best single day’s shooting they covered 26 set-ups. The film crew averaged ten people (in comparison, a mini series can have a crew of up to 100 strong).

Choosing the dinosaurs was simpler in comparison. While it was a long process in as much as it required the gathering and sorting of much information, they basically went for the ones that are best researched. They made sure that there was a very large fossil site underlying each programme. As Tim pointed out, ‘There is so little to go on from the fossil record that we need as much help as possible!’ (See Appendix I for a list of the stars of the show.) Attention to detail.

Whatever was decided on, the team tried to stick to what they could reasonably predict rather than speculating wildly. They wanted to avoid any uncertain aspects. Though, as Tim points out, ‘Of course the simple fact that dinosaurs don’t exist any more meant that the production team faced a number of challenges! The research was straightforward enough but we encountered a huge range of conflicting scientific opinions. So, a consensus had to be reached based on the theories with the most evidence to support them.’ Fortunately, many palaeontologists were happy to help because the programmes would be the first time their research would be brought to life. Jurassic Park had certainly been spectacular, but it had not been an accurate portrayal of dinosaur life.

With regards to details on individual dinosaurs, stature and size were probably the easiest to ascertain. Fossilized bones gave a lot of clues as to where muscles would have attached and how big each animal would have been.

Other aspects were not as clear-cut, for example speed and motion of dinosaurs, as well as skin colour and behaviours. For all aspects the team sought best advice and then made the best possible decision on the knowledge gathered. For example, as to how they determined at what speed a certain dinosaur would travel, researcher Alex Freeman explained, ‘It was difficult, but not impossible, to estimate the speeds of dinosaurs from their trackways. By measuring the spacing between the feet it should be possible to calculate the running or walking speed – if only we knew the length of the legs. It is rare that we can identify footprints as belonging to a particular dinosaur, but it is possible to estimate roughly the length of the legs of the dinosaur from the size of its feet! Therefore we can make a good guess at the speeds of different dinosaurs.’ Detailing the skin was another difficult issue. Initially, they tried to use photographs for the skin – but that did not work. However, in some cases they were lucky and some dinosaur skin imprints had been found which showed exactly what some dinosaurs’ skin had been like. But there was no direct evidence of any dinosaur’s colour, so they had to make guesses using modern animals’ colours as a guide. They were also lucky in finding an expert during their recruitment process. A chap called Daren Horley rang up and asked whether they had someone to do the skin for the dinosaurs. He explained that he was a commercial artist but that he had learned everything one possibly could about dinosaurs and their skin. The BBC had originally employed a graphic designer, but the first dinosaur that had come to FrameStore had not been too realistic, so when Mike showed Tim a dinosaur painted by Daren, Daren got the job. He’d painted highly detailed skin in Photoshop, which was then pasted onto the models.

Just like the colour, sounds were very difficult to speculate about, as Tim explains, ‘A little brown bird can make an extraordinary set of sounds. In the end, we created sounds that seemed to fit the size and shape of the body.’ Theory into praxis.

In preparation for the project FrameStore decided to hire people rather than put them on time contracts, as was often done in the industry. Mike believed that after the making of Walking with Dinosaurs this kind of business would take off. He strongly believed this business had a future – he just knew it would be big. However, one problem was to get the right people. For computer-generated imaging there were not many skilled people in the UK. Unlike in the US, at the time no one in the UK offered proper training in that area. Mike points out, ‘Computer animation is an animation job, not a computer job.’ Not being able to rely on conventional avenues of recruitment he approached two people from a games company he had come across in an animation software user group. Though the games industry was generally not too well regarded in the industry, these people tend to be quite skilled at animation, work fast and know what they were doing. And, as Mike recalls, ‘They were desperate to get out and get into something more meaningful. And,’ he adds, ‘these two turned out to be our secret weapon.’ He ended up with a team of about 30, made up of 15 computer animation staff, including nine animators, three technical support staff, one skin designer, two part-time programmers, a team of six to eight worked on the compositing aspects, putting the images together, with the remaining seven to nine working on production and administration.

The project was set-up in a completely isolated unit – one reason was to get away from ‘infection’. People tended to work on a number of projects and there was always one going wrong, Mike did not want the bad tension to affect the team. Instead he wanted everyone to be 100% committed to the project, own it, feel responsible for its success and for solving problems. He wanted people to feel part of a family, of ‘being in it together’. He deliberately wanted to create an atmosphere of ‘us and them’ in the organization – which was very much not what people at FrameStore were used to. He highlighted another reason, ‘If people work on more than one project and come up against a problem that is tricky, they move onto another project and solve all easier problems first.

People tend to postpone working on the most difficult tasks – at least working on the less difficult tasks gives people the sense that they achieve something. If there is only one project to work on, you cannot avoid working on the tricky problems.’ Mike also decided to emulate American working conditions and divide tasks up among his team according to individual skills. Normal practice in computer graphics across Europe was for staff to become generalists. FrameStore decided that, to meet the BBC’s deadline and produce the highest quality work, the team should make the maximum use of individual skill, and over the course of the project each team member became a specialist in their own area.

Walking with Dinosaurs was produced using a combination of CGI (Computer-Generated Images) and ‘animatronics’.

CGI means that the images come out of the computer rather than being externally generated and then manipulated by the computer. ‘Animatronics’ – animated models – were used for many of the close-up shots. Whilst computer graphics were good, they were better for long-distance shots. Animatronics were more realistic in close-up work, such as a dinosaur eating or drinking. Mike estimated that about 80% of the series had been done in CGI, the remaining 20% using animatronics (made by a UK-based company called Crawley Creatures). An animatronic model could take between two weeks to two months to make. The result was 20 minutes of animation per 30 minutes session; in Jurassic Park in comparison there were about 7–8 minutes for the entire film.

Tim drew up storyboards thinking he might have to accept that his ideas could not be realized. ‘I had an ideal that I wanted to aim for, but I was always prepared to forget things and try to find another way round things. But Mike Milne and FrameStore have this foolish ‘‘can do’’ policy, so they threw themselves at everything we asked them to do and, as time passed, in fact the reverse happened.

They would say, ‘‘You know how the script says that this dinosaur does this? Well, why don’t we have him walk right into the camera?’’ so the whole thing fed off itself and as you are riding the crest of the wave, things just get better and better. None of us was complacent, we were all perfectionists saying, ‘‘no, we can do better’’ and ‘‘no, let’s try that again’’ and that’s fundamental.’ Mike’s praise was just as fulsome, ‘Tim proved to be very flexible, he was willing to change the brief/the story if the way he initially proposed was too difficult or too expensive to do.’ Insert:

Whilst Jurassic Park is hugely regarded by the industry and is considered to be a benchmark in this kind of animation, we established very early on that Walking with Dinosaurs would be made in the style of a wildlife documentary, with the viewer watching the dinosaurs going about their normal activities in their natural habitat.’ But the biggest challenge remained how to make something unreal look real. To get an idea about dinosaur movement and behaviour, much time was spent studying existing natural history documentaries. FrameStore realized that a range of techniques would be needed to make the film look as realistic as possible. Tim explained, ‘The majority of shots in a documentary have a moving camera, either hand-held, panning or tilting. These we had to create without the assistance of motion control or repeatable memory heads, this was especially difficult for several The making of dinosaurs.

The BBC commissioned three sculptors to produce highly detailed scale models of each of the dinosaurs, based on their skeletons and the most up-to-date research. These were then scanned using Soho Cyberscan, FrameStore’s state-of-the-art scanning system, specially developed for the project, and which, by using a laser scanner on a robot arm, could build up an incredibly detailed and accurate image. A major challenge was preserving the skin detail of the dinosaur models without overloading the database – a challenge met by a breakthrough in programming made by team member Andy Lomas. A crude version of each character was generated to allow animators to track movements and check positions without overloading the system with too much data. Only towards the end of the process was minute detail, such as skin colour and texture, put back into the image. ‘One of the fundamental needs for animators are systems that operate with enough speed to enable them to animate intuitively,’ explains Mike Milne, ‘SoftImage does not allow animators to switch between simple and complex images swiftly, so another of our team members, Alex Parkinson, built a system that could.’ Daren Horley, responsible for designing the dinosaurs’ skin, looked at different species in detail, and found himself facing a dilemma. ‘Ken Carpenter, a palaeontologist from the University of Colorado, was kind enough to leave me some casts of skin impressions from a Stegosaurus. The thing that struck me was the small size of the scales, on a large animal they would be all but invisible at a distance. I discovered that to make the scale texture show up at TV resolution I had to make them reasonably large; it became an informed compromise between what was scientifically accurate and what looked right. The BBC suggested a look that utilized a lot of colour, but I felt that we might risk a toy-like appearance and favoured a muted colour palette.’ Bringing the dinosaurs to life.

Putting dinosaurs into a background was not an issue, that was something FrameStore did all the time, but the question was, how to get life-like creatures with lifelike movements? A first idea was to use real animals and transfer their movements to the dinosaurs, that was what Mike had done for the pilot (rhinos, elephants), but Mike felt that if only they could get the movements right they would not have to worry too much about the rest. The problem was that there were not many animals around they could use. The right people at the right time helped overcome this issue, Mike remembers, ‘We were very lucky. The two people I recruited from the games industry were absolutely brilliant, they could not only make movement look just right, they were also very fast doing so. Had we not found them it could have been a big problem.’ Insert:

How long on average did it take to make a fully rendered Computer-Generated (CG) Dinosaur?

On average: two weeks to build the CG model from the scanned maquette, two weeks to paint the textures, three to four weeks to animate the basic walks, runs, etc., another four to six weeks to animate all the shots, about three weeks for the computer to render all the frames, and then a couple of weeks to combine the images with the live-action backgrounds.

