INTRODUCTION
In this memo, I will give a brief summary of Ben Elgin's article, "Running the Tightest Ships on the Net."  I will further go on to apply this article to Fiedler's Contingency Theory model as presented in chapter 11 of our text. 

MILITANT MANAGEMENT
In his article, Elgin discusses an emergence of militant management in Internet based corporations.  He uses three companies, siteROCK Corp., Advanced Internet Technologies Inc. (AIT), and NOCpulse, as examples to illustrate his point.  All three companies provide hosting and management services for Internet sites of other businesses.  These three companies are noted for running "tight ship" operations based on regimented procedures and rock-solid processes. 

As Elgin points out, militant management corporations contain "no-nonsense managers who believe discipline and precise execution can create a top-notch Web company with outstanding customer service..." (125).  Elgin compares this style of management to what he calls the, "touchy-feely managers...of the late 1990s" (125).  These companies, rather than focusing on employee innovation, freedom, and on-the-job entertainment (i.e. fitness centers, golf courses, fishing ponds, etc.), base their structure on strict rules and procedures for maintaining successful operations and providing customer satisfaction.  According to Elgin, companies using militant management have a common goal: "to engineer human reliability, using military processes to create teamwork, orderliness, and quick resolutions in an often chaotic business" (125).

THE MILITANT MANAGEMENT MENTALITY
All three companies realize that promising-and delivering-reliability is the key to survival.  The common goal of engineering human reliability through processes, teamwork, and orderliness, has allowed these companies to provide that reliability.  Take siteROCK's, "two-man rule" for example.  When a problem is identified with a customers' Internet site, one employee immediately calls for help from a fellow employee.  The two then proceed to run through procedures laid out in 30 thick binders to help pinpoint the problem.  The idea behind this process is that two heads reduce the chance for human error (125).  Similar processes are intended to make sure that customers are the first priority of the business and do not, as Elgin puts it, "fall through the cracks" (126). 

Militant management corporations, by creating strict procedures and customer service standards, have fared well in the Internet hosting market.  These companies have taken military type strategies and converted them to business strategies for internal and external decision making within their companies.  Their style of management, which monitors both the market and their employees on an ongoing basis, has become a competitive advantage for these companies.  The only problem now, as Elgin states, is "striking a balance between hard-core military processes and an innovative environment..." (127).

FIEDLER'S CONTINGENCY MODEL
Fiedler's Contingency Theory, as discussed in chapter 11 of our text, states that people's leadership styles tend to be either task motivated or relationship motivated.  The preferred leadership style of the individual, be it task or relationship motivated, is based on a combination of three variables:  (1) Leader-member relations, (2)Task structure, and (3) Position power.  The results of these three variables combine to give a measure of situational control.  The model proposes that a task-oriented leader will be most successful in situations of either very high control or very low control, and that a relationship-oriented leader will be most successful in a position of moderate control (Schermerhorn and Chappell, 176). 

According to Elgin's article, it is safe to assume that militant management corporations such as siteROCK, AIT, and NOCpulse, are task-oriented firms possessing very task oriented leadership.  To make this assumption true, let us look at how the three companies satisfy the three contingency variables.
1.  Quality of Leader-Member Relations- measures the degree to which the group
       supports the leader
       - At AIT, employees willingly attend personal training (PT) sessions every morning 
          before work.  This shows the commitment to the basic principles of the company.
2.  Degree of Task Structure- the extent to which task goals, procedures, and 
       guidelines are clearly spelled out
       - To pinpoint and solve the problem at siteROCK, the two employees browsed 
          through 30 binders of company rules and procedures.
       - At siteROCK, before each shift turns over, employees must do 90 minutes of 
          paperwork before handing over the keys.
       - siteROCK employees are required to read through several three-inch-thick
          binders of standard operating procedures before they can work in the command
          center.
3.  Amount of Position Power- the degree to which the position gives the leader power
       to reward and punish subordinates
       - Managers for these three companies have the ability to hire, fire, and reward
          employees.
       - At siteROCK, before an employee is promoted, managers have the ability to put
          him/her in a position to come up with solutions to the most difficult situations in 
          the field.

