Is Web Success Necessary for CEO Survival?

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Event Summary

Cahners Business Information is one of the biggest trade magazine publishers in North America, with 1998 revenues of approximately one billion dollars. Formerly Cahners Publishing, the company changed its name in 1997 when it merged with the Chilton publishing company. Cahners had positioned itself as an emerging leader in Internet business to business publishing. As recently as the beginning of September 1999 the company announced layoffs of 300 employees and a consolidation of all operations to the New York area. On September 22, 1999, the New York Post reported that Cahners' CEO Bruce Barnet, along with at least two senior executives, was resigning. It is believed that Barnet was forced out by the parent company, Reed Elsevier, which has had its own financial problems in recent years. There is concern within the company that more high-level departures are coming. One insider called it "an executive bloodbath that's not over yet," and just one week later the company's CTO announced his own resignation.

Market Impact

What makes this an interesting issue is the question of the extent to which Cahners' internet strategy figured into the decision. Ever since the merger with Chilton, Cahners had positioned itself for success as an Internet publisher. Its first major endeavor was Manufacturing Marketplace, a portal site for its magazines that cover the manufacturing industry. However, Cahners has not noticeably capitalized on that success. Manufacturing Marketplace has not taken any bold steps into electronic commerce, as has its near rival VerticalNet, and it has not developed the kind of user-drawing affiliations as has another rival, Thomas Register.

The natural position for Cahners is as an intermediary between buyers and sellers; the sellers are the advertisers in Cahners' various magazines, who are also listed in industry directories and online product catalogs. Visitors to many Cahners sites use these catalogs to locate vendors, but once they have the information the sites provide no help in making contact with the vendor or completing a transaction. In an announcement dated just a few days after Barnet's resignation, the company announced the purchase of a stake in PartMiner, a company with a similar directory in the electronic parts area and one that is developing an online business model. The purchase will help Cahners' electronics portal, e-insite, move ahead as an e-commerce site, but may also signal that the company had become disillusioned with its own attempts to develop e-commerce technology. . In other areas of the company, which has more than 120 individual magazine websites, there is relatively little cutting-edge work to show, especially in electronic business areas. That the Internet strategy is behind the departures is given credence by the resignation of CTO Rob Rubin, who was responsible for development and operations of the corporate websites and new media infrastructure.

User Recommendations

Some reports suggest that Barnet was hampered by parent Reed-Elsevier in his attempts to move strongly toward a web presence, while others propose that the company's technology investments were not matched by the kind of vision and planning needed to succeed in electronic commerce. Either way, it seems clear that Barnet's and Rubin's departures were intimately tied to the company's failure to grab the e-commerce leadership position among business to business publishers. This only underscores the almost hysterical pressure on every company to "do e-business" and the importance of early alignment of business and technical strategic planning if such ventures are to succeed.

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