But even the animation of the animals was only part of the equation. The computer-generated dinosaurs needed to be placed onto live action backgrounds – and they needed to interact with the environment. So it was decided to film various bushes, trees, plants, driftwood and rocks against a portable bluescreen. Using a bluescreen would allow the placing of individual elements together or adding aspects into a scene without encountering problems with the background. The BBC crew also scaled trees and tweaked branches with string to simulate a dinosaur’s shoulder brushing against it, and threw stones into streams to create splashes where the dinosaur’s feet would tread. In the studio dust clouds, splashes, water sprays, drips, etc., were also filmed against a bluescreen backdrop.

All camera angles and lenses had to be measured meticulously to make sure that the dinosaur animation matched the movement in the background plates. Lighting references had to be taken (using high-tech equipment such as footballs) to ensure a perfect match for compositing.

Footage was loosely cut together, crude block animations were then placed onto the background plates to give a sense of timing, followed by the modelling and animation.

Subtle effects such as reflections in water and shadows were then added and the grading matched between each shot. Once this had been completed the most detailed images of the dinosaurs were composited onto the background plates, using Inferno and Henry, and bluescreen layers were added. Simulations of hand-held camera effects such as pans and tilts were added towards the end of the process, along with other effects such as motion blur to lend realism to the shots. (For more details on the stages of the animation process, please refer to Appendix 2.) Insert:Computers and Software behind the Dinosaurs FrameStore used SoftImage, a specialized animation software, costing about £10,000, for all modelling, animation and rendering. The combining of images with live-action was done on special machines called ‘Henry’ and ‘Inferno’ which cost nearly half a million pounds. In terms of hardware they used Silicon Graphics Octanes for the animation, dual Pentium 2’s for the rendering. The Octanes were not all that powerful – about 200 MHz with 256 Mb RAM – but they had special graphics boards for really fast previewing. The rendering machines had twin 700 MHz processors with 1 Gb RAM.

If i only had time. They created a word ‘blockmatic’ – block out animation. Mike explains, ‘It meant you had to decide two things. First, how many creatures are in the picture and second, how fast they are going to move, no more. Setting up the entire episode like that helps the producer to get a feel for the whole flow and it does not require a great creative genius to achieve that. That completed Tim would then decide what actions he would want the dinosaurs to do in each scene. The advantage of breaking it down into such steps is that they are non-threatening and achievable.’ ‘And,’ adds Mike, ‘at any time you have got something you can deliver.’ ‘When working in the creative industry,’ Mike comments, ‘it is essential to know when to stop.’ Creative people tend to want to refine and refine and refine. During the making of Walking with Dinosaurs, Mike took the shots out from the previous day first thing the next morning and put them onto the computer. That way he knew exactly what/how much had been done. He would make the decision when something was finished, which members of the team might have argued with, saying that they would want to spend more time on a particular scene, but he had the final say. In his view it was preferable to be able to deliver than refine the product endlessly. He explains, ‘One has to set limits in one’s own mind as to what it is people get out of the documentary rather than getting it 100% right.’ Another way to manage a huge task was to break down the creative tasks into manageable chunks. ‘But,’ he emphasizes, ‘you need to do it all in parallel, so at any time there is a finished product and you can see it all at the same level [of quality], then elevate it to the next level, etc.’ However, seven months into the project they had still not a single episode completed. FrameStore’s MD was getting really worried. Mike, on the other hand, felt that the learning from the first episode would enable them to do the rest much faster later on. They were also developing a set of behaviours that could be used in all scenes. About 1/6 to 1/10 of the scenes would be special and more detailed, but going over the same ground again and again was kept to a minimum.

When they were just about one year into the project, Mike decided to call a crisis meeting, he felt they had a serious decision to make. They had lost too much time in the beginning and were now running out of time. Mike went to the team and suggested they hire more people to get the work done. This would mean that the profit would get blown out of the window, but at least they would be able to deliver on time. The team, though, did not agree with this. Mike remembers, ‘They just said, ‘‘no way, not a good idea’’. But the good thing was that a few days later they came back with a counter-suggestion: the existing team should split in two and just get on with it.

Their argument was that they would have to spend so much time training the newcomers they might as well do it themselves. Splitting the existing team in two meant that they could work on the two most straightforward episodes simultaneously.’ Though the arithmetic seemed a bit strange, it worked, though Mike admits that the quality for one of the two suffered a bit. However, on the upside, the episode for which quality was slightly compromised was set under water where the scenery was so beautiful that it did not need such high quality to have a positive impact on the viewer.

Working with bbc global brand management.

In the late 1990s the BBC decided to respond to an increasingly globalized marketplace of television and entertainment. In 1998, about half way through the development of Walking with Dinosaurs, the BBC set up the Global Marketing and Brand Development Department (GMBD) to coordinate and manage products that would sell across media and globally. Part of the responsibility of the new department was to create and ensure brand consistency across the range of products developed in association with a programme.

The new department was part of BBC Worldwide, the commercial arm of the BBC whose responsibility it was to maximize revenues from BBC properties (programmes, brands) so as to generate cash to be re-invested into quality BBC programming. As part of BBC Worldwide, GMBD’s remit was to coordinate and raise investment for new projects, liaise with production to develop ancillary products appropriate to the brand, and position those products effectively in market, thereby generating revenues for BBC Worldwide and the BBC.

GMBD played an essential part in realizing new productions. First and foremost, BBC Worldwide would acquire the rights from the BBC in return for its investment. Secondly, they would cooperate with production to develop a brand proposition in keeping with television and translate this into brand and style guides (see Appendix 2I) – this process aided the crystallization of a unique selling proposition of a production. Prior to the setting up of GMBD, such decisions would have been left to the discretion of the producer. Thirdly, GMBD tended to take a strategic perspective on the development of BBC properties. It would look to identify opportunities across new media, new channels and routes to market.

Throughout programme development the team in BBC Worldwide would also make sure that producers were aware of the commercial necessities. For example, in countries such as Japan, the use of a presenter can cause problems. The Japanese audience would not have responded positively to a British presenter and would require their own. A similar reaction could be expected in France, where the issue has more to do with the French perception that the presenter format ‘talks down’ to the audience. While many producers are aware of commercial necessities when developing programme content and structure, there can be a conflict between commercial and creative interests. And while this may not be explicitly expressed Tim comments, ‘BBC Worldwide would rarely directly object to any project by a producer, but whether they thought it was worth it or not would be reflected in the money they are willing to put up. In the end getting a film off the ground means ensuring that everyone’s needs are met.’ Paul Clarke, Head of Factual Global Marketing, BBC Worldwide, adds, ‘Collaboration at all levels is the only way to ensure successful acquisition of funds for new programming and ensuring that the brand is marketed effectively.’ In the process of programme development there are two main points of contact between commercial and production: tagging meetings and the development of the concept for a production.

If and when required, commercial would call tagging meetings. During these meetings, producers present treatments (synopses of what the programme or series is about plus initial budgeting) and GMBD assess them as to their commercial value and tags those it is interested in. Evaluation criteria would include whether the programme would be likely to be transferable into more than four countries, whether it would have potential to be exploited through a range of media, i.e. video, book, merchandise, etc. and whether it would have some permanence in the marketplace, i.e. promises to be a series rather than a one-off. As Paul explains, ‘To effectively market a title such as Walking with Dinosaurs requires significant marketing investment, and therefore you need to sustain brands for the long term rather than launch new titles every quarter.’ Before the setting up of the GMBD department, much of the interaction between commercial and production tended to rely on personal contacts and initiative. Now there were four main kinds of meetings between GMBD and production:

1. Commercial hours meetings: ensuring an understanding between production, GMBD and BBC public service of the demand and supply of science, natural history and history, arts and documentaries programming. Insights from the meeting would direct the allocation of investment.

Editorial meetings: between production and GMBD: allowing GMBD to preview up and coming titles and 2.

share ideas with production.

3. Title launch meetings: GMBD would align production with stills/specific requirements to facilitate cross-media exploitation; it would also allow production to update GMBD on latest changes to programme treatment.

4. Title review meetings: ongoing and ad hoc as necessary.

Once a treatment had been selected and budgets have been signed-off, an initial development meeting would be held between commercial and production to discuss the latest treatment, as this could change during the first phase, as well as identify stills requirements. It was important to do this early on as production used to work on these aspects towards the end, but as the production of books could have lead-times of 18 months or more, programme and related products would not be available at the same time. Early agreement on ancillary products was important for another reason: different media have different demands on the quality of images. For example, pictures for the book need a higher resolution than those for the film, which meant that additional money would be needed. It was further important to agree to time-lines, particularly as people in production would not always be aware of ancillary product time-lines, which often varied widely from those for television production.

Finally, BBC Global Brand Management would engage in the brand development and positioning. Generally this would involve the following:

An outline on how to position the programme Developing a brand guide Developing marketing plans Effective positioning development would rely on close cooperation between production and GMBD. By necessity this had to be an iterative process given that the ideas would initially be primarily in the producer’s head and could change, especially in the early stages. The visual identity would be developed out of the brand positioning and marketing plans would be developed in collaboration with BBC public service marketing media format teams (publishing, video and DVD, etc.) and applied to international markets.

For Walking with Dinosaurs the process was slightly different, as GMBD did not exist when the series went into production. Alix remembers, ‘The Walking with Dinosaurs series was started before we came into being. Half the auxiliary products had already been initiated and we were not too happy with the consistency – or lack of it – across the products.’ However, in many ways the series was seen as a test case for the new approach, signifying a shift from programmes primarily driven by production to programmes developed in close cooperation with GMBD. It was a first not only in its scope of international outlook, but also in terms of developing merchandise for a factual – rather than fictional – programme.