Managers in militant management corporations, as you can see, maintain a very high situational control.  They possess good leader-member relations, high task structure, and strong position power.  We can therefore say, that militant management corporations are largely task oriented.

CONCLUSION
As we have seen, militant management corporations are largely task-oriented.  In these companies, managers enforce the use of strict procedures and rules to provide better customer service and gain employee responsibility.  In the three instances we have seen, militant management corporations have proven to be successful in the management of company operations.  Without adjusting management styles in different situations, however, it is hard to say how successful management in these companies will remain.  According to Fiedler's model, neither task or relationship motivated styles are effective all the time.  We will have to see what happens with these companies when the situation calls for a different type of management.  

Corporate Entities:

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Running the Tightest Ships on the Net

^{Business Week; New York; January 29, 2001; Ben Elgin in Emeryville, Calif.;} 

Think of it as War Games meets Revenge of the Nerds. In the command center at Emeryville (Calif.)-based siteROCK Corp., eight staffers tap on keyboards and watch rows of overhead screens spew out data on the performance of their customers' Web sites. One twentysomething staffer suddenly yells to a colleague across the room, who races over to help troubleshoot.  According to the ``two-man rule,'' two heads reduce human error.

Dave Lilly, siteROCK's chief operating officer, beams as he watches through soundproof glass. The duo quickly runs through procedures laid out in 30 thick binders to help pinpoint the Web site's problem. The activity follows a tight script based heavily on the 53-year-old Lilly's six years in the military, part of them as chief engineer of a nuclear submarine. The goal: to engineer human reliability, using military processes to create teamwork, orderliness, and quick resolutions in an often chaotic business.  ``If processes can work on a nuclear submarine where you have 19-year-olds taking orders from 22-year-olds, they'll work anywhere,'' he says.

NORAD OF THE NET. Sound extreme? Perhaps, but siteROCK isn't alone. Advanced Internet Technologies Inc. (AIT), a Fayetteville (N.C.) company that hosts, or runs, Internet sites for other businesses, also is steeped in military methodology. It's headed by 13-year Army veteran Clarence E. Briggs III, a burly former infantry major who runs a rigorous two-week ``boot camp'' for new hires and sizes up the market the same way a general would a battlefield. Meanwhile, siteROCK's chief
competitor, NOCpulse Inc. of Sunnyvale, Calif., dubs itself the NORAD of the Internet, for North American Defense Command Center. Although it has no military roots, NOCpulse requires staffers to follow scores of procedural documents on its internal Web site, dubbed The Bunker.

Indeed, a new counterculture is springing up at the gritty core of the Internet industry, among the companies that handle the meat-and-potatoes Web site operations and other mission-critical tasks for businesses. Gone are the pool tables, noontime massages, and touchy-feely managers that marked Silicon Valley's Internet boom of the late 1990s. 

In is a breed of no-nonsense manager who believes discipline and precise execution can create a top-notch Web company with outstanding customer service and business smarts. ``Internet-operations work requires rock-solid processes,'' says Corey Ferengul, senior program director with market researcher Meta Group. These companies ``offer quite a contrast from the willy-nilly management of early service providers.''

Promising--and delivering--reliability are key to survival. More than 65 companies have sprouted up in the past two years to run and manage sites for Internet startups and traditional companies alike. Analysts say that's far too many, even for a market that research firm IDC projects will grow to $177 billion by 2004, up from $116 billion in 1999. Moreover, the competition is getting tougher, with big players such as WorldCom Inc. entering the market through its September acquisition of Web hoster Digex Inc. To stay in the game, small startups are trying extreme management to convince corporate customers that their systems are foolproof.