The results.

Initially it was quite difficult to get licensees to understand the difference between Jurassic Park and Walking with Dinosaurs. The difference was not in the animation, but in the fact that Walking with Dinosaurs was aiming to be a documentary, whereas Jurassic Park was made up, beginning to end. In addition, Walking with Dinosaurs would not have used human beings in their film or anything else that would not have been consistent with the world in those days.

Still, there was some criticism from some palaeontologists. Though Tim Haines pointed out, ‘90% of the palaeontologists I talked to are delighted, and anyone who is involved in museums or institutions that thrive on public interest are also delighted. It is interesting to look at some of the criticisms from the Natural History Museum, which has used Walking with Dinosaurs in its advertising campaign to get people to attend. Dismissing the series as invalid, because it’s based on speculation, betrays a deep-seated elitism.’ It was felt that there would have been room for improvement. Transmission in the UK was October 1999, a lot of the products only came out about 12–18 months later. Another issue with the product was that one cannot trademark the ‘truth’. Had production been aware of this they could have ‘personalized’ the dinosaurs, e.g. a broken tooth, a scar, etc., which would have helped to brand merchandise. Had they been able to liaise with Tim earlier, they could have alerted him to that fact and individual dinosaurs would have been more trademarkable. As a consequence, BBC Worldwide has now developed a philosophy guide that clarifies unique selling points. In addition, there is a brand guide as well as a style guide that outlines how to use the logo.

Despite these issues, the series has gone from strength to strength and the results are impressive:

In September 99, even before the first broadcast the series had generated more than £1.30 m in television pre-sales.

The series has been the 19th most popular programme ever at the BBC, and it has done incredibly well because it is not linked to any particular culture and can be translated into any language.

In the US it broke all records; it was the highest non-sports cable programme; in spring 2000 over 40 m people in the US watched all or some of the programme on the Discovery Channel.

By December 2000 the series has had a total retail marketing value approaching £35 million and has generated more than £1.7 million in programme sales with TV deals in 22 countries; BBC Worldwide hold all publishing rights to the series, advance orders and sales of the video and books alone have already been made to the value of £1.25 million.

By mid-2001 the series had been licensed to over 50 countries.

By mid-2001 Tim’s book had sales in the UK in excess of 700,000 and about the same number of the children’s book were sold; the book had also been Number 1 in the Sunday Times Hardback ‘General’ category for two weeks.

All in all, the programme has made a turnover of more than £25 m and won several awards (see Appendix IV). Tim explains the success as follows, ‘TV is there to entertain.

Also to educate but that is not the primary objective. On TV you want to give people relaxation and Walking with Dinosaurs is both highly entertaining and highly educational.’ He also points out that, ‘The first programme was even better than the pilot in that is was even more realistic. This was just as well as expectations had been raised through the excellent pilot. As a producer you have a problem, you want people to be excited about a programme but the more fuss people make about a programme the more the pressure is on for the producer to meet or exceed expectations.’ Insert: ‘Walking with Dinosaurs is the first major example of global brand marketing in the factual area and is, with all ancillary marketing products, pointed to become one of BBC Worldwide’s top earners. It has already broken audience records for ABC in Australia and has been a massive hit in Germany for Pro7 – it is a worldwide phenomenon.’ said BBC Worldwide Chief Executive Rupert Gavin.

Questions 1. What are possible mechanisms for ensuring both creativity and commercial realism?

2. Drawing on both your own experience and the case study, what does it take to make an innovative project happen? [What are aspects of innovative projects (a) generally (b) in this case? How were they addressed?] 3. What are the considerations in innovating for a global market?

4. What are considerations for developing a global brand?

Appendix i: meet the dinosaurs.

Starring in each of the series:

1. New blood – 220 million years ago Coelophysis – meaning hollow form (because of his thin bones) dinosaur; carnivore, meat and fish eating, cannibalistic scavenger.

Placerias – mammal-like reptile; herbivore.

Cynodont – meaning dog-toothed; half mammal, half reptile; omnivore.

Postosuchus – archosaur; carnivore.

Peteinosaurus – early pterosaur; insectivore.

2. A time of titans – 152 million years ago.

Diplodocus – meaning double beamed lizard; dinosaur, herbivore.

Allosaurus – meaning different lizard; dinosaur; carnivore.

Stegosaurus – meaning covered lizard; dinosaur, herbivore.

Anurognathus – meaning without tail and jaw; pterosaur; insectivore.

Orchitholestes – meaning bird robber; dinosaur; carnivore.

3. Cruel sea – 149 million years ago.

Ophthalmosaurus – meaning eye lizard; ichthyosaur; carnivore.

Liopleurodon – plesiosaur; carnivore.

Rhamphorhynchus – meaning beak snout; pterosaur; carnivore.

Eustreptospondylus – meaning well-reversed vertebrae; carnivore.

Cryptoclidus – meaning hidden collar bone; plesiosaur; carnivore.

Hybodus shark – cartilaginous fish, carnivore.

4. Giant of the skies – 127 million years ago.

Polacanthus – meaning many spined; dinosaur; herbivore.

Ornithocheirus – meaning bird hand; pterosaur.

Tapejara – meaning old being; pterosaur; carnivore.

Iguanodon – meaning iguana tooth; herbivore.

Utahraptor – meaning robber from Utah; dinosaur; carnivore.

5. Spirits of the ice forest – 106 million years ago.

Leaellynasaura – named after daughter of palaeontologist Tom; dinosaur; herbivore.

Dwarf allosaur – meaning strange lizard; dinosaur; carnivore.

Muttaburrasaurus – named after a township in Australia; dinosaur; herbivore.

Koolasuchus; named after a palaeontologist; amphibian, carnivore.

6. Death of a dynasty.

Anatotitan – meaning giant duck; dinosaur; herbivore.

Torosaurus – meaning bull lizard; dinosaur; herbivore.

Ankylosaurus – meaning fused or stiff lizard; dinosaur; herbivore.

Tyrannosaurus – meaning tyrant lizard; dinosaur; carnivore.

Appendix 2i: excerpt from brand guide.

Brand positioning.

the real-life experience with the most extraordinary creatures that ever lived Brand substantiators.

travel back in time and watch living, breathing dinosaurs in their natural habitat.

it feels completely real; a primeval environment is created by leading-edge computer technology, animatronics and footage from locations around the globe where ancient plants still survive.

story-led programmes which show us the anatomy, life-cycle and behaviour of dinosaurs – familiar favourites like Tyrannosaurus Rex, as well as less familiar creatures like Liopleurodon, the world’s largest carnivore at 25 meters long.the latest palaeontological theories on the magnificent prehistoric animals which roamed the earth for 160 million years.

Target audience.

broad family appeal – adults and children alike.

everybody who loved Jurassic Park.

everybody with an interest in natural history or palaeontology.

How does it make me feel?

Wow, that was amazing.

I feel I could reach out and touch them. . . the detail is fantastic.

When you see the dinosaurs in the forest crashing through the trees, splashing in the water, chasing insects – it’s like being on a dinosaur safari.

Brand values.

real, captivating, cutting edge.

Associated products.

home videos.

adult trade books.

children’s books (photo book, sticker book, Q&A book, 3D poster book).

DVD.

Music CD.

Merchandise.

Online site.

MBA in a day. Chapter 14, Quality Management Systems.

For more than two decades “quality” and “quality manage ment systems” have been leading buzzwords in the busi ness world. Numerous consultants have built their careers around these topics, and quality issues in business have been responsible for the development of new organizations and even industries, for instance, the American Society for Quality and Six Sigma consulting.

The notion of quality in business focuses on the savings and additional revenue that organizations can realize if they eliminate errors throughout their operations and produce products and services at the optimal level of quality desired by their customers. Errors can take almost any form—for example, producing the wrong number of parts, sending bank statements to customers who have already closed their accounts or sending an incorrect bill to a client. All of these errors are very common, and the costs incurred seem minimal. But over time when mistakes are repeated the costs add up to a significant amount, so eliminating errors can result in significant increases to the bottom line of a business.

What is quality?

According to the American Society for Quality, “quality” can be defined in the following ways:

Based on customer’s perceptions of a product/service’s design and how well the design matches the original specifications.

The ability of a product/service to satisfy stated or implied needs.

Achieved by conforming to established requirements within an organization.

What Is a Quality Management System?

A quality management system is a management technique used to communicate to employees what is required to produce the desired quality of products and services and to influence employee actions to complete tasks according to the quality specifications.

What Purpose Does a Quality Management System Serve?

Establishes a vision for the employees.

Sets standards for employees.

Builds motivation within the company.

Sets goals for employees.

Helps fight the resistance to change within organizations.

Helps direct the corporate culture.

Why Is Quality Important?

Business success may simply be the extent to which your organization can produce a higher-quality product or service than your competitors are able to do at a competitive price. When quality is the key to a company’s success, quality management systems allow organizations to keep up with and meet current quality levels, meet the consumer’s requirement for quality, retain employees through competitive compensation programs, and keep up with the latest technology.

History of the quality movement.

As early as the 1950s, Japanese companies began to see the benefits of emphasizing quality throughout their organizations and enlisted the help of an American, W. Edwards Deming, who is credited with giving Japanese companies a massive head start in the quality movement. His methods include statistical process control (SPC) and problem-solving techniques that were very effective in gaining the necessary momentum to change the mentality of organizations needing to produce highquality products and services. Deming developed his 14 points (Appendix 14.1) to communicate to managers how to increase quality within an organization.

Deming believed that 85 percent of all quality problems were the fault of management. In order to improve, management had to take the lead and put in place the necessary resources and systems.

For example, consistent quality in incoming materials could not be expected when buyers were not given the necessary tools to understand quality requirements of those products and services. Buyers needed to fully understand how to assess the quality of all incoming products and services, understand the quality requirements, as well as be able to communicate these requirements to vendors. In a wellmanaged quality system, buyers should also be allowed to work closely with vendors and help them meet or exceed the required quality requirements.

According to Deming, there were two different concepts of process improvement that quality systems needed to address: (1) common (systematic) causes of error, and (2) special causes of error.

Systematic causes are shared by numerous personnel, machines, or products; and special causes are associated with individual employees or equipment. Systematic causes of error include poor product/service design, materials not suited for their use, improper bills of lading, and poor physical conditions. Special causes of error include lack of training or skill, a poor lot of incoming materials, or equipment out of order.

Another influential individual in the development of quality control was Joseph M. Juran, who, like Deming, made a name for himself working in Japanese organizations focusing on improving quality. Juran also established the Juran Institute in 1979; its goals and objectives were centered on helping organizations improve the quality of their products and services.

Juran defined quality as “fitness for use,” meaning that the users of products or services should be able to rely on that product or service 100 percent of the time without any worry of defects. If this was true, the product could be classified as fit for use.

Quality of design could be described as what distinguishes a Yugo from a Mercedes-Benz and involves the design concept and specifications. The quality of a product or service is only as good as its design and intention. Thus, it is important to include quality issues in the design process, as well as to have in mind during the design phase the difficulties one might have in replicating the product or service with the intended quality level.

Quality of conformance is reflected in the ability to replicate each aspect of a product or service with the same quality level as that intended in the design. This responsibility is held by individuals to develop the processes for replication, the workforce and their training, supervision, and adherence to test programs.

Availability refers to freedom from disruptive problems throughout the process and is measured by the frequency or probability of defects—for example, if a process does not have a steady flow of electricity and this causes defective parts, or when an employee must complete two jobs at once and is therefore forced to make concessions on the quality of both products or services.

Safety is described by Juran as calculating the risk of injury due to product hazards. For example, even if the product or service meets or exceeds all quality standards and expectations, but there is a possibility that if it is not used properly it could injure someone, the product will not be considered high-quality.

Field use refers to the ability of the product to reach the end user with the desired level of quality. This involves packaging, transportation, storage and field service competence, and promptness.

Juran also developed a comprehensive approach to quality that spanned a product or service’s entire life cycle, from design to customer relations and all the steps in between. Juran preached that an organization should dissect all processes and procedures from a quality perspective and analyze for a “fitness for use.” Once this is completed the organization can begin to make changes based on the “fitness for use” model.

The Quality Revolution Comes to the United States.

The push for increased quality began in American manufacturing companies in the 1980s, following in the footsteps of Japanese manufacturers. Japanese companies found themselves with a distinct competitive advantage over American companies with their ability to produce much higher quality products with fewer defects.

The Ford Motor Company was the first to invite Deming to help the company transform itself into a quality-oriented organization. As a result, Ford was able to achieve higher quality standards than any other American automotive manufacturer and substantial sales growth in the late 1980s even when the rest of the U.S. automotive market was declining. Ford attributes the ability of its Taurus to overtake the Honda Accord in annual sales to the high quality standards set by the company.

The U.S. Congress, seeing the need for American companies to strive for increased quality, established the Malcolm Baldrige National Quality Award, modeled after Japan’s Deming Prize. This spawned a substantial increase in the resources American businesses allocated for quality improvement, and within 10 years an American organization, Florida Power and Light, was able to capture Japan’s Deming Prize for quality.

Since the early 1980s and on into the twenty-first century, quality issues have surfaced in every industry and almost every organization in the United States. The quality movement started in manufacturing and then moved to service industries. Initially service organizations did not feel quality systems would transfer very easily from manufacturing, but today service companies are reaping substantial rewards from implementing quality programs.

Throughout the history of the quality movement there have been several approaches to quality and even the development of several organizations dedicated solely to setting standards for quality.

Standardized Systems.

ISO 9000 is a series of quality management systems (QMS) standards created by the International Organization for Standardization, a federation of 132 national standards bodies. The ISO 9000 QMS standards are not specific to products or services, but apply to the processes that create them. The standards are generic in nature so that they can be used by manufacturing and service industries anywhere in the world.

An organization that would like to have ISO certification needs to meet all the criteria stated in the ISO standards and pass a detailed audit performed by an ISO auditor. In some industries ISO certification has become necessary; for example, some large manufacturers require all suppliers to be ISO certified. While ISO certification is highly respected, if it is not a trend in your specific industry, the additional cost of certification is a deterrent to most managers. It is very possible to reach the desired quality level within an organization with a wellplanned quality system and without going through all the additional steps for ISO certification.

QS-9000, released in 1994, is the ISO 9000 derivative for suppliers to the automotive Big Three: DaimlerChrysler, Ford, and General Motors. This quality management system standard contains all of ISO 9001:1994, along with automotive sector-specific, Big Three, and other original equipment manufacturer (OEM) customerspecific requirements.

Total Quality Management (TQM).

TQM is a management approach in which quality is emphasized in every aspect of the business and organization. Its goals are aimed at long-term development of quality products and services. TQM breaks down every process or activity and emphasizes that each contributes or detracts from the quality and productivity of the organization as a whole.

Management’s role in TQM is to develop a quality strategy that is flexible enough to be adapted to every department, aligned with the organizational business objectives, and based on customer and stakeholder needs. Once the strategy is defined, it must be the motivating force to be deployed and communicated for it to be effective at all levels of the organization.

Some degree of employee empowerment is also encompassed in the TQM strategy and usually involves both departmental and crossfunctional teams to develop strategies to solve quality problems and make suggestions for improvement.

Continuous Quality Improvement (CQI).

Continuous quality improvement came into existence in manufacturing as a different approach to quality and quality systems. It does not focus as much on creating a corporate quality culture, but more on the process of quality improvement by the deployment of teams or groups who are rewarded when goals and quality levels are reached. CQI allows individuals involved in the day-to-day operations to change and improve processes and work flows as they see fit.

CQI implementation attempts to develop a quality system that is never satisfied; it strives for constant innovation to improve work processes and systems by reducing time-consuming, low value-added activities. The time and resource savings can now be devoted to planning and coordination.

CQI has been adapted in several different industries. For example, in health care and other service sectors, it has taken on the acronym FOCUS-PDCA work:

Find a process to improve.

Organize to improve a process.

Clarify what is known.

Understand variation.

Select a process improvement.

Then move through the process improvement plan:

Plan—create a time line, including all resources, activities, dates, and personnel training.

Do—implement the plan and collect data.

Check—analyze the results of the plan.

Act—act on what was learned and determine the next steps.

The FOCUS-PDCA acronym is an easy system for management to communicate to teams, and it helps them stay organized and on track with the end result in mind. The system has proven to be very successful for the CQI team approach.

Six Sigma.

Six sigma was developed at Motorola in the 1980s as a method to measure and improve high-volume production processes. Its overall goal was to measure and eliminate waste by attempting to achieve near perfect results. The term six sigma refers to a statistical measure with no more than 3.4 defects per million. Numerous companies, including General Electric, Ford, and DaimlerChrysler, have credited six sigma with saving them billions of dollars.

Six sigma is a statistically oriented approach to process improvement that uses a variety of tools, including statistical process control (SPC), total quality management (TQM), and design of experiments (DOE). It can be coordinated with other major initiatives and systems, such as new product development, materials requirement planning (MRP), and just-in-time (JIT) inventory control.

Six sigma initially was thought of as a system that could be used only in manufacturing operations, but more recently it has proven to be successful in nonmanufacturing processes as well, such as accounts payable, billing, marketing, and information systems.

At first glance six sigma might seem too structured to be effective in analyzing processes that are not standard and repetitive as in manufacturing situations, but the theory of six sigma is flexible enough to suit any process. Nevertheless, many of the lessons learned on production lines are very relevant to other processes as well.

The following is a brief description of the steps involved in the six sigma process:

1. Break down business process flow into individual steps.

2. Define what defects there are.

3. Measure the number of defects.

4. Probe for the root cause.

5. Implement changes to improve.

6. Remeasure.

7. Take a long-term view of goals.

Elements of a quality system.

There are several elements to a quality system, and each organization is going to have a unique system. The most important elements of a quality system include participative management, quality system design, customers, purchasing, education and training, statistics, auditing, and technology.

Participative Management.

The entire quality process, once started, will be an ongoing dynamic part of the organization, just like any other department such as marketing or accounting. It will also need the continuous focus of management. The implementation and management of a successful quality system involves many different aspects that must be addressed on a continuous basis.

Vision and Values. The starting point for the management and leadership process is the formation of a well-defined vision and value statement. This statement will be used to establish the importance of the quality system and build motivation for the changes that need to take place, whether the organization plans to exceed customer expectations, commit to a defined level of customer satisfaction, or commit to zero defects. The exact form of the vision and values is not as important as the fact that it is articulated and known by everyone involved. This vision and value statement is going to be a driving force to help mold the culture that is needed throughout the organization in the drive for quality. It is not the words of the value statement that produce quality products and services; it is the people and processes that determine if there is going to be a change in quality. The vision and value will be very important statements to set agendas for all other processes used to manage the quality system.

Developing the Plan. The plan for the quality system is going to be different for every organization, but there are similar characteristics:

There should be clear and measurable goals.

There are financial resources available for quality.

The quality plan is consistent with the organization’s vision and values.

The plan for the quality system might also include pilot projects that would entail setting up small quality projects within the organization. This will allow management to understand how well the quality system is accepted, learn from mistakes, and have greater confidence in launching an organization-wide quality system. The plan should provide some flexibility for employee empowerment, because, as has been demonstrated, the most successful quality systems allow employees at all levels to provide input.