But is a boot-camp approach the best way to go? It can be--to a point. ``The military has a great track record of managing people on an ongoing basis,'' says M. Diane Burton, assistant professor of management at Massachusetts Institute of Technology's Sloan School of Management. ``It can be a competitive advantage'' if used correctly. A case where the strategy worked is Electronic Data Systems, the granddaddy of technology outsourcers. When Ross Perot founded the company nearly
38 years ago, he applied management methods taken from his eight years in the Navy. EDS today is a $19 billion company and still has a regimented image, even though Perot sold it 16 years ago. ``Warfare is the most complex task in the world,'' says Perot's son, Ross Jr., who now runs his dad's second military-style consulting business, Perot Systems Corp., founded in 1988.  ``It makes sense that many of the same processes are applied in business.''

The regimented atmosphere and military themes, however, may be tough to stomach for skilled workers used to a more free-spirited atmosphere. AIT, which recruits heavily from nearby Fort Bragg, may go too far for some. If newcomers are surprised to learn that many employees gather willingly every morning before work for PT, or personal training, they might be shocked to learn that the company has an arms room stocked with 12-gauge shotguns and 9-millimeter handguns. It's kept
locked, but has been opened twice during hurricanes, when the company feared looters might storm headquarters. ``We're paranoid about our customers' security,'' says CEO Briggs, claiming clients are comforted to know their sites are electronically and physically secure.

IRONCLAD. Striking a balance between hard-core military processes and an innovative environment will be key to the success of these startups. When customers demand new services or technology, siteROCK, AIT, and NOCpulse will have to bend to provide them. The CEOs of the companies insist their ways do not include any authoritarian business methods, and instead they encourage bottom-up feedback from employees. In fact, siteROCK, which counts Commerce One, Gap, and Microsoft among its customers, nixed a photo of employees posing with a salute. ``We don't want to appear rigid,'' explains a company spokesman.

If used effectively, military-style leadership boasts valuable lessons for other Net execs. Most important, ironclad processes can make sure customers don't fall through the cracks. That has been a longtime gripe for Jean L. Scrocco, curator of the online Spiderwebart Gallery. In 1998, three years and two hosting providers into her Web efforts, Scrocco decided to bet heavily on the Net and shuttered her physical art store in Morris Plains, N.J. She quickly had doubts as Spiderwebart staggered through two more hosting providers, suffering weeklong lapses in service. ``I was starting to look for another building in New York or Las Vegas,'' she says. In 1999, she hired AIT, and her woes lightened. ``We still have some trying times, but we know we're going to get a fast response and professional treatment,'' says Scrocco.

Business strategy is another area where ex-military execs bring a colorful, determined flavor. AIT holds monthly war games called Intelligence Preparation of the Market, after the army's pre-engagement processes known as Intelligence Preparation of the Battlefield. Staffers probe competitors' businesses for weak points and target customers to lure away. So far, it's helping privately owned AIT stay ahead of the game, with 50% of its new customers coming from competitors. End result: AIT's revenues jumped 177%, to about $20 million, in 2000. Briggs says the company is profitable, but he would not disclose numbers. SiteROCK and NOCpulse, however, have no clear timetable for reaching profitability. NOCpulse recently went live with its first half-dozen customers, while siteROCK says its 60 customers pay an average of $128,000 a year.

The military's emphasis on training and milestones also carries over well to business. When siteROCK considers promoting an employee, the worker sits before superiors who pepper the candidate for 90 minutes with questions, such as: What would you do if Mae-West, one of two critical Internet hubs in the U.S., went down? ``We want to come up with some of the most difficult situations and see how they react under pressure,'' says Lilly.

SiteROCK employees also are required to read through several three-inch-thick binders of standard operating procedures before they can work in the command center. As each shift turns over, the staff must shuffle through 90 minutes of paperwork before handing over the keys. ``Not everyone would be able to do this job. You have to be able to follow directions and follow the processes,'' says Lori Perrine, a customer-support specialist at siteROCK.

Still, the real stress remains on these underdog managers, toiling to find equilibrium between discipline and innovation in this pressure-cooker market. There's still no manual for that.
 

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