Communication. Change, especially a movement toward higher quality, is challenging to communicate effectively, yet the communication process is essential for the company’s leaders to move the organization forward. Communication is the vital link between management, employees, consumers, and stakeholders. These communication lines also bring about a sense of camaraderie between all individuals involved and help sustain the drive for the successful completion of long-term quality goals.

Communication systems also must allow for employees to give feedback and provide possible solutions to issues the company must face. Management needs to allow for this in both formal and informal ways, such as employee feedback slips and feedback roundtable meetings.

The responsibility for fostering a culture that values communication lies with senior management. They alone have to ensure that goals and objectives are communicated to all. They are also responsible for setting up the system for feedback from the employees.

Rewards and Acknowledgment. Rewards, compensation, and acknowledgment for achievements in quality are very effective ways to motivate employees. They tell employees at the end of the day exactly what management is trying to accomplish. Rewards, compensation, and acknowledgment may also be seen as a form of communication— they are tangible methods that senior management uses to let employees know that quality is important. This could come in the form of individual rewards or team rewards. Rewards, compensation, and acknowledgment take many forms, and it is up to management to ensure that this type of program is in line with the goals and objectives of the quality system and the goals and objectives of the organization. Organizations have found that the best and most cost-effective reward, compensation, and acknowledgment programs are geared to meeting specific criteria. These programs motivate managers who in turn motivate their employees to strive toward predefined goals.

Quality System Design.

A quality system is composed of the standards and procedures that are developed to ensure that the level of quality desired is repeated in every unit of a product or service. This portion of the quality system is very concrete and can be measured and managed. Before you start, your organization should establish a core team to carry the performance system design process forward.

The eight steps of the design process are:

1. Understand and map all business structures and processes. This forces employees involved in designing a performance mea surement system to think through and understand the entire organization, its competitive position, the environment in which it operates, and its business processes. This will also al low for complete understanding of customer touch points and how the different operations in the organization affect the cus tomer’s perception of quality. See Figure 14.1 for an example of a process map.

2. Develop business performance priorities. The performance mea surement system should support the stakeholders’ requirements from the organization’s strategy through to its business processes. This order of priorities must be in place well before the process enters the actual design phase.

3. Understand the current performance measurement system. Every organization has some kind of measurement system in place.

For this reason, there are basically two ways to approach the de sign and implementation of a new performance measurement system. Either you can scrap the old system and introduce a new one as a replacement, or you can redevelop the existing system.

Both approaches can work, but the former approach is more likely to lead to trouble. People will cling to the old measure ment system and either use both systems simultaneously or use the old one and simply go through the motions of the new one.

You can eliminate this outcome by taking the second approach.

4. Develop performance indicators. The most important element of a performance measurement system is the set of performance indicators you will use to measure your organization’s perfor mance and business processes. This is the point in the design process where the top-down approach meets the bottom-up design approach and where the broad masses of the organiza tion become involved. The purpose of this step is to develop the performance measurement system with an appropriate number of relevant and accurate performance indicators.

5. Decide how to collect the required data. Developing perfect per formance indicators that will tell you everything you ever wanted to know about what goes on in your organization is one thing, but being able to collect the data required to calcu late these performance indicators is a completely different matter. This issue must initially be addressed during the de velopment of the performance indicators so that you avoid se lecting those that can never actually be measured. There will be trade-offs of cost and time versus the benefits of collecting data, but a likely middle ground between perfect data/high cost and no data/no cost will be found.

6. Design reporting and performance data representation formats.

In this step, you decide how the performance data will be pre sented to the users; how the users should apply the perfor mance data for management, monitoring, and improvement; and who will have access to performance data. After you fin ish, you should have a performance measurement system that has a solid place in your organization’s overall measurement based management system.

Test and adjust the performance measurement system. Your first 7.

attempt at the performance measurement system will probably not be perfect—there are bound to be performance indicators that do not work as intended, conflicting indicators, undesir able behavior, and problems with data availability. This is to be expected. In this step you should extensively test the sys tem and adjust the elements that do not work as planned.

8. Implement the performance measurement system. Now it’s time to put your system to use. This is when the system is officially in place and everyone can start using it. This step involves is sues such as managing user access, training, and demonstrat ing the system.

This is not an absolute process that needs to be followed to the letter in order for it to work. In some cases, one or more steps may be unnecessary; in others, additional steps may be needed. It’s up to you to make the necessary adjustments to the process to maximize the probability of the system’s success.

Designing Part Two of the Quality System.

This portion of the quality system is conceptual. It is more about management’s role in increasing motivation and the determination to make the first part run smoothly. It is rooted in the communication between management and employees, which was discussed earlier. In most cases, the employees who are performing the activities and process know how to improve the quality. This part of the system should allow employees to make recommendations and motivate them to want to improve quality.

Customers.

The inclusion of customers in a quality program can take many different avenues, including the cost of losing a customer, the customer’s perception of quality, and the satisfaction level of the customers. The customer portion of a quality program is going to be unique for every industry and organization, but it must capture how quality plays into the customer’s value system and how quality drives the purchase decision.

In service industries, in particular, quality is measured in customer retention rates and the cost of losing a customer. If typical accounting measures could capture the exact cost of losing a customer it would be easy for managers to allocate the exact amount of resources needed to retain customers. According to the Harvard Business Review, companies can increase profits by almost 100 percent by retaining 5 percent more of their customers. Customers over time will generate more profits the longer they stay with the same company.

Perceived quality by customers leads to referrals; in service industries, referrals can equate to more than 60 percent of new business. If a company can increase the number of referrals through increased quality, it is going to have a substantial effect on the bottom line of the business.

Purchasing.

Purchasing is an area in an organization where substantial gains in quality can be realized through the implementation of just a few policies and procedures designed around quality. Today’s suppliers need to be partners in the quality effort. A company’s products or services are only as good as the combination of all the inputs.

The first step in molding the purchasing system to collaborate with the entire quality system is to take all the standards developed for all incoming materials that can be qualified as an input to routine process or activity. If the quality system’s performance standards and procedures are completed as described in the design phase these standards should already be established.

The second step is educating the purchasing personnel on how the standards are important to the process flows of the organization.

If standards are not upheld, the quality of the product or service will be jeopardized. The employees should also be educated on how to measure and communicate the required standards. This may involve materials or statistical process control education, and it could even be as simple as cross-training the purchasing personnel so that they know exactly how the inputs fit into the organization. Once the purchasing area knows how the products are used and what problems can arise, they will have a better chance of procuring inputs that meet all the specifications.

Once steps one and two are complete it will be the purchasing department’s responsibility to communicate the requirements to suppliers and hold them accountable for the quality. This sometimes may not be a simple task and could involve finding new suppliers or working with current suppliers to develop higher quality standards.

Education and Training.

The education of employees for the purpose of reaching higher quality standards has many different facets. For example, the quality education of management is going to be different than the quality education of the general workforce, because they play different roles in the process.

Because most quality problems start at the top, so too should education. The education of management on quality issues should start with a general discussion of quality systems and the roles management plays in quality programs. With respect to general knowledge, management must understand the history of the quality movement, who the major players were, and how quality programs have affected the business world. More specifically, managers must know how quality programs have affected their specific industry in the past, and they should have an idea of what role quality programs play in the future of their industry. Management must also keep abreast of new developments in quality. The discussion of the roles that management must play in a quality system is the most important aspect of their education. Management must understand how employees view their actions or inactions, how their individual actions and jobs impact quality, and the overall importance of dedication to quality by management. Managers must understand that without strong leadership and reinforcing dedication to quality, a quality program will not be meaningful.

The education of employees for a quality program will include a discussion of how these programs will affect their jobs on a daily basis.

It should also include a brief overview of quality as well as the tools employees will use in order to ensure outputs and how their roles add to the overall quality goals of the organization.

Data Development and Statistics.

Statistical analysis is a very important aspect of quality systems. It could be considered a cornerstone of the quality improvement process and is very closely tied to auditing a quality system, which is discussed later in the chapter. Statistical process control (SPC) was what Duran taught as a decision maker in quality systems. Statistical analysis is the measurement portion of quality systems and allows it to be managed. A very common saying in management, which relates well to quality, is “you cannot manage what you cannot measure,” and statistical analysis will give you the measurements necessary to make management decisions.

Statistics was a key tool that Deming used to distinguish between systemic and special causes, and the key to quality management in general was statistical process control. SPC was developed by Walter Shewart while working at Bell Labs in the 1930s, and Deming took Shewart’s concept and applied it to quality management. Deming believed that SPC was necessary because variation is a fact of life in any process. Deming believed that it was very unlikely that two products/services when produced by the same procedure and operator would be identical.

Control Charts and Their Role in Quality Systems. Control charts are the most widely used tool in quality systems. Control charts communicate a lot of information effectively. Figure 14.2 shows a process in which all the outcomes are within the specified limits. The upper control limit (UCL) is .18 and the lower control limit (LCL) is .02, and all the points fall between these two limits. This means the process is in control and operating correctly. If some of the points were to fall outside of the UCL or LCL, it would signal that the process is not in control and action needs to be taken to correct the problem.

We discussed earlier the two different types of errors, (1) systematic and (2) special causes. Systematic errors will show up on a control chart as one or two points outside of the control limits with the rest of the points within the limits. Special causes will show up on a control chart with numerous points outside of the control limits.

The exact use of statistical measures is going to be different for each organization. Some statistical analysis will be very easy to set up and use. For example, the length or weight of a particular part can be measured and analysis can show if the parts are within the required specifications. In service industries the statistical analysis will be more abstract, but is just as valuable. For example, one could survey customers regularly and ask them on a scale of 1 to 10, “How would you rate the service?” Here are some common traits of statistical measures used in quality systems:

Are driven by the customer.

Reflect vision and values.

Benchmarked to the competition.

Are achievable.

Auditing.

Auditing a quality management system is just as important as any other aspect of the system. The audit process allows everyone involved to see if the quality management system is working correctly and if the goals and objectives are being reached. Auditing also plays major roles in motivating employees and allows for rewards and acknowledgment measures to be assessed as well as possible compensation.

Auditing of quality management systems can take many forms, and each organization will have a unique auditing process that fits its system. Service industries will have a very different auditing system than a manufacturing organization, but the end result of the systems is going to be the same. Here are some examples of auditing systems used in service organizations.

Mystery Shoppers. Shoppers are sent to businesses to interact with employees and assess the overall service quality and report back to management. This is usually done on a regular basis, and reports are produced for the employees.

Customer Surveys. Customer surveys are now well used as a means to find out how your business is viewed by consumers. These surveys can range from mail-in forms to short forms the consumers complete at the time of purchase or even having a saleperson or clerk asking the customer to rate the product or service at the close of the purchase. Getting direct input from your customers is invaluable and should be done in some form in every organization.

New Customer Measures. Measurement over time of the number of new customers can be a very effective tool to assess quality levels. Customers who are very happy with your service are going to tell others—60 percent of new customers in service organizations come from referrals. New customers can be an important litmus test of quality.

Quality in Services. Quality in service industries has more recently come into the mainstream, and the benefits reaped by service organizations initiating solid quality management programs have been substantial. The basis for quality management systems in service organizations is to proactively measure and manage the quality level of the services; some of the metrics applied as the basis of service quality are:

The “iceberg principle,” in other words, the average service company never hears from more than 90 percent of customers who are not happy with the level of service they received. For every legitimate complaint received there will be more than 20 customers who feel they have had problems, and at least 25 percent of those problems could be considered serious enough to warrant investigation.

Of the customers that make a complaint, more than half will do business again if the complaint is addressed and resolved.

If the complaint is resolved quickly, and the customer feels the organization cares about its customers, the number will jump up to almost 100 percent.

If a complaint is not resolved, the average customer will tell more than eight other individuals about the negative experience. If the complaint is resolved, the customer will tell at least five others about the positive experience.

On average it costs six times more to gain a new customer than to keep an existing one.

As you can see, quality in service industries can have substantial influence on the bottom line. A well-designed and managed quality system can be the key to providing the quality of service desired.

Summary.

The quality movement and quality systems have had many different names or terms of reference in the past few decades, and might look like a short-lived business management trend at first glance. With everincreasing competition and consumer expectations, professionals and business managers cannot ignore quality issues and expect to maintain or improve their competitive position. Quality systems, time and again, have been responsible for substantial increases in the bottom line of businesses in every industry and have given organizations the boost they need to meet overall goals and objectives. Organizations that do not accept that quality improvement is going to be ingrained into every part of their business are not going to be around to see what the future brings.

Resources for quality.

Agency for Healthcare Research and Quality www dot ahrq.gov A U.S. government agency established to improve the quality of health care.

American Customer Satisfaction Index www dot theacsi.org An organization dedicated to tracking customer satisfaction and providing benchmarks and insights into customer satisfaction.

American Society for Quality www dot asq.org A nonprofit organization dedicated to the development of qual ity. The organization offers a wide range of resources for quality professionals.

Baldrige National Quality Program www dot quality.nist.gov Center for Quality of Management www dot cqm.org/index.html International Organization for Standardization www dot iso.org/iso/en/ISOOnline.frontpage Quality Leaders Network www dot qualityleaders dot net/qnet/default.htm Appendix.

Deming’s 14 Points.

1. Create constancy of purpose toward improvement of product and service, with the aim to become competitive and to stay in business and to provide jobs.

2. Adopt the new philosophy. We are in a new economic age. Western management must awaken to the challenge, must learn their responsibilities, and take on leadership for change.

3. Cease dependence on inspection to achieve quality. Elimi nate the need for inspection on a mass basis by building quality into the product in the first place.

4. End the practice of awarding business on the basis of price tag. Instead, minimize total cost. Move toward a single sup plier for any one item, on a long-term relationship of loyalty and trust.

5. Improve constantly and forever the system of production and service, to improve quality and productivity, and thus con stantly decrease costs.

6. Institute training on the job.

7. Institute leadership. The aim of supervision should be to help people and machines and gadgets do a better job. Super vision of management is in need of overhaul as well as super vision of production workers.

8. Drive out fear, so that everyone may work effectively for the company.

9. Break down barriers between departments. People in re search, design, sales, and production must work as a team, to foresee problems of production and in use that may be en countered with the product or service.

10. Eliminate slogans, exhortations, and targets for the work force when asking for zero defects and new levels of productivity. Such exhortations only create adversarial re lationships, as the bulk of the causes of low quality and low productivity belong to the system and thus lie beyond the power of the workforce.

11. (a.) Eliminate work standards (quotas) on the factory floor.

Substitute leadership. (b.) Eliminate management by objec tive. Eliminate management by numbers, numerical goals.

Substitute leadership.

12. (a.) Remove barriers that rob the hourly worker of his right to pride of workmanship. The responsibility of supervisors must be changed from sheer numbers to quality. (b.) Remove barriers that rob people in management and in engineering of their right to pride of workmanship. This means, inter alia, abolishment of the annual merit rating and of manage ment by objective.

13. Institute a vigorous program of education and self improvement.

14. Put everybody in the company to work to accomplish the transformation. The transformation is everybody’s job.

References.

American Society for Quality. www dot asq.org, accessed February 15, 2004.

Biolos, Jim. Six Sigma Meets the Service Economy. Boston: Harvard Busi ness School Press, 2002.

Garvin, David, and Artemis March. A Note on Quality: The Views of Deming, Juran, and Crosby. Boston: Harvard Business School Press, 1981.

Reichheld, Fredrick F and W. Earl Sasser Jr., “Zero Deflections: Qual ity Comes to Services,” Harvard Business Review (September– October 1990).

Wolkins, D. Otis. Total Quality: A Framework for Leadership. Manage ment Leadership Series. New York: Productivity Press, 1995.

MBA in a day. Chapter 13, E-Commerce and Uses of the World Wide Web.

The Internet is the starting point for an exploration of e-com merce, and the World Wide Web is a worldwide collection of computer networks, cooperating with each other to exchange data using a common software standard. Though considered by many as a new technology, the Internet has been around for several decades.

Originally known as ARPAnet, the Internet was created in 1969 by the U.S. Department of Defense as a nationwide computer network that would continue to operate even if the majority of it were destroyed in a nuclear war or natural disaster. It was not until 1992 that commercial entities started offering Internet access to the general public, and the business world has not been the same since.

The effect of the internet on businesses.

Over the past decade, widespread Internet and e-mail access have radically changed the way companies do business and communicate with their employees, vendors, and customers. Consumers and businesses purchase products and services such as $2,000 laptops and airline tickets by paying with credit cards via the Internet without ever speaking to a customer representative or salesperson. Many companies allow customers to track the status of their orders online to see when their products shipped and when they are scheduled to arrive, again without ever speaking to a customer representative. When companies such as Amazon and Priceline emerged, their business models revolved around conducting 100 percent of their business online, eliminating the need for costly bricks-and-mortar outlets. More and more consumers are paying their bills online as they become comfortable with online security, thus eliminating the need to pay postage and write checks for each bill using the traditional snail-mail method. Today thousands of adults are getting their undergraduate and master’s degrees online without ever attending an actual class or meeting their peers or professors, who teach the classes online. There are few businesses or organizations isolated from this transformational wave of technology and innovation.

Internet facts.

According to www dot internetworldstats dot com, the total number of Internet users worldwide as of February 2004 is 719.3 million. This is approximately 11.1 percent of the total world population of 6.45 billion.

IDC Research predicts that this number will exceed one billion users by the end of 2005. The United States is still the country with the highest number of Internet users at 186.5 million, 63.3 percent of the total population of the country, which stands at 295.5 million. Asia ranks highest as the continent with the most number of Internet users with a total of 229.82 million. North America is second at 203.38 million versus 203.28 million for Europe. Additionally, the countries with the highest percentage of the population using the Internet include Sweden (76.9 percent), Netherlands (66.0 percent), and Australia (64.2 percent).

Description of typical internet users.

According to the UCLA World Internet Project’s findings based on research collected from 2002 to 2003, in general, around the world men are more likely (in some countries, such as Italy and Spain, much more likely) to use the Internet than women. However, in countries such as the United States, Sweden, and Taiwan, the ratio of men to women who use the Internet is nearly 1:1.

It is interesting to note that according to the study, the average Internet user watches less television than non-Internet user counterparts. For example, in the United States, Internet users watch 5.2 hours less television per week. Internet users are also more likely to spend time reading books and engaging in social activities. They also tend to be more educated and have higher total household incomes.

Definition of web-based systems and e-commerce.

A Web-based system is a business process that is supported and accessed online. For example, e-commerce, a Web-based system involving purchasing products online, may include features such as charge card approval systems and customer order tracking systems, which provide companies with the opportunity to sell their products and services online more efficiently. Many internal employee Web-based systems such as payroll, vendor selection and ordering, time sheet, and expense report submissions are also examples of Web-based systems.

As an example of how Web-based systems are changing the way organizations harness the power of the Web, let’s look at the payroll function. Companies have to provide their employees with benefit information, taxes paid, vacation/sick days remaining, and so on each time they get paid. To complicate matters even further, of the people on payroll, some are contractors and part-time workers, while others are considered regular employees. If the company’s payroll system is Internet-based, data can be entered by disparate reporting units, in a wide array of geographic locations, away from the headquarters’ accounting and payroll office, if needed. The online system is able to keep better track of the number of vacation days, amount of 401(k) contributions, and health insurance deductions on each employee’s pay stub.

The process of accounting for employees’ time can also be automated, eliminating the need for manually totaling payroll hours and time cards, reducing the number of errors, and providing immediate real-time data for managers, allowing them to make more departmentspecific, accurate, time-sensitive decisions. A Web-based payroll system is beneficial not only to human resources staff, but also to employees. They no longer have to make copies of their time sheets when they turn in the originals because past time-sheet records are available on the Internet for viewing and printing, and they no longer have to worry about calculational errors while adding numbers because the time sheets are automatically calculated online. The system also enables employees to fill out their time sheets while they are away from the office, which is especially convenient for those who spend a significant amount of time in the field.

Clients also appreciate suppliers and service providers who use Web-based systems. Not only does providing clients with access to information on your web site save them time, it saves you time as well.

Allowing clients to access old reports and data from previous and current projects by using a password online saves you from having to take time out of your busy day to print out the report and ship it to the client. The client is able to log in online and make copies of the report himself, and the benefit to him is that he can access the information immediately. He does not have to wait for you to return from out of town to print his file and then wait another day or two to receive it in the mail. Clients can also access project and budget updates, participate in virtual conferences and meetings, and retrieve invoices online. While clients find the online process to be convenient and quick, your company saves time and money and also benefits from the “stickiness” factor. Once a client gets used to accessing information using your system, she will be less likely to switch her business to one of your competitors. As discussed in Chapter 8, this notion of switching costs is a key driver of customer loyalty and competitive advantage. Once clients understand and build trust in your system, they will be less likely to risk working with a company that does not offer this service to its clients or spend the time to learn how to use another company’s system.

An example of a company that takes advantage of the stickiness factor is Bank of America. The company used to charge customers for online banking, but now it offers the service for free. The bank realized that once customers spend time inputting all the information required to use online banking and learning their system, they will be less likely to move their account to another financial institution.

Another Internet-based system that many companies have implemented is electronic bidding for products and services, meaning that proposal bids are sent electronically instead of via regular mail or paper-based systems. Benefits to companies of the electronic bidding system include the arrival of bids in a consistent, legible format free of calculation errors, and a reduction in the amount of man-hours and other resources needed to print, distribute, and edit bids. The suppliers who are bidding also benefit from the process because they have access to project bidding information 24 hours a day, and they can send in their bids even when they are away from their offices. Additionally, the number of errors made on the forms is reduced because the system detects them and will not accept them unless they are completed in their entirety and are free of errors. Other advantages of electronic bidding are the elimination of travel expenses and confirmation of delivery of bid on the supplier side.

Although they may cost several thousand dollars to set up and their maintenance and support functions may have to be outsourced, in general Web-based systems are more cost-efficient since they save on printing, human labor, mailing, and invoice costs.

As customers grow more comfortable with security issues regarding purchasing products online, Jupiter Research predicts e-commerce—purchasing products or services online—will continue to grow over the next five years, specifically among small businesses that have established a reputation among consumers for being entities that are legitimate and trustworthy. In addition, Jupiter Research predicts ecommerce will grow from $65 billion in 2004 to $116 billion by 2008, and the percentage of U.S. consumers who purchase products online will increase from 30 percent in 2004 to 50 percent by 2008.

Advantages and disadvantages of e-commerce.

While e-commerce is expected to continue growing over the next several years and trending toward wide adoption to sell products and services online, there are many challenges that should be considered before implementing an online selling system for your company.

One major concern among consumers is that of security and privacy of personal information. Consumers want to be assured that the personal information they provide on a company’s site will not be sold to other companies for marketing purposes. Others are wary about technology that tracks personal information such as web sites visited and items purchased by customers. A major barrier for consumers who still do not purchase products online is the fear that a web site is not secure and that their credit card number or other personal information will be accessed by hackers.

Another reason many consumers choose not to purchase online is because of viruses. While in the past viruses were often spread by opening an infected e-mail, these days simply surfing the Internet is enough to be vulnerable to getting a virus. System downtime is another problem associated with e-commerce sites. Whether the downtime is a result of system maintenance, server issues, hackers, or poor system administration, it can have a negative impact on sales. If customers are unable to purchase from your site due to technical problems, they may become dissatisfied and visit the web site of your competitor instead.

Although there are several challenges associated with e-commerce, there are also many advantages to selling products online for companies and customers. One advantage for companies is cost savings through lower inventory management, customer service, administration, and communication costs, order tracking, and integration with the company’s accounting system. Web orders can be sent directly to the warehouse, which allows customer service representatives to focus on larger customer orders, while smaller orders can be handled more efficiently online. Detailed purchase history reports on each customer allow companies to design customized online purchase deals for customers who have not purchased from their sites in several months or reminder notices to order specific products for customers who purchase specific products on a regular basis. Current online inventory reports can aid in projecting inventory depletion and assist with product restocking information.

Manufacturers of products have the advantage of being able to sell directly to customers by bypassing the intermediary if they sell online and are able to pass along some of the savings to their customers.

Another advantage to companies is that sending e-mails to customers is an effective low-cost way of sending customized messages about upcoming products, special online purchase offers, or shipping and order confirmations. Additionally, specific customer information can be stored for repeat customers, making it easier to analyze customer groups. Benefits to consumers include 24-hour shopping, convenience, lower prices, special online promotions, comparative shopping, and proactive feedback from the company regarding stock-outs or delays in shipping.

E-commerce trends.

Mitchell Levy of CEOnetworking has compiled a list of top technology-related trends for 2004. Of the top 10 trends on his list, two are related to e-commerce: the increase of spam and viruses and the continued growth of e-commerce.

According to The Washington Post, spam or unsolicited commercial e-mail accounts for about 50 percent of all e-mails. With the help of special software, spammers can generate various combinations of letters and numbers and place the name of a common Internet service provider (ISP) such as AOL after each @ to create a list of millions of e-mail addresses, many of which are actual e-mail accounts. Although as of 2003, 26 states had antispam laws, many people still continue to send out spam since they are unlikely to get caught, and it is an inexpensive way to reach customers. The fact remains that although only a handful of people out of a thousand people who receive a spam message open it and eventually make a purchase, spammers find it worth their time to spam because the amount of sales generated is higher than the cost to distribute spam. This creates a problem for legitimate companies that are sending out e-mails to current or past customers who may delete them thinking they are spam. Even though many believe there should be a ban on spam similar to the ban on unsolicited faxes that came into effect in 1991, others argue that banning spam violates spammers’ rights to free speech.

As more and more small businesses go online, e-commerce will continue to grow in the coming years. According to e-Marketer, 80 percent of small business were online as of 2003.

E-commerce will continue to grow based on wider acceptance, reliability and security and that growth will accelerate on a multiplier to economic recovery. That is to say that e-commerce as a route to market will gain disproportionately from economic recovery.

—Jeff Drust, vice president, e-business, Autodesk, Inc.

Online sales will continue to rise. Convenience and familiarity are at work here. Those who have not bought will and those who have will buy more.

—Jim Sterne, president, Target Marketing.

Steps in developing an e-commerce strategy.

STEPS IN DEVELOPING AN E-COMMERCE STRATEGY Depending on whether your company is currently selling online, the following section may either help you set up a web site or make your web site more successful. The first thing you should do before you begin the setup is determine what you expect to achieve by creating a web site. Without determining the scope of the project, it is impossible to be fully prepared for all the steps involved in the process. Be sure to consider the following:

What are your goals and objectives for creating this web site?

Which products or services will be provided?

Who will the target market be?

Should you hire an outside firm to help develop and maintain the web site or should you handle it internally?

If the system will be handled internally, can you afford to hire a system administrator, Web copywriters, Web designers, pro ject director, and/or software engineer?

How will selling online affect your current relationships with your vendors, salespeople, and employees?

Will a Web presence contribute to “channel conflict” or the concerns by intermediaries that they may be bypassed by cus tomers, who will be reaching you directly?

Where will the funding for the web site come from?

How much do you expect the total project will cost?

Can your current purchasing, accounting, and supplier sys tems be integrated into the web site’s system?

Do you have the infrastructure and customer response capa bilities to support volume from the Web?

Setting Up a Web Site.

Once you have determined the scope of your web site project, the next step is to begin setting it up. First you have to create a domain name that is unique, yet descriptive. To make sure that you choose a unique company name, you may want to consider working with a lawyer or name consultant to avoid the hassle of having to change the name of your company later after finding out the name you picked already belongs to another company. After you have picked out a unique domain name, the next step is to contact a Web hosting service to secure and register your new domain name. A Web hosting service hosts your web site on its server. It also offers many features that you may select from such as offering a shopping cart on your site.

Although it is possible to host your web site on your own server, this method is not recommended because of the high costs involved in doing so. The more people who visit your site, the more storage space you will need and the more money you have to pay; make sure the plan you pick allows for growth.

Although you may hire an outside firm to develop and maintain your web site, if you plan to make minor changes such as changing prices on the site you may want to consider having the necessary tools in your office to handle these minor changes yourself. For example, you need to consider how your site interacts with major Web browsers your customers are likely to use, such as Netscape Communicator and Microsoft Internet Explorer browsers. Since your customers will use either one of these browsers to access your web site, you need to test any changes you make in both formats to make sure the changes will not cause problems for customers using either browser. You should also consider purchasing a file transfer protocol (FTP) program to upload any new files to your web site and a text editing software program such as Notepad that comes with Windows. Other tools you may want to purchase include HTML editors and tutorials, a digital camera, and graphics equipment.

Web Site Content.

There are many things to keep in mind when developing the content for your web site. In general, web sites should be easy to use, clear, and concise, and should contain accurate and updated information. While you want to make sure your web site is interesting enough to entice visitors to continue browsing and clicking, you do not want to use graphics that take so long to appear that visitors become frustrated and leave your site. Be sure to offer visitors the option of viewing your page in another format if it takes too long to download, and keep your pages short so they download faster and eliminate the need to use the scroll bar. It is important to remember that your web site should be consistent with your company’s established brand, logo, mission, culture, and philosophy to avoid confusing customers, employees, and suppliers. Make sure your web site is user-friendly and easy to navigate. Also include a site map, and “contact us,” and FAQ (frequently asked questions) pages.

Alicia Sequerah, CEO of Womenetwork dot com, also suggests using effective marketing copy on your web site, as the site is a part of an integrated marketing strategy. Sequerah suggests that companies should use more “you” phrases rather than “we” phrases to show customers how they will benefit from purchasing your products. For example, try using “You get . . .” rather than “We offer . . .” solutions to problems your target market is experiencing.

Test Your Web Site before Going Live.

Once the web site is set up, all pages and features should be tested. Try to send an e-mail from the “contact us” section; try to purchase something from your shopping cart using a credit card; make sure that a confirmation e-mail is sent to your e-mail address and another e-mail is promptly sent to your supplier; see how long it takes your home page to appear completely; try to send in a bid. Just make sure you test all parts of the web site. Upon successful completion of internal testing, the next step is to conduct focus groups or one-on-one interviews with current customers, vendors, clients, and prospective customers to find out what they like and dislike about your site, as well as to ask for suggestions on how to improve it. Once the system goes live, if it does not work properly you risk frustrating or alienating customers, employees, and suppliers; so it is best to test it thoroughly and get feedback before going live even though you may have to spend more money than you initially thought.

Web Site Maintenance and Refreshment.

Just because your web site is up and running does not mean that your work is done. Your web site needs constant refreshment, refinement, and incremental, continuous improvement. Product prices, availability and descriptions, phone numbers, employee contact information, news and press releases, and all other sections of your web site must be updated on a regular basis. Additionally, to increase the number of times customers visit your web site, you should give them a reason to revisit your site. Give them the option to bookmark your web site, automatically add them to your newsletter, customer discount, and order reminder lists (also extend them the option to decline this offer), offer links on your web site to complementary web sites your target market would find interesting, offer sweepstakes or contests online, and make changes to the web site based on customer feedback. Every visitor to your web site is a potential customer. Implement ways to capture, and keep in touch with, visitors to your web site!

Promoting Your Web Site by Attracting a Target Market.

Your company may have a great web site, but you should not subscribe to the Field of Dreams approach to web site development (“If you build it, they will come”). You need to make some adjustments so you can reach your target audience, and conversely, so your customers will find you. According to Dr. Ralph Wilson, an e-commerce consultant, there are many things a company can do to try to reach its target audience.

One thing he suggests companies do is track the number of visitors who visit their web sites. Your hosting service should be able to provide these figures to you each month. Some specific things you can track include:

Agent log—record of links used by those who visited your site.

Browser—Which browser do your visitors use?

Entry page—Which page of your site do visitors see first?

File—number of times a particular file is accessed.

History—analysis of specific features over several months’ time.

Impressions—number of times a logo is viewed.

Path—page sequence followed by visitor.

Repeat visitors—number of repeat visits from same address.

Sales—by frequency, volume, and sales amount.

Sessions—number of times site has been accessed by the same user in a specific amount of time.

Time—amount of time visitors spend on each page.

Something else Dr. Wilson recommends is submitting your URL to search engines such as Yahoo! by clicking on the “Add your URL” link on their web sites, and submit your site to directories such as About dot com. You will be prompted to write a short description of your web site, so think about what words people would plug into search engines to search for your products and services before submitting the description of your web site.

Additionally, you should try to find web sites that complement your products and services and place reciprocal links or banner ads on them. Writing articles for another web site’s newsletter is another effective way to spread the word around about your web site. Try developing your own newsletter, and e-mail it to those who visit your web site once a quarter. This helps keep your company on their minds. Providing readers with the option of e-mailing your newsletter to a friend is another great way to make people aware of your web site. Lastly, don’t forget to add your web site address on all your company’s brochures, stationery, and so on.

Efficiencies of E-Commerce.

Once you take the time to set up e-commerce on your web site, you can leverage the benefits. When a customer places an order, an e-mail is sent to his e-mail account, thanking him for placing his order with your company. Another e-mail is sent to your company’s warehouse, a supplier’s warehouse located nearby, or a manufacturer—whichever is responsible for shipping the products. Products can be shipped directly to the customer without having to be sent to your company, which not only shaves a few days off the total shipping time, but it also eliminates additional shipping, inventory tracking, and storage costs.

When the order has shipped out, an e-mail is sent to the customer’s account alerting him of an estimated shipping arrival date and a link to the shipping company’s online package tracking system. Because the customer paid for the products and services with a credit card, there are no invoices or late payment hassles to deal with, which eliminates the need for more staff. The automated system can also e-mail reminders to customers about purchases, special online offers, and upcoming new products and services.

You should consider outsourcing the product fulfillment and inventory management processes so that you can focus more on your company’s competencies. These companies handle everything, including setting up the software; running daily, weekly, and monthly warehouse inventory reports; packing and verifying your orders; and shipping them out.

Monitor and Track Visitors and Sales.

A major advantage to having a web site is being able to track visitors’ behavior. All customer and visitor data should be tracked and analyzed on a regular basis. Once the data is properly analyzed, customers can be grouped and targeted with customized offers, which can enhance sales. It is important to monitor the success of your web site so that you can make changes to enhance efficiency and sales even further.

Harnessing the power of a web inside—creating a successful intranet.

While the Internet is an international network of computers linked together, an intranet is an internal network that can be accessed only internally and usually is accessed through a password by authorized users such as employees, existing clients, or customers. Allowing clients to access project and budget data, invoices, and old reports through a password is an example of an intranet.

The key advantage to implementing an intranet is improved communications; an intranet facilitates employees sharing knowledge with each other, collaboration on work-related documents, learning the latest company news, and socializing outside of work and forming stronger bonds. Additionally, intranets can save companies money on printing, paper, and distribution costs. They can also increase productivity and efficiency.

For example, if employee directories, benefits information (401(k), health insurance, etc.), holidays, upcoming events, company organizational charts, and policies are posted on the intranet, employees spend less time searching for paperwork or calling employees in other departments for answers to their questions. Employees can also receive information regarding news and announcements simultaneously and in a timely manner rather than having to wait for the information to be announced in the next staff/team meeting or distributed in their internal mailboxes. This sharing of information makes employees feel like they are an important part of the organization. As a result of improved communications and efficiency, employees are more likely to be satisfied with their jobs and become more loyal to the company, thereby increasing employee retention and improving customer service.

To ensure that an intranet is successful, the information on it must be consistent with the company’s brand, business objectives, and mission. Additionally, enough staff and resources should be allocated to promote and implement the intranet as well as adequate staff to maintain and refresh it.

When thinking of a domain name for your intranet, think of a name that is consistent with your brand. For example, Southwest Airlines’ intranet is called Freedom Net, based on its external brand “A Symbol of Freedom,” which is easier to remember, more energizing, and powerful than www dot southwest dot com/employees/intranet.

The best way to find out what information should be included in your intranet is to conduct interviews or focus groups with employees from various departments.

Incorporating intranet objectives in regular strategic planning helps to ensure that the intranet is aligned with your company’s goals and objectives each year. Ideally, you should consider a team approach, incorporating input from a diverse set of users’ needs and perspectives to review and refresh the intranet. The intranet strategist would monitor performance against objectives, track the budget and resources allocated to the project, and ensure that standard procedures are implemented in the layout of pages. The intranet operations person would be responsible for the day-to-day operations of the site, which includes interacting with other departments such as human resources and marketing to obtain updated materials. The intranet developer’s main job is to determine ways in which to improve and enhance the intranet. However, depending on how large your company is, you may assign only one person to be responsible for all three major tasks or find this function to be well served by outsourcing to a consultant.

Along with analyzing suggestions that employees send via the online suggestion box, employees should be surveyed on a regular basis about the intranet’s content and design, and results should be available on the intranet for all employees to see. If changes are made as a result of feedback from employees, be sure to mention this on the intranet to prove to your employees that you value their feedback and make them feel like they are actively involved in the process.

Simply alerting your employees via e-mail that your company has implemented an intranet may not be enough to entice them to use it.

You need to get them energized and excited about the intranet. Perhaps you could provide lunch for your staff one day and explain how to use it and what the benefits are to them and to the company. You can also create a formal implementation plan and publicize it internally by using testimonials and specific stories from employees who have tested it, with confirmation about how easy it is to use and what the specific benefits to them are. In addition, you could also mail out an announcement letter or even hold an intranet launch party.

The success of your intranet depends not only on adequate staff, funding, and site content, but also on senior management buy-in. If senior management fails to actively support the intranet, it will be a challenge to convince others to use the system. If company leaders expect their employees to use the intranet, they must lead by example and use it themselves.

Summary.

Harnessing the power of the Web and technology is a vital part of an organization’s success and future. To remain competitive in today’s business environment, companies must retain their employees, improve communications with clients and employees, improve productivity, increase efficiency, and reduce costs. Implementing an intranet and integrating the Web into a strategic plan can help achieve these goals. While web sites can be used as marketing and sales tools, they can also be used to improve internal organizational efficiency by streamlining the order, tracking, and vendor bidding processes. In today’s complex, competitive world, technology can be a powerful element in attaining competitive advantage, lowering costs, increasing customer satisfaction, and achieving long-term success.

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